MADHURI SUNIL ZODE,MUMBAI vs. ITO, WARD 20(2)(1), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated
30.05.2023 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short „the Ld.
CIT(A)‟] for assessment year 2020-21, raising following grounds:
1. On the facts and circumstances of the case and in law, the learned CIT(A), NFAC, Delhi (in short, ['the Id. CIT(A) '] erred in not appreciating that the CPC, Bengaluru was not justified in making the disallowance of Rs. 17,14,276/- towards deposit of employees'
contributions in EPF and ESIC u/s 36(1)(va) of Income Tax Act, as the issue was disputed and moreover, the juri ictional high court

Madhuri Sunil Zode
2
of Bombay had held that employees' contributions could be paid till the due date of filing of the return of income in view section 43B of Income Tax Act.
2. On the facts and circumstances of the case and in law, the Id.
CIT(A) erred in dismissing appellant's appeal, without disposing of the appellant's contention of financial hardships, particularly when the appellant had received delayed payments from Navi Mumbai
Municipal Corporation (in short, 'NMMC') in pursuance of contract with NMMC for rodent control services in Zone-I and Zone-II, Navi
Mumbai.
3. On the facts and circumstances of the case and in law, the Id
CIT(A) erred in sustaining the disallowance of employees'
contributions to EPF and ESIC u/s 36(1)(va) of Income Tax Act to the extent of Rs. 16,58,532/-, as these contributions related exclusively to the workers employed towards contract with the NMMC for rodent control services and delay in deposit of Rs. 15,33,499/- towards EPF and deposit of Rs. 1,25,033/-towards ESIC, aggregating to Rs.16,58,532/-, was due to delayed payments from 'NMMC'.
4. On the facts and circumstances of the case and in law, the ld.
CIT(A) erred in not appreciating that in view of the peculiar facts of the instant case, due date for payment of employees' contribution to EPF and ESIC in relation to workers employed exclusively under contract with NMMC for rodent control services would be with reference to the month during which the payments towards employee's salary are received from NMMC by the appellant and not with reference to the month to which the employees' salaries relate.
5. On the facts and circumstances of the case and in law, the Id.
CIT(A) erred in sustaining the disallowance for delay in deposit of Rs. 13,208/- towards EPF and deposit of Rs. 1,930/-towards ESIC, aggregating to Rs. 15,138/- without considering extension of due dates.
6. On the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that there was no violation whatsoever of the objectives behind the introduction of section 36(1)(va) r.w.s.2(24(x), which are as under: a. penalize employers who misutilize contributions to provident fund or other funds for the welfare of the employees (Circular No. 495 dated 22.09.1987), b.
penalize employers who by late deposit of employee contribution
'get unjustly enriched by keeping the money belonging to the employees' *. (Memorandum to Finance Act 2021) c. avoid the mischief of employers retaining amounts for longer periods

Madhuri Sunil Zode
3
(Supreme Court in para 52 in Checkmate Services Private Ltd v.
CIT).
7. Without prejudice, on the facts and circumstances of the case and in law, the disallowance of employees' contributions to EPF and ESIC is unjustified in view of the country-wide lockdown due to Covid-19 pandemic and a lenient view of the delay needs to be taken, as held by the honorable ITAT Mumbai "E" Bench in Khandelwal Laboratories Pvt Ltd. v. Additional CIT, CPC in ITA No.
679/Mum/2024 dated 30.05.2024. The appellant seeks permission to add, delete, modify or amend any ground of appeal.
2. At the very threshold, it is pertinent to note that the present appeal is accompanied by an application for condonation of delay of 542 days in filing the same before the Tribunal.
2.1 The assessee, in support of the application, filed an affidavit narrating that the impugned order of the Ld. CIT(A) was passed on 30.05.2023 and that the appeal before the Tribunal was due by 30.07.2023. However, the appeal came to be lodged only on 21.01.2025. The explanation tendered is that the assessee, acting on the advice of his then consultant, was dissuaded from filing an appeal in light of the judgment of Hon‟ble Supreme Court in Checkmate Services Pvt. Ltd. v. CIT (dated 12.10.2022). It is further averred that only upon subsequently obtaining advice from another consultant in January 2025 did the assessee take steps to file the appeal, albeit belatedly. The relevant contentions of the assessee reproduced in the affidavit are extracted as under:
1. That my Return of Income for AY 2020-21 was filed on 15.01.2021, declaring total income of Rs. 27,29,260/-

Madhuri Sunil Zode
4
2. That my return of income was processed 29.11.2021 by Centralized
Processing
Center
(CPC), wherein a sum of Rs.17,14,276/- was disallowed due to delayed deposit of PF/ESIC.

