NARESH KUMAR,SHANTI NAGAR, MODEL TOWN, PANIPAT, HARYANA, INDIA vs. ASSESSING OFFICER, WARD ONE, PANIPAT, HARYANA, INDIA

“ 1. That Mr. Naresh Kumar who is an illiterate Person having PAN No: AAWPK7713J (hereinafter referred to as "the appellant") is a law abiding citizen of India. He is Prop. of Veenus Engineering and providing "Construction services" mainly to various PSU S/Govt. organizations & Private companies, thus not principal Employer. The appellant is regularly in filing the returns and paying taxes to the credit of Income Tax Department.

3. That the Centralized Processing Centre, Income Tax Department (in short CPC) had issued the impugned intimation u/s 143(1) of the Income Tax Act, 1961 (In 17.12.2022, having CPC/2122/A3/318842156 by making the additions illegally and against the short "the Act") dated reference no. provisions of IT Act, 1961. As Per Intimation, The DCIT CPC BENGALURU has wrongly made net addition of Rs. 3,49,62,160/-.

4. It is to be noted here that the above said intimation u/s 143(1) of the Act, was neither served to the Appellant on his E mail nor was sent through speed post which is in violation of section 282 of the Act. Therefore, the Appellant was unaware and never came to know about the impugned intimation dated 17.12.2022.

5. It is pertinent to mention here that at the time of passing of the impugned intimation u/s 143(1) of the Act, the Appellant was in the state of unsound mind. He was suffering from hyperactivity, irritability, disturbed sleep, grandiosity.

- 3654 & 3656/Del/2025 Naresh Kumar increased energy K c/o HTN, F10, F17 (smoking), that the assessee was under the medical treatment since November 2019 to 15.09.2023 (medical certificate has been attached along with the appeal).

6. That after discharge the Petitioner had taken considerable time to revive his mental condition and when he came to know on 28.11.2023 about the above said impugned intimation by his CA (who was not expert in Income Tax Litigation) from the ITBA portal only. The Appellant has consulted with another senior tax consultant on 29.11.2023 about the said assessment order. Thus he informed about intimation dated 17.12.2022 for AY 2021-22. …….xxxxx…….

10. It is to be noted here that the Appellant was suffering from hyperactivity, irritability, disturbed sleep, grandiosity, increased energy K c/o HTN, F10, F17 (smoking), that the assessee was under the medical treatment since November 2019 to 15.09.2023 i.e. for four years. He was under continuous medical observance since November 2019. The Appellant is not like a machine which can work in proper manner like a machine as he normally works, after such a long ailment. In fact even a machine can't work proper after immediate service, it also takes some time to be normal condition. That after service it will work in proper manner. The Appellant's mind was not in sound condition and it revive gradually with help of medical treatment. Therefore, it is not possible for any human being who is mental patient that after discharge from medical treatment his mind and body with work in normal condition. He will take considerable time, to come into routine activities, to which he was akin to do it before ailment. 15. It is to be noted here that the CIT(A) has passed the order u/s 250 on 28.02.2025 but it was never served to the appellant neither at his address through speed post nor on his email. Therefore, it is not possible for any person to open the Income Tax Portal every time. When the Appellant came to his legal consultant and asked him that is there any order of CIT(A), only 15.05.2025 and the counsel of the appellant after getting directions from the appellant had drafted the appeal and filed it on 02.06.2025. Thus, the appeal was filed within the limitation period of 60 days prescribed under section 253(3) of the Act. 16. That clause (5) of section 253 of the Act, itself says that "if it is satisfied that there was sufficient cause is there sufficient cause for not presenting it within that period The Appellate Tribunal may admit an appeal" Therefore, in the present case, there is sufficient cause for not present the appeal within time. November The Appellant was suffering from hyperactivity, 2019 irritability, disturbed sleep, grandiosity, increased energy K c/o HTN, F10, F17 (smoking), that the assessee was under the medical treatment since November 2019 to 15.09.2023 - 3654 & 3656/Del/2025 Naresh Kumar 17.12.2022 The order was never served to the appellant neither through speed post nor in the email of the appellant. 25.11.2023 The appellant when his mental health revived came to know on 25.11.2023 about the above said impugned order from his CA. 20.12.2023 The appellant filed the CIT(A) along with the application of condonation of delay giving sufficient cause of delay on 20.12.2023 before Commissioner of Income Tax, Appeal ADDL/JCIT (A)-4 Mumbai. 28.02.2025 CIT(A) dismissed the appeal dated 28.02.2025 The order was never served to the appellant neither through speed post nor in the email of the appellant. 15.05.2025 The Appellant came to his legal consultant and asked him that is there any order of CIT(A), only 15.05.2025. 02.06.2025 On 02.06.2025 the appeal was filed within the limitation period of 60 days prescribed under section 253(3) of the Act. Sufficient 1. Mental & physical illness of Appellant cause of 2. Non-service of impugned order; delay 3. Illiteracy of Appellant 4. Bonafide intention

