ITAT Rajkot Allows Condonation of 1,987-Day Delay and Restores Appeal for Fresh Hearing

The Income Tax Appellate Tribunal, Rajkot Bench, in the case of Saurabh Rajnikant Shah Vs ITO, has delivered an important ruling on condonation of substantial delay in filing appeals and on adherence to the principles of natural justice in appellate proceedings.

The matter related to Assessment Year 2019-20 and arose from an intimation passed under Section 143(1) of the Income Tax Act 1961 by the CPC, which was later challenged before the Commissioner of Income Tax (Appeals) and eventually before the Tribunal. The assessee faced two layers of delay:

  • Delay in filing the appeal before the Tribunal (71 days), and
  • A very large delay in filing the first appeal before the Commissioner (Appeals) (Ld. CIT(A)), quantified at 1,987 days.

The Tribunal examined the reasons placed on record, particularly the impact of the COVID-19 period, non-deposit of TDS by the employer, and incorrect or incomplete legal guidance received by the assessee, and ultimately exercised its discretion to condone both delays. The ex parte and non-speaking order passed by Ld. CIT(A) was set aside and the matter remanded for fresh adjudication.

Background and Procedural History

Origin of the Dispute

The assessment for Assessment Year 2019-20 was completed by way of an intimation under Section 143(1) dated 16.11.2019 issued by the CPC. The dispute centred around TDS which, according to the assessee, was duly deducted and reflected in Form 16 but was not deposited by the employer to the credit of the Central Government. Consequently, credit of such TDS was not allowed in the intimation.

The assessee, believing that the employer would eventually deposit the TDS and that the problem would automatically stand resolved, did not immediately resort to the appellate remedy.

Appeal Before CIT(A) and Limitation

The assessee received the Section 143(1) intimation on 16.11.2019. Under the Act, the appeal before Ld. CIT(A) could have been lodged by 15.12.2019. However, the appeal was actually filed on 23.05.2025, resulting in a delay of 1,984/1,987 days (as recorded in the proceedings).

An affidavit was filed explaining this delay. The assessee relied heavily on:

  • The Supreme Court orders in Court on Its Own Motion Civil Application No. 3 of 2020, which directed that the period from 15.03.2020 to 30.05.2022 be excluded for limitation purposes on account of the COVID-19 pandemic; and
  • The fact that the assessee had been continuously following up with the employer and relying on communications from the employer and advice of tax and legal professionals.

After excluding the COVID-19 period as per the Supreme Court directions, the effective balance delay came down to 1,087 days.

Appeal Before ITAT and Limitation

The order of Ld. CIT(A) under Section 250 was dated 29.09.2025, and the ensuing appeal to the ITAT was itself delayed by 71 days. The assessee submitted a separate application for condonation of this delay together with an affidavit explaining mitigating circumstances. The Tribunal, after perusing the affidavit, found adequate cause and condoned the 71-day delay at the threshold.

Assessee’s Explanation for Delay Before CIT(A)

COVID-19 Period and Exclusion of Limitation

Relying on the Supreme Court’s suo motu orders passed during the pandemic, the assessee asserted that the period from 15.03.2020 to 30.05.2022 could not be counted for limitation purposes. Consequently:

  • Original last date for filing appeal: 15.12.2019
  • Appeal actually filed: 23.05.2025
  • Gross delay: 1,984/1,987 days
  • Delay after excluding COVID-19 block: 1,087 days

The assessee emphasised that the critical period when the delay first started coincided with the beginning of the pandemic, which severely affected normal functioning, access to advisers and understanding of appellate formalities.

Non-Deposit of TDS and Employer’s Assurances

The core factual explanation for the delay revolved around the TDS credit issue: