UDAY SHANBHAG,BENGALURU vs. DEPUTY DIRECTOR OF INCOME TAX, BENGALURU

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ITA 535/BANG/2026Status: DisposedITAT Bangalore06 October 2026AY 2022-235 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the decision of the learned Additional/Joint CIT(A) and dismissed the assessee's appeal. The Tribunal found that the explanation offered by the assessee for the 899-day delay in filing the appeal before the lower appellate authority was neither reasonable nor bona fide. The Tribunal agreed with the lower appellate authority that the assessee failed to demonstrate a sufficient cause for the belated filing. Specifically, the Tribunal rejected the assessee's contention that he was regularly following developments in leave encashment cases and only became aware of favorable orders after consulting professionals, stating this was not a sufficient cause for such a substantial delay. Consequently, the Tribunal was not inclined to condone the delay of 899 days in filing the appeal before the learned Additional/Joint CIT(A). The ratio decidendi is that a significant delay in filing an appeal, even when substantial justice is invoked, requires a demonstrably reasonable and bona fide cause, and mere belated discovery of favorable legal developments after a prolonged period of inaction is generally not considered sufficient cause.

What were the facts?

The assessee, Uday Shanbhag, an ex-employee of Canara Bank, filed his return of income for Assessment Year 2022-23 on July 27, 2022, declaring a total income of Rs. 11,22,150/- and claiming an exemption of Rs. 10,30,094/- under Section 10(10AA) for leave encashment. The CPC processed the return under Section 143(1) on March 17, 2023, restricting the exemption to Rs. 3,00,000/-, resulting in a taxable income of Rs. 18,52,250/- and a demand of Rs. 1,01,740/-. The assessee appealed this intimation to the Additional/Joint CIT(A), Thane. The appellate authority dismissed the appeal due to a delay of 899 days, finding no reasonable cause for the delay and deeming it a lapse due to deliberate inaction. The assessee then appealed this dismissal to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the delay of 899 days in filing the appeal before the learned Additional/Joint CIT(A) should be condoned, considering the principles of substantial justice over technicalities, and if the assessee has shown sufficient cause for the delay. Assessee's contentions: The assessee argued that the denial of condonation of delay was unjustified, as substantial justice should prevail over technical considerations. He relied on Supreme Court decisions in Collector of Land Acquisition, Anantnag Vs. M/s. Katiji & Others and N. Balakrishnan Vs. M. Krishnamurthy, emphasizing that limitation rules are not meant to destroy rights but to ensure prompt remedies. The assessee also claimed to have learned about favorable decisions in leave encashment cases and CBDT notification no. 31/2023 only in October 2025 after consulting professionals, asserting that the issue was covered by various ITAT coordinate bench decisions and the notification, thus meriting condonation to advance justice. Revenue's contentions: The Revenue argued that the appeal should be dismissed in limine due to the significant delay of 899 days and the assessee's failure to demonstrate a sufficient cause for the belated filing.

Which sections of the Income-tax Act were involved?

Section 10(10AA),Section 143(1),Section 250,Section 249(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE

Before: SHRI BALAKRISHNAN S. & SHRI KESHAV DUBEY

Hearing: 09.07.2026Pronounced: 06.10.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. Addl./JCIT(A), Thane dated 12.01.2026 vide DIN & Order No. ITBA/APL/S/250/2025-26/1084687588 (1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2022-23.

2.

The assessee has raised the following grounds of appeal:-

ITA No.535/Bang/2026 Uday Shanbhag, Bengaluru Page 2 of 5

3.

The brief facts of the case are that the assessee is an ex- employee of Canara Bank. The assessee filed his return of income for the AY 2022-23 on 27.07.2022 declaring total income of Rs.11,22,150/- and claimed an exemption of Rs.10,30,094/- u/s 10 (10AA) of the Act towards the earned leave encashment received upon retirement. Thereafter, the said return of the assessee was processed by the CPC and accordingly intimation u/s 143(1) of the Act was

ITA No.535/Bang/2026 Uday Shanbhag, Bengaluru Page 3 of 5 passed on 17.03.2023 by restricting the exemption claimed by the assessee u/s 10(10AA) of the Act amounting to Rs.3,00,000/- instead of Rs.10,30,094/- as claimed by the assessee and computed the taxable income of Rs.18,52,250/- and accordingly raised demand of Rs.1,01,740/- for the AY 2022-23.