……..

In view of the above facts and circumstances of the case it is therefore humbly prayed and requested: 1) Allow the present appeal on merits considering illness, unsound mind of the Appellant, unaware about the impugned order due to non-service of the impugned order to the Appellant Sufficient Cause; 2) Condone the unintentional, unplanned, spontaneous, and bonafide delay of 35 days to do substantial justice to the appellant/assessee; 3) Condone the unintentional, unplanned, spontaneous, and bonafide delay of 338 days in filing CIT(A) to do substantial justice to the appellant/assessee; 4) For such further and other reliefs, including costs of this Petition, as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case in the Interest of Justice and Equity.”

- 3654 & 3656/Del/2025 Naresh Kumar 2.2 Further, the assessee’s application for condonation of delay for filing the appeal before the Ld. CIT(A) for A.Y. 2021-22 and 2023-24 are reproduced as under:

For A.Y. 2021-22 “That the appellant aggrieved by the Assessment order u/s 143(1)(a) of the Income tax Act, 1961. The assessee is a proprietor of Veenus Engineering, the assessee had failed to file appeal before Hon'ble commissioner Income Tax (Appeals) within the time limit of 30 days as prescribed under section 249(3) of the Income Tax Act, 1961. In the present case, In the present case, intimation order u/s 143(1)(a) has been passed but he was unaware of the fact that the assessment has been completed long back on 17.12.2022. But the CPC DCIT Bengaluru had not served the intimation order to the assessee as per the income tax Act, 1961, but that time he was in unsound mind. That time assessee was not able to understand/consider the Intimation order passed against him, as he was also unaware of the fact that an assessee aggrieved by the order of Assessing officer can file an appeal before CIT(A). The Assessment order was passed on 17.12.2022, and appeal before CIT(A) is to be filed on or before 15.01.2023, However same was not filed within the time prescribed. That the assessee was suffering from hyperactivity, irritability, disturbed sleep, grandiosity, increased energy Kc/o HTN, F10, F17 (smoking), that the assessee was under the medical treatment since November 2019 to 15.09.2023 (medical consultancy certificate has been attached). His mental condition is stable now. It was hard on the part of the assessee, to deal with Income tax proceedings along with medical treatment. Further in the present case, when the mental condition of the assessee being in good state of mind, he came to know about such order when he open ITBA portal. Then he asked an accountant, who was not professionally qualified in relation to Income Tax litigation to check the status of the proceedings pending before Ld.AO. Thus, the assessee has consulted another senior tax consultant. Thus he informed about the assessment order passed about AY 2021-22, So the appeal was not filed before CIT(A) within the prescribed period. Due to above reason the assessee is not able to filed the appeal within the prescribed time limit, it is a sufficient reason for not filing the appeal within the prescribed time limit. Now, the assesse wants to file appeal before commissioner of Income Tax. The time limit of filing of appeal expired on 15.01.2023 u/s 249(2). However, same was not filed within the limitation period of 30 days i.e. on or before 15.01.2023. LIMITATION PERIOD FOR FILING APPEAL Appeal to be filed within Applicable due date 30 days from date of 15.01.2023 (prescribed under order (Date of order- section 249(2) of the Act, 17.12.2022) 1961) 6 - 3654 & 3656/Del/2025 Naresh Kumar as evident from table above, the time limit of filing of appeal expired on 15.01.2023 u/s 249(2), In view of the above facts the assessee has submit that the delay was unintentional, for bona fide reasons and due to the circumstances we, therefore pray that the delay in filing the appeal may be condoned beyond the control of the Appellant.” ……………

