In the system settings the place (systemsettings -> workspace appearance -> desktop theme) where we can change the desktop (or plasma) theme, there is an option to install new themes over the web using "Get new themes", but there is no option to install theme from the file. This option was present earlier.

This is a bit of problem because sometimes the Internet connection is not available and I may want to install theme from some other source.

You can copy the theme to ~/.kde/share/apps/desktoptheme/.
They usually come as archive so just extract them there in a directory named after the theme.

Sounds like a regression to me, or it might have been intentionally removed. Any way I would file a bug report at https://bugs.kde.org/ if it hasn't been filed before.

You can use the command line tool "plasmapkg" to install appropriately formatted zip files containing either Plasma themes or applets as a further workaround which is safer.

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plasmapkg -i /path/to/plasma/theme.zip