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Facts
The assessee's appeal before the CIT(A) was dismissed due to an 8-day delay in filing, which the assessee attributed to the sudden death of their Chartered Accountant. The original assessment order by the AO included several additions, such as disallowances of depreciation and unexplained cash credits.
Held
The Tribunal found that the death in the CA's family constituted a 'sufficient cause' for the delay. Therefore, it directed the CIT(A) to condone the delay and decide the appeal on its merits after providing the assessee with an opportunity to be heard.
Key Issues
Whether the death of the assessee's CA constitutes sufficient cause to condone an 8-day delay in filing an appeal before the CIT(A).
Sections Cited
143(3), 250, 32, 68, 69C, 249(3)
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Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
(AY:2023-24) Vimala Jayantilal Purohit vs. Income Tax Officer Circle 17(1) D/302 Kiran Building Parsi Kautilya Bhavan, BKC, Panchyat Road, Andheri, Bandra East, Mumbai – 400069. Mumbai - 4000051 PAN/GIR No: CYZPP8694Q (Appellant) (Respondent) Appellant by None Respondent by Shri Akhtar Hussain Ansari, (Sr. DR) Date of Hearing 24.02.2026 Date of Pronouncement 27.02.2026 O R D E R PER BIJYANANDA PRUSETH, AM:
This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income-Tax (Appeals) National Faceless Appeal Centre (NFAC), [in short, ‘CIT(A)’], dated 02.09.2025 for the assessment year (AY) 2023-24.
The grounds of appeal raised by the assessee are as under:
“1. That the Learned Assessing Officer (Ld. AO) erred in law and on facts in completing the assessment u/s 143(3) and in making various disallowances and additions, which are unjustified, arbitrary, and against the principles of natural justice. The appellant denies his liability to be assessed at the income determined by the Ld. AO.
2. Disallowance of Additional Usage Period Depreciation Machinery That the Ld. AO erred in disallowing additional depreciation of Rs 29,07,161/- on the ground that the machinery was not put to use for more than 182 days, without appreciating the business nature, facts and relevant explanations/evidences furnished. The appellant prays that the additional depreciation be allowed as claimed.
Calculation of Depreciation. Sany Rig SR235-C10 and Machinery Tools: Though the assets were mentioned under ">182 days," How ever while calculating the Depreciation We have charged Depreciation and additional depreciation at half rate the as prescribed under Income tax act. There has been typographical error occurred while submitting the reply to Income tax officer and by mistakenly we written the depreciation in Column more than 180 day though we have calculated and charged correctly the depreciation and additional Depreciation at half the rate. (a) Machinery Purchased and Depreciation Claimed. Machine Date of Original Depreciati Additional Total Purchase Cost of on Normal Depreciati Machine (Half the on (Half rate i.e. the rate i.e. 7.5%) 10 %) Sany Rig 24.01.202 3,15,00,000 23,62,500/ 31,50,000/ 55,12,500 SR 235- 3 /- - - /- C10, 2023 New) Machine 09.12.202 2,75,500/- 20663/- 27550/- 48213/- ry Tools 2
Machine 12.01.202 18,64,407/- 139831/- 186441/- 326271/- ry Tools 3
Machine 30.03.202 4100,000/- 307500/- 4,10,000/- 717500/- ry Tools 3 Proclaim 15.12.202 10,00,000/- 75000/- 100,000/ 1,75,000/ Machin 3 - ii. Put to Use to Machine: assessee is a Civil Contractor and is engaged in sub- contract works of MCGM, Railways, builders/developers and private sector department: like work contract work with labor and machinery, job work, piling work, civil work, drainage, desalting, bridge etc. The Assesee has purchased machine such as Excavators, Piling Rigs. This machine has been purchased in ready to use to condition and hence its available form the first day as put to use. iii. Sany SY-380LC-9 HD: This machine has been newly purchased from M/s Sai Prince Intraguild Pvt Ltd. iv. Supporting Documents Enclosed: Invoices for new machinery 3. Machinery Tools Purchased for Repair Wrongly Capitalized and Depreciation Claimed, a. Assessee Purchased the machinery tools for the repair of the existing machinery. How ever Machinery tools purchased wrongly capitalized by assessee and depreciation claimed, however it is a revenue expenditure. Following are the Details of Such tools purchased. Machinery Tools 09.12.2022 2,75,500/- (AY 