For A.Y. 2023-24

“That the appellant aggrieved by the Intimation order u/s 143(1) read with section 144B of the Income tax Act, 1961 failed to file appeal before Hon'ble Commissioner of Income Tax (Appeals) within the time limit of 30 days as prescribed by the Income Tax Act under section 249(2) of the Income Tax Act, 1961. In the present case, the Intimation order was issued on 26.02.2024, and appeal before Ld. CIT(A) is to be filed on or before 27.03.2024 However same was not filed within the time prescribed. LIMITATION PERIOD FOR FILING APPEAL Appeal to be filed within Applicable due date 30 days from date of order communicated 27.03.2020 the date is wrongly typed by the the assessee (Date of order-26.02.2024) assessee as the correct date is 27.03.2024 (prescribed section 253(3) of the Act, 1961)

The assessee had repeatedly troubled by the previous illness ie hyperactivity, irritability, disturbed sleep, grandiosity, increased energy Kc/o HTN, F10, F17 (smoking) (last medical certificate attached), In the previous month February and march 2024 assessee again suffering from abovesaid illness and assessee had no idea of intimation order passed for relevant period, this is sufficient cause for not presenting the appeal within the said period. Therefore, Due to the sufficient cause he had not provided the evident document to his income tax advisor upto 27.03.2024. The time limit of filing of appeal expired on 27.03.2024 u/s 253(3), and applying the extended period, the period of filing appeal expired on 27.03.2024. However same could not be filed within the limitation period of 30 days from 26.02.2024.”

- 3654 & 3656/Del/2025 Naresh Kumar 3. The Ld. AR referred to the condonation applications before us and before the Ld. CIT(A) and requested that in view of the facts stated in the aforesaid condonation applications the delay may kindly be condoned in filing the appeal before the Ld. CIT(A) and the Tribunal and submitted the appeal may be admitted and adjudicated on merits by the Tribunal.

4. The Ld. Sr. DR supported the respective orders of the Ld. CIT(A) in not condoning the delay and also submitted that the delay in filing both the appeals before the Tribunal should also not be condoned.

6. First, we take up ITA No.- 3654/Del/2025. (Assessment Year- 2021-22)

6.1 In this case as per the intimation u/s 143(1) of the Act, dated 17.12.2022, following two adjustments were made - 3654 & 3656/Del/2025 Naresh Kumar (i) Disallowance u/s 36(1)(va) -Rs. 68,67,768/- (ii) Amount of any liability of a contingent nature – Rs. 2,80,94,391/-

7. In this regard, the assessee has raised the following grounds of appeal in respect of disallowance.

“1. That the DCIT CPC Bengaluru erred in confirming/sustaining the addition made towards belated payment of Employee's contribution to PF&ESI of Rs. 68,67,768/- is wholly unsustainable both on facts and in law. Break-up of provident fund and ESI are given below:- Particualrs Amounts Provident Fund 65,14,524/- Any fund set up under the 3,53,244/- provisions of ESI Act, 1948 Total 68,67,768/-

5. That the DCIT CPC Bengaluru erred both in law and facts by disallowing the employee's contribution of EPF/ESI. Hence same is allowable deduction u/s. 37(1) as laid down by Hon'ble Supreme court (S.C) in the case of Travancore titamium product ltd. 1966 AIR 1250.

7. That there is no misuse of funds by the assessee. So, there was no breach of law as envisaged in memorandum explanation of the bill in which this option was incorporated in the Act.

- 3654 & 3656/Del/2025 Naresh Kumar 8. The Ld. AR submitted in respect of ground nos. 1,3,4,5 & 7 that no adjustment could be made u/s 143(1) of the Act in respect of disallowance u/s 36(1)(va) -Rs. 68,67,768/-, as it was beyond the scope of section 143(1)(a) of the Act.

