Case Law Details
Ram Bhagat Phatela Vs ITO (ITAT Chandigarh)
ITAT Condoned 87-Day Delay in TDS Mismatch Appeal; Matter Remanded for Fresh Decision- Bona Fide Confusion Over CPC Rectification Saves Assessee
Ram Bhagat Phatela Vs ITO, ITA No. 327/Chd/2025, AY 2022-23, order dated 12.11.2025
Assessee, a commission agent (Kachha Arhtiya) dealing in agricultural produce, filed return declaring income of Rs. 7,91,300 & claiming TDS credit of Rs. 1,13,872. CPC, while processing u/s 143(1), allowed only Rs. 41,634, resulting in a TDS short-credit of Rs. 72,238. Assessee filed appeal before CIT(A) with a delay of 87 days, which CIT(A) refused to condone & dismissed the appeal in limine.
Before Tribunal, Assessee explained that the delay was caused due to bona fide confusion created by departmental communications. ITO, Sirsa, through letter dated 06.03.2023, directed him to approach CPC, Bengaluru because rectification rights were not transferred to AO. Income-tax Bar Association, Sirsa had also represented the issue to higher authorities, leading Assessee to believe that rectification at CPC was the appropriate remedy. Tribunal held that the explanation was plausible, bona fide, & supported by official correspondence.
Relying on the Supreme Court judgment in Collector, Land Acquisition vs. Katiji emphasising liberal interpretation in condonation matters, Tribunal held that there was no deliberate inaction & that substantial justice must prevail. It noted that several Chandigarh Bench decisions had condoned similar delays arising from CPC-related TDS mismatch issues.
Accordingly, the delay of 87 days in filing the appeal before CIT(A) was condoned, the order dismissing appeal was set aside, & the matter was restored to CIT(A) to decide the issue on merits. CIT(A) was directed to follow binding Chandigarh ITAT precedents including Deepak Trading Company (ITA 107/Chd/2025) & Mukesh vs ITO (ITA 44/Chd/2025), & provide adequate opportunity of hearing.
Final Result: Appeal allowed for statistical purposes; matter remanded to CIT(A) for fresh adjudication.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This appeal by the assessee is directed against the order of the Ld. CIT, Appeal Addl/JCIT(A)-4 Mumbai dated 06.01.2025 passed under section 250 of the Income-tax Act, 1961, whereby the appeal of the assessee was dismissed in limine as being barred by limitation for 87 days.
2. The assessee, an individual engaged as a commission agent (Kachha Arhtiya) dealing in agricultural produce, filed his return of income for A.Y. 2022-23 on 31.07.2022, declaring an income of Rs.7,91,300/- and claiming TDS credit of Rs.1,13,872/-.
3. The CPC, while processing the return u/s 143(1), granted TDS credit of only Rs.41,634/-, disallowing balance TDS of Rs.72,238/-. The intimation was served on the assessee on 17.02.2023.
4. The assessee filed the appeal before the CIT(A) on 09.06.2023, resulting in a delay of 87 days. The CIT(A) declined to condone the delay, holding that no sufficient cause was shown and that the delay was due to negligence and inaction.
5. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.
6. During the course of hearing the assessee explained that he had acted bona fide on the advice of the Income-tax Bar Association, Sirsa, which had made a representation to the Commissioner of Income Tax, Rohtak regarding similar CPC mismatches in TDS credits for A.Y. 2022-23.
6.1 The ITO, Ward-1, Sirsa vide letter dated 06.03.2023 advised the assessee to approach CPC, Bengaluru for rectification, stating that rectification rights were not transferred to the jurisdictional AO. This resulted in confusion about the appropriate remedy. The assessee contended that the delay was neither deliberate nor due to negligence but was caused by a bona fide belief that the matter could be rectified at the CPC level.
7. Per Contra, the Ld. DR supported the order of the CIT(A) and submitted that the condonation of delay is not automatic and must be based on cogent and verifiable evidence showing “sufficient cause.”
7.1 The DR placed reliance on the judgments of the Hon’ble Supreme Court in MajjiSannemma vs. Reddy Sridevi [2021 SCC Online SC 1260] and Ajay Dabra vs. Pyare Ram & Ors. (SLP No. 15793/2019, dated 31.01.2023), wherein it was held that in the absence of bona fide explanation, delay should not be condoned.
7.2 It was contended that the assessee has not produced any documentary evidence showing that any rectification application was actually filed before CPC, Bengaluru or that any active step was taken within the limitation period.
7.3 The DR, however, fairly submitted that if the Hon’ble Tribunal were to consider the assessee’s explanation as bona fide, then the matter may be restored to the CIT(A) for adjudication on merits, with a direction to decide the issues afresh in accordance with law and keeping in mind the binding precedents of the Chandigarh Tribunal in Deepak Trading Company vs ITO (ITA No. 107/Chd/2025, dated 01/07/2025) and ITA No. 44/Chd/2025, IN THE CASE OF MUKESH VS ITO where similar CPC-related TDS disputes were adjudicated.
8. I have heard both sides and carefully perused the record. It is not in dispute that the assessee’s grievance relates merely to non-grant of TDS credit due to a CPC mismatch. The explanation that the assessee was under a bona fide belief that rectification at CPC level was the correct remedy is plausible and consistent with departmental communications dated 06.03.2023, which advised the assessee to approach CPC.
8.1 The Hon’ble Supreme Court in Collector, Land Acquisition vs. Mst. Katiji& Others [(1987) 167 ITR 471 (SC)] has laid down that substantial justice should prevail over technical considerations and that a liberal approach should be adopted in condonation of delay when no mala fide intention or deliberate inaction is established.
8.2 The Hon’ble Chandigarh Bench various matters has also consistently condoned delays in filing appeals before CIT(A) where the delay arose due to confusion created by CPC rectification processes.
8.3 In the present case, the delay of 87 days stands satisfactorily explained. There is no evidence of deliberate neglect, and the cause shown by the assessee constitutes “sufficient cause” within the meaning of section 249(3) of the Act. The assessee stands to gain nothing for not pursuing the appeal in time, therefore I condone the delay in filling the appeal before the Ld. CIT(A) .
8.4 Since I have already condoned the delay in filing the appeal before the Ld. CIT(A), and as the Ld. CIT(A) has not adjudicated the grounds on merits, I hereby remit the matter to the file of the Ld. CIT(A) with a direction to decide the appeal afresh on merits, in accordance with law.While adjudicating the appeal in remand proceedings, the Ld. CIT(A) shall keep in view the binding precedents of the Hon’ble ITAT, Chandigarh Bench, in the cases of Deepak Trading Company vs ITO [ITA No. 107/Chd/2025] and ITA No. 44/Chd/2025, wherein the Hon’ble Tribunal has laid down the legal position relating to TDS mismatch and CPC processing issues. The Ld. CIT(A) may also consider and apply any other decision of the Hon’ble Tribunal, if the facts of the present case are found to be similar.
9. The Ld. CIT(A) shall further ensure that due and adequate opportunity of being heard is afforded to the assessee before deciding the matter afresh.
10. The delay of 87 days in filing the appeal before the CIT(A) is condoned. The order of the CIT(A) rejecting the appeal on limitation is set aside, and the matter is restored to the file of the CIT(A) for decision on merits in accordance with law and the above observations.
11. In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 12/11/2025
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