Madhuri Sunil Zode
5
12. I say that the delay in filing appeal before hon'ble ITAT has happened due to not having proper advice from my previous consultants and my being ignorant of the intricacies of relevant provisions of the Income Tax Act.
13. I say that the delay in filing appeal is due to bonafide reasons and unintentional.
14. That I had no intention to jeopardize the interest of revenue by delaying the appeal.
15. That the reasons submitted as above are genuine and true in every sense.
16. That I humbly submit that delay in filing appeal was due to circumstances beyond my control and the condonation of delay of about
542
days in filing the appeal deserves sympathetic consideration and I pray for condonation in the interest of justice.”
3. The assessee pleaded that the delay was occasioned by ignorance of law, reliance upon erroneous advice, and disturbance of peace of mind owing to the tax demand, and that such delay is bona fide, unintentional, and deserves sympathetic consideration in the interest of justice.
3.1 The Departmental Representative, however, opposed the condonation, contending that the assessee remained supine for over
500 days without any diligence. It was urged that mere change of opinion by another consultant cannot constitute sufficient cause for condoning such inordinate delay, particularly when the assessee, as a prudent litigant, could have sought timely independent advice.
The Ld. DR submitted that there is no bonafide explanation on the part of the assessee for the delay.

Madhuri Sunil Zode
6
4. Having heard learned counsel for the parties and perused the record, we are of the considered view that the application for condonation of delay is wholly devoid of merit. It is well settled that while dealing with an application under Section 253(5) of the Income-tax Act, 1961 ( in short the Act) , what is required to be demonstrated is “sufficient cause” within the meaning of law. The expression “sufficient cause” has been judicially interpreted to connote a cause which is beyond the control of the party and which falls within the realm of reasonable human conduct. In Ornate
Traders Pvt. Ltd. v. ITO (2008) 312 ITR 193 (Bom), the Hon‟ble
Bombay High Court held that the test of sufficient cause is to be judged with reference to reasonableness and the conduct expected of a litigant acting with ordinary prudence. Likewise, in P.K.
Ramachandran v. State of Kerala (1997) 7 SCC 556, Hon‟ble
Supreme Court cautioned that the law of limitation has to be applied with all its rigour, and that courts cannot extend limitation on mere equitable considerations. The relevant observation of Hon‟ble Supreme Court (supra) is reproduced as under:
“ That apart, we find that in the application filed by the respondent seeking condonation of delay, the thrust in explaining the delay after 12.5.1995, si:
"at that time the Advocate General's office was fed up with so many arbitration matters equally important to this case were pending for consideration as per the directions of the Advocate
General on 2.9.1995."

Madhuri Sunil Zode
7
This can hardly be said to be a reasonable, satisfactory or even a proper explanation for seeking condonation of delay. In the reply filed to the application seeking condonation of delay by the appellant in the High Court, it is asserted that after the judgment and decree was pronounced by the learned Sub Judge, Kollam on 30.10.1993, the scope for filing of the appeal was examined by the District Government Pleader, Special Law Officer, Law
Secretary and the Advocate General and in accordance with their opinion, it was decided that there was no scope for filing the appeal but lateron, despite the opinion referred to above, the appeal was filed as late as on 8.1.1996 without disclosing why it was being filed. The High Court does not appear to have examined the reply filed by the appellant as reference to the same is conspicuous by its absence from the order. We are not satisfied that in the facts and circumstances of this case, any explanation, much less a reasonable or satisfactory one had been offered by the respondent State for condonation of the inordinate delay of 565 days.
Law of limitation may harshly effect a particular party but it has to be applied with all its rigour when the statute so prescribe and the Courts have no power to extend the period of limitation on equitable grounds. The discretion exercised by the High Court was, thus, neither proper nor judicious. The order condoning the delay cannot be sustained. This appeal, therefore, succeeds and the impugned order is set aside. Consequently, the application for condonation of delay filed in the High Court would stand rejected and the Miscellaneous First Appeal shall stand dismissed as barred by time. No costs.”
4.1 Tested on these touchstones, the explanation offered by the assessee, that he relied upon the advice of one consultant for more than one and a half years and only thereafter sought opinion of another consultant, cannot be held to constitute sufficient cause.
The change of professional advice, or a belated realization of legal remedy, is neither a circumstance beyond the assessee‟s control nor one which could be treated as reasonable. On the contrary, it Madhuri Sunil Zode
8
exhibits gross negligence and lack of due diligence on the part of the assessee.
4.2 It is trite law that length of delay is immaterial if sufficient cause is made out; equally, even a short delay cannot be condoned in the absence of satisfactory explanation. In the present case, the delay of 542 days is inordinate and remains unexplained in law.
4.3 We are thus of the clear opinion that the assessee has failed to establish any sufficient cause warranting condonation of delay. The reasons set out in the affidavit amount only to a change of opinion and misplaced reliance on professional advice, which cannot be a ground to defeat the mandatory scheme of limitation.
4.4 Accordingly, the application for condonation of delay is rejected. Consequently, the appeal is barred by limitation and is dismissed in-limine.
5. In the result, the appeal of the assessee is not admitted.
Order pronounced in the open Court on 21/08/2025. (SANDEEP GOSAIN)
ACCOUNTANT MEMBER
Mumbai;
Dated: 21/08/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forwarded to :

Madhuri Sunil Zode
9
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

BY ORDER,
////

(