4.

Aggrieved by the intimation passed by the CPC dated 17.03.2023, the assessee preferred an appeal before the ld. Addl. JCIT(A)/CIT(A)/NFAC.

5.

The ld. Addl. JCIT(A), Thane dismissed the appeal of the assessee by observing that the impugned appeal has been filed on 01.10.2025 against the order passed by the CPC dated 17.03.2023 with delay of 899 days. The ld. Addl. JCIT(A) held that there was no reasonable cause which prevented the assessee from filing the appeal for 899 days. Thus, it is clearly a case of lapse and is a direct result of deliberate inaction on the part of the assessee. Accordingly, by following the decision of Hon’ble Supreme Court, the delay of 899 days in filing the appeal was not condoned as no sufficient cause has been shown u/s 249(3) of the Act. Consequently, the appeal of the assessee becomes non-est and therefore, the same was not admitted by ld. Addl.JCIT(A).

6.

Aggrieved by the order of ld. Addl. JCIT(A), Thane, the assessee has filed the present appeal before this Tribunal.

7.

Before us, the assessee personally appeared before us and vehemently submitted that the denial of the condonation of delay in filing of appeal by 899 days was not justified when substantial justice is pitted against technical consideration. The assessee heavily relied upon the decision of Hon’ble Supreme Court in the case of Collector of Land Acquisition, Anantnag Vs. M/s. Katiji & Others 1988 SC 897

ITA No.535/Bang/2026 Uday Shanbhag, Bengaluru Page 4 of 5 as well as the decision of Apex Court in the case of N. Balakrishnan Vs. M. Krishnamurthy, AIR 1998 SC 3222, which held that rules of limitations are not meant to destroy the right of parties but to ensure they seek their remedy promptly without resorting to dilatory tactics. Lastly, the assessee submitted that he was regularly following the developments in the leave encashment cases and only in October, 2025, learnt about the decision. The assessee became aware of the recent favourable order only after consulting with professional and discovered that the issue involved in his case was squarely covered by various decisions of coordinate benches of ITAT and the CBDT notification no.31/2023. Given the nature of the case wherein the meritorious aspect is clearly in the assessee’s favour, the condonation of delay should have been granted to advance the cause of justice.

8.

The ld. D.R. on the other hand, vehemently submitted that the appeal of the assessee may be dismissed in limine as there is huge delay of 899 days and the assessee has failed to demonstrate the sufficient cause in filing the appeal belatedly.

9.

We have heard the rival submissions and perused the materials available on record. In our considered opinion, the explanation offered by the assessee before the ld. Addl./JCIT(A) cannot be said to be reasonable and bona fide and we also agree with the contention of the ld. Addl./JCIT(A) that assessee fails to demonstrate sufficient cause in filing the appeal belatedly by 899 days. Further, the contention of the assessee that he was regularly following the development in the leave encashment case and he became aware of the recent favourable order only after consulting with professional and discovering that the issue involved in his case was squarely covered by various decisions of coordinate benches of ITAT cannot be accepted as sufficient cause for condoning such huge

ITA No.535/Bang/2026 Uday Shanbhag, Bengaluru Page 5 of 5 delay in filing the appeal before the ld. Addl./JCIT(A). Accordingly, we are also not inclined to condone the delay of filing the appeal belatedly by 899 days before the ld. Addl./JCIT(A).

10.

In the result, appeal filed by the assessee is dismissed.

Order pronounced in the open court on 6th Oct, 2026

Sd/- Sd/- (Balakrishnan S.) (Keshav Dubey) Accountant Member Judicial Member Bangalore, Dated 6th Oct, 2026. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order

Asst. Registrar, ITAT, Bangalore. Digitally signed P G by P G RAJANI Date: RAJANI 2026.10.14 17:56:04 +05'30'

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