2023-24) Vimala Jayantilal Purohit Machinery Tools 12.01.2023 18,64,407/- Machinery Tools 30.03.2023 4100,000/- Total i. The machinery tools capitalized during the year were merely replacement parts and components for existing machinery. These expenses did not enhance the capacity or efficiency of the original assets, nor did they result in the creation of a new asset. ii. Treatment Under Income Tax Act-Section 32 iii. As per the provisions of the Income Tax Act, 1961, and relevant judicial precedents: iv. Expenditure incurred on replacement of parts and components is considered revenue expenditure and is charged to the Profit & Loss account. v. Only expenses that result in an enduring benefit or increase in the asset's capacity can be capitalized as per Section 32. b. Error in Depreciation Calculation i. The assessee mistakenly added the cost of machinery tools to the fixed assets and claimed depreciation. ii. However, since the expenditure qualifies as revenue in nature, the entire amount should be charged to the Profit & Loss account instead of claiming depreciation. c. Rectification & Request In light of the above, we request the department to consider the following: Reclassify the expenditure on machinery tools as revenue expenditure instead of capital expenditure. Reverse the depreciation claim on this amount, ensuring compliance with Section 32. Allow the entire cost of machinery tools as a deductible expense in the Profit & Loss account. CIT Saravana Spinning Mills (P) Ltd. (2007) 293 ITR 201 (SC)] The Supreme Court held that replacement of parts of machinery which do not amount to bringing into existence a new asset or enhancing the life of the existing machinery substantially would be treated as revenue expenditure and not capital expenditure. Alembic Chemical Works Co. Ltd. v. CIT [(1989) 177 ITR 377 (SC)] Expenditure incurred to preserve and maintain existing assets should be treated as revenue expenditure. CIT v. Southern Switchgear Ltd. [(1984) 148 ITR 272 (Mad HC)] Where expenditure was incurred on replacing old parts with new ones without increasing the value or efficiency, it was treated as revenue in nature.
4. Excess Depreciation on Rig HR-180 (2022-New) That the Ld. AO erred in disallowing 239,33,001/- on the ground of excess depreciation claimed at 27.12% instead of 15% without giving due weight to the actual usage, classification under correct block of assets, and other relevant provisions of the Income Tax Act, 1961. The disallowance is arbitrary and liable to be reversed. The Rig HR-180 (2022-New) was purchase on dated 15.01.2022. As per the provisions of Income tax additional depreciation was for A Y 2022-23 was half the rate and balance half the rate was charged in subsequent Assessment year. Following is the calculation of Depreciation (AY 2023-24) Vimala Jayantilal Purohit Machin Date of Original Additional Current Total e Purchase Cost of Depreciatio Year Dep Machine n of Last Year Rig HR- 15.01.202 3,93,30,000 39,33,000/- 48,67,087 88,00,089 180 2 /- /- /- (2022 - New) Supporting Documents Enclosed: Invoice Copy of Rig HR-180 (2022 - New) purchased dated 15.01.2022.
Unsecured Loans-₹1,29,48,000 (Section 68 Compliance) That the Ld. AO erred in treating unsecured loans of ₹1,29,48,000/- as unexplained cash credits under section 68 without properly considering the details submitted by the appellant, and without affording sufficient opportunity to produce lenders or additional documentation. The addition is based on suspicion and not on substantive evidence and hence deserves to be deleted.
Sr. Party Name Amount PAN No No 1 Arun kumar S Purohit 3,60,000/- AOSPP2375R 2. Babulal Ragaramji 1,50000/- AHCPL8797L 3. Balaji Corporation (Harish Bhuraram 5,00,000/- APRPP3370A Ji Purojit) 4. DS Engineers (Arun kumar S Purohit) 40,00,000/- AOSPP2375R 5 Naisha Construction 50,00,000/- AWHPP1979Q 6 Sundesha Enterprises 15,00,000/- AAHPM2360E 7 Swatik Chemical India 190000/- ABEPC0439N 8 Rajnish Wellness Ltd 700000/- AAHCR3491G 9 Mihir Patawa 48,000/- BHRPP7249H 10 Sonulal Saheb Choudhary 5,00,000/- KGCPS3663H 1,29,48,000/- The loans were received from genuine parties through banking channels. Complete documentary evidence is attached to substantiate the identity, genuineness, and creditworthiness of lenders. Supporting Documents Enclosed: LPAN, ITR copies, and bank statements of lenders. confirmation letters. iii. Bank transaction proof reflecting credited amounts.