8.1 The Sr. DR submitted that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. ltd. vs. CIT 143 taxmann.com 178

10. Further, in respect of ground no. 6, i.e. that the Central Processing Centre, Bengaluru erred in passing the intimation order without calculating the due dates of deposit as per prescribed law from the date of disbursement of salary as per the judgement of Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal), the Ld. AR submitted that this issue is squarely covered by the decision of the Co- ordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2020-21 in ITA No.- 3702/Del/2023 in assessee’s own case, Naresh Kumar vs. ITO, and submitted - 3654 & 3656/Del/2025 Naresh Kumar that the matter may be restored to the file of the AO to verify its claim that the due date of payment of employee’s contribution towards PF & ESI from the date on which salary and wages were actually disbursed among the employees and allow the relief accordingly. In this regard, the Ld. AR also filed a chart for A.Y. 2021-22 and claiming that out of the disallowance of Rs. 65,14,524/- towards employees contribution in ‘Employees Provident Fund’ and Rs. 3,53,244/-towards employees contribution in ‘ESI’ a sum of Rs. 38,45,162/- and Rs. 3, 52,883/- was allowable respectively, in view of the above order of the Tribunal.

10.1 Similar chart also filed for A.Y. 2023-24, claiming that out of the disallowance of Rs. 1,04,40,323/- towards employees contribution in ‘Employees Provident Fund’ and Rs. 8,60,813/-towards employees contribution in ‘ESI’ a sum of Rs. 1,03,90,873/- and Rs. 8,60,813/- was allowable respectively.

“ 1. This appeal is filed by the assessee against the order of Ld. Addl. /JCIT(A)-1, Pune, dated 16.10.2023 for the Assessment Year 2020-21. Naresh Kumar 2. Brief facts of the case are that assessee had filed the income tax return declaring net income of Rs.85,76,090/- on 04.11.2022. Thereafter, the Assessing Officer completed the assessment u/s. 143(1) of the Income-tax Act, 1961 (for short 'the Act') at a total income of Rs.1,80,97,300/- after making adjustments to total income. The intimation u/s. 143(1) of the Act was passed on 16.03.2023, by making the addition of Rs.95,21,210/- on account of delayed deposit of Employee contribution of PF & ESI.

3. Against the aforesaid action of the AO, assessee preferred the appeal before the Ld. CIT(A), who vide his impugned order dated 16.10.2023 has affirmed the action of the AO and dismissed the appeal of the assessee.

4. Aggrieved with the order of the Ld. CIT(A), assessee is in appeal before us on the following grounds:- 1) That the Authorities below erred in confirming /sustaining the addition made towards belated payment of employees' contribution to PF & ESI of Rs. 1,11,94,917/-is wholly unsustainable both on facts and in law. Break up of provident fund and ESI are given below:

Particulars Amounts Provident Fund Rs. 96,43,823/-and Fund set up under the provisions of ESI Act, of RS. 1,94,85,48,552/-Total Rs. 1,11,94,917/-.

2) Since no additions u/s. 36(1)(va) could be done, as per the mandate of u/s. 143(1)(a) thus there was no adherence of relevant section and therefore, it is clear cut case of mistake of law and thus it is mistake apparent from record u/s. 54.

3) That the authorities below failed to appreciate the fact that no addition by way of adjustment while processing /intimation the return of income u/s. 143(1)(a) towards the delayed deposit of the employees contribution towards ESI and PF [though deposited within the due date of filing of return u/s. 139(1) can be made. It would not fall clause (iv) of section 143(1) and that the jurisdiction of HC & SC was in favour of assessee at the time of processing under that section. Thus, it was debatable issue at the time of processing of return.

4) That the authorities below erred both in law and facts by disallowing the employee's contribution of EPF/ESI. Hence, same is allowable deduction u/s. 37(1) as laid down by Hon'ble Supreme Court in the Travancore titamium product ltd. 1966 AIR 1250. case of 3654 & 3656/Del/2025 Naresh Kumar 5) there in That there is no misuse of funds by the assessee. So. was no breach of law as envisaged memorandum explanation of the bill in which this option was incorporated in the Act.

6) That the authorities below erred in confirming /sustaining the addition made of Rs. 10,02,542/- (EPF) on account of delayed deposition of Employer's /Employee contribution of PF and ESI after the date specified u/s. 43B of the Act. It is wrongly disallowed by CPC u/s. 143(1)(a), because it doesn't fall under the jurisdiction of section 143(1). It is wholly unsustainable both on facts and in law. ……………….xxx……………..

5. The primary issue involved in this appeal is that the Id. Addl./JCIT(A) has erred in upholding the disallowances of expenditure of Rs.95,21,210/- made by the Assessing Officer representing delay in remittance of Employee's Contribution towards ESIC and Provident Fund invoking provisions of section 36(1)(va) of the Income-tax Act, 1961.

6. At the time of hearing, ld. counsel for the assessee submitted that the issue involved is relating to confirmation of adjustment of Rs.95,21,210/-u/s.36(1)(va) r.w.s 2(24)(x) on account of delayed deposit of employees contribution to PF and ESI made in the intimation u/s.143(1), without appreciating the fact that employees contribution to PF and ESI are recovered from the employees on disbursement of salary and wages Accordingly, due date for deposit of employees contribution to PF and ESI i.e. within 15 days of the following month during which salary and wages was actually disbursed among the employees, thus he submitted that employees contribution to PF and ESI was actually deposited on or before 15th of the following month in which salary and wages actually disbursed. In order to support this contention, reliance is placed on the decision of the Coordinate Bench of the Tribunal in the case of Bensons Movers Pvt. Ltd. vs. ACIT dated 17.11.2023 passed in for assessment year 2019-20. The Ld. Counsel for the assessee submitted that in view of the aforesaid decision, the matter may be restored to the file of AO to ascertain the due date for remittance of the PF/ESI contributions of employees in the present case.

- 3654 & 3656/Del/2025 Naresh Kumar

9. Coming to alternative plea of the assessee. Considered the rival submissions and this plea was considered by the coordinate Bench in the case of Benson Movers Pvt. Ltd. (supra) and the relevant decision of the coordinate Bench is as under :-

"5. In so far as employees contributions towards PF & ESI it is noticed that the issue as to whether the due date under PF/ESI Acts should be as per the calendar month for which the salary is payable or from the month in which the salary is paid to the employee by the employer came up for adjudication in the case of Sentinel Consultants Pvt. Ltd. Vs. ACIT (supra) and the Tribunal restored the issue to the file of the AO with the following observations:-

"9 We have carefully considered the rival submissions and perused the material available on record. The disallowance of employees' contribution to PF/ESIC for breach of condition under Section 36(1)(va) is in controversy.

9.1 We notice at the outset that an opportunity was given via electronic platform of the deptt. For the proposed adjustments and in the absence of e-response, the adjustments were carried out the CPC-Bangluru and intimation was issued enhancing the assessed income in the captioned assessment years. The CIT(A) in the first appeal has sustained the adjustments towards belated deposits of employees' contribution to PF/ESIC in the light of the judgment rendered by the Hon'ble Supreme Court in Checkmate Pvt. Ltd. vs. CIT (2022) 143 taxmann.com 178 (SC). The contention of the Assessee that such additions cannot be made under the umbrella of S. 143(1) is covered against the assessee the decision of the co- ordinate bench in the case of Weather Comfort Engineers Private Limited vs. ACIT-CPC order dated 15/02/2023. The action of CPC and CIT(A) thus cannot be faulted where some opportunity was admittedly given for e-response.

9.2 We now turn to alternate plea on behalf of the assessee for grant of deduction under general provisions for deduction of expenditure under 3654 & 3656/Del/2025 Naresh Kumar S. 37 of the Act. We do not see any merit in such plea that the belated deposit of employees contributions to PF/ESIC governed under Section 36(1)(va) is also simultaneously amenable to deduction under Section 37(1) of the Act. In terms of the provision, Section 37(1) permits deduction of expenditure which is not in the nature of expenditure prescribed in Sections 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduction of expenditure under the general clause of Section 37(1) would not extend to expenditure specially covered within the ambit of Section 36(1)(va) of the Act. The Hon'ble Supreme Court in the case of Checkmate Pvt. Ltd. (supra) itself explains this position in Para 32 of the Judgment. Such view also draws support from the observations made in recent judgment of the Hon'ble Supreme Court in the case of Pr.CIT vs. Khyati Realtors (P) Ltd. (2022) 141 taxmann.com 461 (SC). The alternate plea is thus without any merit.

9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co-ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal). This aspect has not been found to be examined by the Assessing Officer or CIT (A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall be open to the assessee to place factual matrix before the AO and take such plea for evaluation of the AO. The AO shall examine this aspect and fresh order in accordance with law after giving proper opportunity."

6. We find similar view has been taken by the co-ordinate benches in the cases of B. L. Kashyap & Sons Ltd. (supra) and VVDN Technologies Pvt. Ltd. (supra). The ld. Counsel submits that in view of these decisions the matter may be restored to the Assessing Officer to ascertain the due date for remittance of the PF/ESI contributions of employees. Considering the decisions of the coordinate benches referred to above we restore this issue to 3654 & 3656/Del/2025 Naresh Kumar the file of the Assessing Officer to decide in the light of the observations made by the Tribunal in the case of Kanoi Paper & Industries Ltd. Vs. ACIT (supra). Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee and the assessee is at liberty to provide all the necessary information in support of its contention."

12.1 Respectfully following the above order of the Tribunal in assessee’s own case, we remit the issue back to the file of the AO to consider the alternative plea of the assessee as raised in ground no. 6 of the appeal as per law after giving proper opportunity of being heard to the assessee. Accordingly, ground no. 6 is allowed for statistical purposes.

“ 2. That the Amount Rs. 2,80,94,391/- has wrongly made by DCIT CPC BENGALURU as being a liability of Contingent Nature. That the amount so mentioned in Form 3CD under clause 21(g) as "any liability of a contingent nature" is on account of liability that may arise due to pending litigation as the case of assessee is pending with Income tax department and service tax department. The amount reported under clause 21(g) was not passed through Statement of Profit & Loss and no expense has been booked in respect to such liability. This is mistakenly shown by assessee while filing of Form 3CD under the clause 21 amounts debited to profit & loss of contingent nature. Therefore, same should not be disallowed while processing return of income as it a mistake made while filing of Form 3CD was bad in both law and facts of the case.” 16 - 3654 & 3656/Del/2025 Naresh Kumar 13.1 The Ld. AR submitted that the appeal of the assessee was dismissed by the Ld. CIT(A) in limine by not condoning the delay and was not admitted for adjudication and requested that the matter may be restored to the file of the Ld. CIT(A) for adjudicating the matter.

“8. That the DCIT CPC Bengaluru erred in both law and facts by chargeability of interest under section 234A and 234B of the Act are bad in law. The DCIT CPC Bengaluru is directed to alter, modify OR DLEETE the same in accordance with law.”

16.1 This ground is consequential in nature and the AO will levy interest as per law.

- 3654 & 3656/Del/2025 Naresh Kumar “9. The order passed by the below authority without considering the reasons assigned for condoning the delay is also erroneous illegal and against the principals of Natural Justice and Equity and the well settled laws of the land. Thus, the department has not demonstrated that there was misuse of funds in disallowed the same. .” 17.1 No specific submission was made in respect of this ground. Hence, this ground of appeal is dismissed.

ITA No.- 3656/Del/2025 (A.Y. 2023-24)

“8. That the DCIT CPC Bengaluru erred in both law and facts by chargeability of interest under section 234A and 234B of the Act are bad in law. The DCIT CPC Bengaluru is directed to alter, modify OR DLEETE the same in accordance with law.”

- 3654 & 3656/Del/2025 Naresh Kumar 20.1 This ground is consequential in nature and the AO will levy interest as per law.

Order pronounced in the open court on 30th December, 2025.