KISSAN CHILLIES TRADING COMPANY,GUNTUR vs. INCOME TAX OFFICER, WARD 1(1), GUNTUR

There is a delay of 612 days in filing of appeal before ITAT. The Ld.AR has filed a condonation petition before ITAT requesting the Bench to condone the delay and pass order on merits. The main reason for filing the appeal with the delay was that the appellant is pursuing an alternate remedy by filing rectification petition u/s 154 before CPC, instead of filing an appeal before the ITAT. The CPC disposed of the rectification applications u/s 154 on 05.03.2025 without granting any relief. As mentioned above, the appellant has filed an appeal before Ld.CIT(A) against rectification order on 09.04.2025, which came to be dismissed as non maintainable on 11.12.2025, since the appeal on the same ground had already been decided in the earlier appeal against order u/s 143(1). To sum up, the Ld.AR of the appellant has stated that the delay occurred due to the fact that he is pursuing alternate remedy in good faith. It was also argued that on merits, the appellant has got a good case and relied on the decisions of coordinate Benches of Visakhapatnam where the ITAT has decided the issue on merits in favour of the appellant. In view of the same, it was pleaded that the delay may be condoned and the appeal to be entertained to adjudicate the same on merits.

The Ld.DR opposed the delay, stating that the delay in filing the appeal is quite inordinate and there was no sufficient cause. Hence, the appeal should not be entertained and pleaded to dismiss the same at the admission stage itself.

After hearing both sides, the Bench decides to condone the delay because the appellant is pursuing an alternate remedy i.e., filed an application u/s 154 of Income Tax Act before CPC to rectify the mistake, presuming that he will get relief. Since the CPC rejected the petition, the appellant filed an appeal. The Bench draws strength in condoning the delay, where the appellant was pursuing alternate remedy from the decisions of coordinate Benches of ITAT Delhi in the case of Chandra Goswami Vs. ITO Ward 69(1), Delhi in ITA No.3230/Del/2024 and ITAT Jaipur in the case of Shri Kishanlal Vs. ITO, Ward 2(4), Kota in ITA No.732/JP/2018 (Jaipur Trib.). Hence, the delay in filing of appeal is condoned and proceeding to adjudicate the issue on merits.

In the above cited appeal, the assessee is aggrieved by the intimation order passed by the DCIT, CPC, Bengaluru. The CPC has sent an intimation order u/s 143(1) dated 17.02.2023 for the A.Y.2022-23, where TDS credit was given only to the extent of Rs.32,370/- as against TDS claimed by the appellant to the extent of Rs.2,55,969/-. There was a delay of 108 days in filing the appeal before the Ld.CIT(A), the same was condoned and the Ld.CIT(A) passed order on merits. Before the Ld.CIT(A), the assessee has stated that while processing the return of income u/s 143(1) of the Act, the CPC proportionately disallowed the TDS claimed by the appellant based on the gross amount declared by the traders u/s 194Q of the Act in comparison with the gross amount declared by the appellant in its return of income by applying the formula in Rule 37BA of Income Tax Rules. The assessee is aggrieved because the CPC considered interest income earned by the appellant as gross total receipts and proportionately disallowed TDS credit u/s 194A of the Act. Due to these erroneous presumptions and conclusions by CPC, the assessee was directed to pay tax of Rs.2,62,360/-.

Aggrieved by this order of CPC, an appeal was filed before Ld.CIT(A). During the proceedings before the Ld.CIT(A), notices u/s 250 was issued on 14.02.2024, requesting the assessee to provide certificate of AP Marketing Committee given to the appellant to work as a Commission agent. The assessee was required to provide party-wise sales book as commission agent and percentage of commission received to match the same with the commission income admitted in the income tax return. The Ld.CIT(A) has also mentioned a CBDT Circular No.452 dated 17.03.1986, where, it was mentioned that the assessee is required to prove that he is a Kachcha Arhatia. The assessee was requested to segregate sales turnover determined by the CPC u/s 143(1) of the Act and also business done as commission agent and compare the same with the commission income reflected in the ITR. Since there was no response from the assessee, the Ld.CIT(A) dismissed the appeal of the assessee, stating that the appellant is not a commission agent and he is only a regular trader. The Ld.CIT(A) held that if the appellant was a commission agent, the buyer of goods would have deducted TDS invoking the provisions of section 194J and not 194Q. Hence, the Ld.CIT(A) came to the conclusion that the transactions done by the appellant are in the nature of trade and not as a commission agent. Accordingly, the adjustment made by the CPC invoking the provisions of Rule 37BA is found to be in order and hence the appeal of the assessee was dismissed.

As the appellant did not get relief, an appeal was filed before ITAT by the assessee and the relevant grounds of appeal are as under :

The Ld.DR relied on the orders of CPC and Ld.CIT(A).

Heard both sides. There is considerable merit in the arguments of the Ld.AR of the appellant that he was not afforded proper opportunity to explain his case and demonstrate that he is only a commission agent and TDS provisions relating to commission should only be invoked. The contention of the Ld.AR of the appellant is also correct with respect to the fact that the Ld.CIT(A) gave time to the assessee to file reply by 29.04.2024, but the Ld.CIT(A) passed the order on 27.04.2024 itself, depriving the assessee to file his submissions. In view of the same, the Bench decides to remit the issue back to the file of Ld.CIT(A), directing him to give an opportunity to the appellant and pass an order afresh.

In view of the above, the appeal of appellant is allowed for statistical purposes.

The facts and issues involved in ITA No.05/Viz/2026 for the A.Y. 2023-24 are identical to the facts and issues which we had already considered in ITA No.04/Viz/2026 for the A.Y. 2022-23. The reasons given by us in the preceding paragraph No.10 in ITA No.04/Viz/2026 shall mutatis mutandis apply to ITA No.05/Viz/2026 as well. Therefore, for similar reasons, the issues are set aside to the file of Ld.CIT(A) with a direction to adjudicate the issues afresh after giving proper opportunity to the appellant. Thus, this appeal of appellant is also allowed for statistical purposes.

In the result, appeals filed by the assessee are allowed for statistical purpose for both the A.Ys.2022-23 and 2023-24.