6. Addition on Alleged Purchases from Non-Filers Bogus That the Ld. AO erred in treating genuine purchases amounting to ₹19,44,851/- as bogus solely on the basis that the suppliers had not filed their Income Tax Returns or did not respond to notices u/s 133(6), despite the appellant furnishing invoices, payment proofs, ledger accounts, and other relevant documents. The disallowance is unsustainable and against the settled principles of law. Party Name PAN Transaction Value (2) Tarla Shantilal Mehta (Ship Yard Co) AJLPM5759N 13,73,201.00 4
Rahul Hariraj Sharma (Bhoomi Exim) BCVPS8434G 5,71,650.00 1. We made genuine purchases from these parties based on invoices and payments through banking channels. . Non-filing of ITRs by suppliers is beyond our control. Our liability is to prove payment genuineness. iii. GST was duly paid, and transactions were duly recorded in books of accounts. Supporting Documents Enclosed: Copies of purchase invoices. Ledger accounts of the said suppliers. Bank statements showing payments made. iv. GST payment proof.”
Facts of the case, in brief, are that the assessee filed his return of income for the AY 2023-24 on 30.09.2023 declaring total income at Rs.2,05,03,480/-. The case was selected for scrutiny and after hearing the assessee, the AO made the following additions : (i) disallowance of depreciation - Rs. 29,07,161/-; (ii) disallowance of additional depreciation - Rs. 38,73,991/-; (iii) disallowance of excess depreciation - Rs. 39,33,001/-; (iv) unexplained cash credits u/s. 68 - Rs. 1,14,48,000/- and (v) unexplained Expenditure u/s. 69C - Rs. 19,44,851/-.
Accordingly, the total income was determined at Rs. 4,46,10,484/-. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A), which was late by 8 days. The assessee had stated that the delay was due to the sudden death in the family of the C.A., who was handling the tax matters. The CIT(A) did not condone the delay and dismissed the appeal.
Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The case was posted for hearing on 30.12.2025 and 24.02.2026. Due to winter vacation on 30.12.2025, the parties were informed about adjournment of the case. On the next date of hearing on 24.02.2026, neither the appellant nor 5 (AY 2023-24) Vimala Jayantilal Purohit his AR attended before the Tribunal nor any written submission nor any request for adjournment was filed. Therefore, no useful purpose would be served by prolonging the litigation. Hence, the appeal is decided on the basis of material available on record.
5. The Ld. Sr. DR of the revenue supported the order of CIT(A). He submitted that the CIT(A) has rightly refused to condone the delay in filing the appeal before him in absence of “sufficient cause”.
We have considered the facts of the case and the orders of the AO and CIT(A). The CIT(A) did not condone the delay of 8 days in filing the appeal before him. The appellant, in the condonation application, had submitted that the delay was due to the sudden death in the family of the C.A., who was handling the tax matters. Due to this unforeseen event, there was delay in preparing and submitting the necessary documents for appeal. The delay was neither intentional nor due to any negligence on part of the assessee. However, the CIT(A) was not convinced about the reasons given by the appellant for the delay of 8 days, with which we do not agree. The reason given by the appellant that the small delay of 8 days was on account of the death of a family member of the C.A would constitute “sufficient cause” in terms of provisions of section 249(3) of the Act. The delay was neither deliberate nor intentional but was due to circumstances beyond control of the appellant. Therefore, in the interest of justice, we direct the CIT(A) to condone the delay and decide the appeal on merit (AY 2023-24) Vimala Jayantilal Purohit after granting adequate and reasonable opportunity of being heard to the assessee. The appellant is directed to file submission in details in support of the grounds raised by him by not seeking adjournment without valid reason. The ground is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order is pronounced on 27.02.2026.