ANANTHANARAYANAN RAVI,TIRUVALLUR vs. DCIT, NON CORP. CIRCLE-4(1), CHENNAI

आयकर अपीलीय अिधकरण, ’ बी’ �ायपीठ, चे�ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी एबी टी. वक�, �ाियक सद� एवं �ी एस. आर. रघुनाथा, लेखा सद� के सम� BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No. 865/Chny/2026 �नधा�रण वष�/Assessment Year: 2020-21

v. Ananthanarayanan Ravi DCIT 1506, Gulmohar, Alliance Orchid Non-Corp, Circle 4(1), Chennai Springs, 54, Water Canal Road, Korattur, Tiruvallur- 600076 [PAN: AARPR 2992 K] (अपीलाथ�/Appellant) (��यथ�/Respondent/Revenue) : अपीलाथ� की ओर से/ Appellant by Mr. T. Vasudevan, Advocate : ��थ� की ओर से /Respondent/Revenue by Ms. Gouthami Manivasagam, Addl. : सुनवाईक�तार�ख/Date of Hearing 03.06.2026 : घोषणाक�तार�ख /Date of Pronouncement 09.07.2026 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/Delhi, (hereinafter referred to as ‘Ld.CIT(A)’), Delhi, dated 22.06.2022 for the Assessment Year (hereinafter referred to as ‘AY’) 2020-21 against the confirmation of intimation by CPC u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 15.12.2021.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 2 :: 2. There is a delay of 1265 days in filing of this appeal before this Tribunal. Explaining the delay, supported by an affidavit filed by the assessee along with application for condoning the delay, it is noted assessee is a retired employee of ONGC aged 67 years, had bonafidely claimed the exemption of leave-encashment received to the tune of Rs.30,63,662/-, which was denied by the CPC and on appeal was dismissed by the Ld.CIT(A) by passing the impugned order dated 22.06.2022. At that point of time there was no judicial precedents in favour of the assessee and hence, assessee based on the advice given to him at that particular point of time did not challenge the impugned order within the statutory time limit prescribed by the statute. However, since there was subsequent development and judicial decisions had come to the aid of assessee, and by taking notice of the Notification No.31/2023 dated 24.05.2023 of CBDT, the assessee has preferred this appeal with delay praying for condoning the same.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 3 :: Krishnamurthy (7 SCC 123), Improvement Trust, Ludhiana v. Ujagar Singh (6 SCC 786) and the Hon’ble Jurisdictional High Court of Madras in CIT v. K.S.P. Shanmugavel Nadar (153 CTR 81), we find that the explanation offered by the assessee in filing the delay constituted “sufficient cause for condoning the delay” and the Revenue could not place any material on record to indicate that the delay was deliberate or acted by mala fide intention. It is trite that quasi-judicial authorities are expected to adopt a justice-oriented approach. Denial of adjudication on merits in fiscal matters, which carry civil consequences, should be confined to cases of gross negligence or deliberate inaction. In the case on hand, the explanation tendered by the assessee, viewed in the totality of facts and surrounding circumstances, cannot be said to be either mala fide or lacking in bona fides. On the contrary, it constitutes sufficient cause warranting condonation. Respectfully following the ratio laid down by the Hon'ble Supreme Court and the Hon'ble Jurisdictional High Court, as referred to above, we hold that the delay of 1265, in filing the present deserves to be condoned as the assessee has demonstrated sufficient and reasonable cause for not presenting the appeal within the statutory period prescribed under law and the appeal is admitted for adjudication on merits.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 4 :: u/s.10(10AA)(ii) of the Act, up to Rs.25,00,000/- in par with the government employees, instead of restricting it at Rs.3,00,000/- for A.Y.2020-21.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 5 :: submission of the assessee, the CIT(A). dismissed the appeal filed by the assessee by confirming the order of the CPC, Bengaluru by passing an order dated 22.06.2022 by holding as under:

I have carefully considered the grounds of appeal, assessment order and submission of the appellant. At the outset, I would like to point out that the provisions of act are to be read from the Income Tax Act, 1961 along with the rules framed by CBDT in this regard and not anywhere else. The action of CPC is in accordance with IT Act. Since the appellant is not an employee of central/state government, limit of Rs 3,00,000/- applies to him in respect of exemption under section 10(10AA) as per CBDT notification Notification No. 123/2002(F. No.200/23/98-ITA-I)J issued on 31.05.2002 which read as under: "S.O.588 (E). In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income Tax Act, 1961 (43 of 1961), the Central Government, having regards to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of rupees 3,00,000 (Rupees three lakhs only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise after the 1st day of April, 1998." I am bound to follow the same unless it is rectified by CBDT or otherwise. Accordingly, the grounds of appeal filed by the appellant are dismissed. 6. Aggrieved by the aforesaid action of the Ld.CIT(A), assessee has preferred this appeal before this Tribunal.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 6 :: Tax, Non-Corp Circle-4 (1), Chennai, in ITA No.96/Chny/2026 and this Tribunal by order dated 4.05.2026 was pleased to allow the same by holding as under :-

- Ram Charan Gupta v.ITO (Jaipur Tribunal) - ITA 408/JPR/2022 dated 27.06.2023 for the Α.Υ. 2020-21. - Ram Dev Daiya VITO (Jaipur Tribunal) - ITA 1280/JPR/2025 dated 01.01.2026 for the Ay 2020-21. 19. In view of the above arguments the Id.AR prayed for setting aside the order of the Id.CIT(A) by allowing the claim of the exemption claimed by the assessee u/s. 10(10AA)(ii) of the Act to the tune of Rs. 19,05,997/- 20. Per contra, the id.DR submitted that the assessee's claim for the A.Y.2020-21 cannot be considered as the notification for enhancement of deduction u/s. 10(10AA)(ii) of the Act from Rs. 3.00 lakhs to Rs. 25.00

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 7 :: Lakhs for non-governmental employees has been increased only from 01.04.2023 and hence there is no error in the order of the id. CIT(A) and hence, prayed for confirming the order of the Id.CIT(A) by dismissing the appeal of the assessee. 21. We have carefully considered the rival submissions perused the material available on record, including the orders of the lower authorities along with the judicial precedents relied on. The solitary. issue that arises for our consideration in the present appeal is whether the assessee is entitled to exemption u/s. 10(10AA)(ii) of the Act, in respect of leave encashment received on retirement, to the extent of Rs. 25,00,000/-, as claimed, or whether such exemption is to be restricted to Rs. 3,00,000/-as per the provisions applicable for the assessment year under consideration. 22. It is an undisputed fact borne out from the records that the assessee, a retired employee of ONGC, received a sum of Rs. 19,05,997/- towards leave encashment upon superannuation during the financial year relevant to the assessment year 2020-21. The assessee claimed exemption of the entire amount u/s. 10(10AA)(ii) of the Act. However, the CPC, while processing the return u/s. 143(1) of the Act, restricted the exemption to Rs. 3,00,000/- in accordance with the then prevailing notification, and brought the balance amount to tax. The said action has been confirmed by the Id.CIT(A). 23. The contention of the Id.AR is that the subsequent enhancement of the exemption limit to Rs. 25,00,000/- vide CBDT Notification No.31/2023 dated 24.05.2023, being beneficial in nature, ought to be applied retrospectively, particularly in view of the legislative intent to remove disparity between government and non-government employees. It has further been argued that such amendment is curative and intended to mitigate hardship, and therefore deserves to be applied to pending matters. Reliance has also been placed on certain decisions of coordinate benches of the Tribunal wherein a liberal interpretation has been adopted in favour of the assessee. 24. Upon careful consideration of the statutory framework, we find that Section 10(10AA)(ii) provides exemption to non-government employees in respect of leave encashment, subject to a monetary ceiling as notified by the Central Government. The enhancement of such ceiling from Rs. 3,00,000/-to Rs. 25,00,000/- vide Notification No.31/2023 is a significant upward revision after nearly two decades and is clearly aimed at aligning the benefit available to non-government employees with that available to government employees, thereby removing an evident disparity. 25. In our considered view, the said enhancement is not in the nature of introducing a new exemption but is a measure to rationalize and update an existing provision to reflect present economic realities. The object of the amendment, as discernible from the notification and surrounding circumstances, is to mitigate hardship and ensure parity. It is a settled principle that provisions which are beneficial in nature and intended to remove hardship are to be construed liberally and, in appropriate cases,

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 8 :: applied retrospectively, particularly where no vested right of the Revenue is adversely affected. 26. We further note that the explanatory intent behind such enhancement makes it clear that the amendment is remedial in nature. The absence of an express retrospective clause, in such circumstances, cannot be determinative, especially when the amendment merely enlarges the scope of existing benefit. The Hon'ble Courts have consistently held that beneficial and curative amendments deserve to be applied to pending proceedings so as to advance the cause of justice. 27. We also find considerable force in the contention of the assessee that denial of enhanced exemption results in an unjust and artificial distinction between similarly placed employees retiring before and after the date of notification, which would defeat the very purpose of the amendment Such an interpretation, in our view, would be contrary to the principles of equity and fairness embedded in tax jurisprudence. 28. Further, the coordinate benches of the Tribunal in various decisions, as relied upon by the id AR. have taken a consistent view that the enhanced limit under Notification No.31/2023, being beneficial, should be applied in a liberal manner. Our above view, is supported by the decision of the Jaipur Tribunal in the case of Ram Dev Daiya (supra), wherein the Tribunal has allowed the enhanced deduction of leave encashment in the similar set of facts, by holding as under: 21. Taking up now the appeal of the assessee, the grounds raised by the assessee read as under- "Leave Encashment Fully Exempted 1. Any payment received by an employee of the Central Govt. OR a State Govt. as the cash equivalent of the leave salary in respect of the period of Earned Leave at his credit at the time of his retirement (whether) on superannuation OR otherwise. 12 ITA No. 1280/JPR/2025 Ram Dev Daiya 2. Any such payment (as given in para (i) above) received by an employee of her than employee Central OR State Govt in respect of so much of period of EL as does not exceed 10 months calculated on the basis of the average salary drawn by the employee during the period of 10 months immediately preceding his retirement. (Section 10(10AA) of the I-T Act, 1961. 22. As noted above, the issue related to denial of exemption under Section 10(10AA) amounting to Rs. 13,12,806/-, The assessee is a salaried individual who had returned leave encashment salary received on retirement amounting to Rs. 13,12,806/- and claimed exemption of the same u/s 10(10AA) of the Act. The same was however restricted to Rs. 3 lacs while processing the return of income of the assessee by the CPC in terms of the provisions of Section 10(10AA) of the Act.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 9 :: 23. I have noted above the contention of the Ld. Counsel for the assessee before me of various Co-ordinate Bench decisions of the ITAT, in as much as 22 cases, holding that the limit of exemption of leave encashment as per Section 10(10AA) of the Act applicable for the impugned year would be Rs. 25 lacs. The Ld. Counsel for the assessee submitted the list of the said decisions vide submission dated 25-11-2025 as under: - S Name of the Name of Asst. ITAT Bench Date of Appellant and ITA the r Year order No. Employer N o . 1. Mr.Ram Charan Bank 2020-21 Jaipur 27.06.2023 Gupta ITA employee No.408/JPR/2022 2. Mr.Satish Kumar Electricity 2018-19 Chandigarh 12.09.2023 Thakur ITA Board Himachal No.211/CHD/2023 Pradesh 3. Mr.Mangala BSNL 2018-19 Jaipur 04.10.2023 Ra m Nimbark ITA No.542/JPR/2023 4. Mr.Govind Chatwani Electricity 2020-21 Jaipur 31.10.2023 ITA Board No.385/JPR/2023 Rajastha n 5. Mr.Devendra Kumar Ajmer 2020-21 Jaipur 18.02.2025 gupta MA Vidyut Vitaran No.49/JPR/2023 (Arising out of ITA Nigam No.17/JPR/2023) Ltd. Rajastha n 6. Mr.Dashrath Kumar BSNL 2020-21 Jaipur 05.03.2025 Sen ITA No.1258/JPR/2024 7. Mr.Devi State 2020-21 Jaipur 13.03.2025 Dut Bank of t India Agrawal ITA No.1375/JPR/2024 8. Mr.Suman Oil 2020-21 Ahmedabad 18.03.2025 Ku an mar Jha d Natural ITA Gas No.1179/AHD/2024 commissi on Ltd. 9. Mr.Dinesh 2021-22 Jaipur 07.04.2025 Kumar Medical Mittal ITA No.1570/ Departme JPR/2024 nt Rajastha

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 10 :: n

10 Mr.Sham Sunder Canara 2021-22 Delhi 21.04.2025 . Sahani ITA No.129/ Bank DEL/2025 11 Mrs.Neelam Gupta Bank of 2020-21 Delhi 21.04.2025 . ITA No.081/Del/25 Baroda

12 Mr.Sharad Shukla 2020-21 Agra 22.04.2025 . ITA No.108/AGR/24

13 Mr.Vijay Kumar Jain State 2019-20 Agra 18.06.2025 . ITA No.175/AGR/22 Bank of India 14 Mr.Anil Kumar Khatri State 2020-21 Agra 18.06.2025 . ITA No.187/AGR/22 Bank of India 15 Mr.Goverdhan Punjab 2020-21 Ahmedabad 28.07.2025 . National Bhambhani ITA No.289/AHD/25 Bank 16 Mrs.Sujata Gupta State 2022-23 Jaipur 31.07.2025 . ITA No.915/JPR/25 Bank of Bi kaner & Jaipur 17 Mr.Om Life 2022-23 Jaipur 06.08.2025 . Pra Insurance kash Khandelwal Corporati ITA No.887/JPR/25 on of India 18 Punjab & 2021-22 Delhi 28.08.2025 Mr.Ashok Arora . ITA No.2942/DEL/25 Sind Bank 19 Mr.Chandra Prakash State 2021-22 Jaipur 07.10.2025 . Vashishtha Bank of ITANo.1139/JPR/25 India 20 Mr.Rajiv Canara 2020-21 Delhi 29.10.2025 . Ku Bank mar Wadhwa ITA No.5897/DEL/25 21 Mr.Vijay Pal Gupta Canara 2021-22 Delhi 29.10.2025 Bank ITA No.5915/DEL/25

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 11 :: 22 Mr.Sudhakar State 2020-21 Pune 31.10.2025 . G.Paldewar ITA Bank of No.1781/PUN/25 India 21.Ld. DR fairly agreed that the issue was covered in favour of the assessee as pointed out by the Ld. Counsel before me. He was unable to bring to my notice any contrary decision of the ITAT in this regard, nor was he able to bring to my notice any decision of a higher judicial authority holding to the contrary. In 14 ITA No. 1280/JPR/2025 Ram Dev Daiya view of the above I hold that the disallowance of exemption claimed by the assessee of leave encashment received under Section 10(10AA) of the Act amounting to Rs. 13,12,806/- be deleted. 2. Similarly in the case of Govardhan Deepchand Bhambhani v.ITO (Ahmedabad Tribunal) – ITA 289/Ahd/2025 dated 28.07.2025 for A.Y. 2020-21, the Tribunal has held as under: “4. Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: 1. That assessee retired from service of Punjab National Bank during the year and received leave encashment of Rs.765404/- claimed exemption of such leave encashment amount of Rs.765404 u/sec. 10 (10AA) of Income Tax Act, 1961. Thus the Ld CIT(A) has wrongly disallowed the same. 2. That in view of CBDT notification number 31/2023 dated 24/05/2023 even non-government employees are entitled u/sec. 10(10AA)(ii) of Income Tax Act, 1961 exemption upto Rs.25.00 Lakhs maximum (Retrospectively).

(1) Assessee retired from services of M/s Punjab National Bank in F.Y. 2019-20.

(2) Received Rs.7,65,404/- as "Leave Encashment" benefit in terms of sec 10(10AA) of Act. (3) Return of Income was filed on 25.12.20 claiming whole of such amount of Leave Encashment of Rs.7,65,404/-u/sec 10(10AA) of Act. (4) While processing the return u/sec 143(1)(a) of Act dated 08.12.2021 the amount of such leave encashment of Rs.7,65,404/-was restricted to Rs. 3,00,000/- U/sec 10(10AA) & has Disallowed/Added A sum of Rs.4,65,404 (Rs. 7,65,404/- Amount Actual Received - Rs.3,00,000/-Maximum Amount Allowed u/sec 10(10AA) considering not in category of Central State Govt. Employee U/sec 10(10AA) (i) of Act.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 12 :: (5) No care for Board notification No. 31/2023/ F. No. 200/-/2023- ITA-1 dated 24.05.2023

(Effective retrospectively) made where limit for Non-Govt. Employees (others than Central/State) have been raised to Ras.25,00,000/-(Maximum) u/sec 10(10AA) (ii) of Act: The CIT(A) considering at this notification is not with retrospective effect but w.e.f 01.04.2023 &n since Appellate has already retired in F.Y. 2019-20, hence the claim of assessee for Rs.7,65,404/- u/sec. 10(10AA) is tenable and has restricted to Rs.3,00,000/-. ………………

"S.O. 2276(E).-In exercise of the powers conferred by sub-cıause (ii) of clause (1044) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of Rs.25,00,000 (twenty-five lakhs rupees only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise.

Thus sec 10(10AA) (i) & (ii) both are at par (with RETROSPECTIVE effect & even the private employee on retirement are entitled for such higher limit of Rs. 25,00,000/-or actual amount received whichever is less; to claim u/sec 10 (10AA) of Act.

It is requested to kindly consider & grant relief. Under similar circumstances number of decisions already granted by Jaipur Bench; details as below:- (1) Govind Chatwani, Appeal No. ITA No. 385/JP/2023 dated 31.10.2023 copy as enclosed (Page 2108)

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 13 :: (2) Devendra kumar Gupta M.A. No. 49/JP/2023 dated 18.02.2025 copy as enclosed."

"8. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee relying the decision of Hon'ble Delhi High Court has issued a notice to the Union of India in the case of Kamal Kumar Kalia & Ors. Vs. Union of India & Ors in WP(C) 11846/2019 dated 08.11.2019 wherein the court has given following directions :-

"8. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10(10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect.

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 14 :: stood at Rs.25,00,000 as specified vide notification no 31/2023 issued by the ministry of finance. Since the leave encashment amount as claimed by the assessee is amount to Rs.6,97,100/- which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said Rs.6,97,100/-. Based on these observations the Id. AO is directed to allow the claim of the assessee u/s. 10(10AA) of the act within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed."

On being consistent to the said finding, we held that the assessee is entitled to get the deduction as claimed in the return of income u/s 10(10AA) of the Act as the limit has been increased from 3 lac to 25 lacs.

The Ld.DR could not point out any change in facts or law 8. and since the facts are similar, we hold that the assessee is entitled to the benefit of enhanced exemption limit of Rs.25,00,000/- u/s.10(10AA)(ii) of the Act in respect of leave encashment received on retirement. The assessee is noted to have been paid total leave encashment of Rs.30,63,662/-, out of which he claimed exemption of Rs.25,00,000/- u/s.10(10AA)(ii) of the Act, which was restricted to Rs 3 lakhs. Accordingly, the action of the CPC restricting the

ITA No.865/Chny/2026 (AY 2020-21) Ananthanarayanan Ravi :: 15 :: exemption to Rs.3,00,000/- and the confirmation thereof by the Ld.CIT(A) are set aside. The AO is directed to allow the exemption as claimed by the assessee at Rs 25 Lakhs instead of Rs 3 lakhs. Assessee succeeds.

Order pronounced on the 09th day of July, 2026, in Chennai. Sd/- Sd/- (एबी टी. वक�) (एस. आर. रघुनाथा) (ABY T. VARKEY) (S.R.RAGHUNATHA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 09th July, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF YASHVI Digitally signed by YASHVIR R SINGH Date: 2026.07.20 SINGH 16:17:47 +05'30'