ARUN GOKALDAS BHANKHAR,AHMEDABAD vs. INCOME TAX OFFICER,WARD 7(2)(1), AHMEDABAD

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ITA 677/AHD/2026Status: DisposedITAT Ahmedabad09 July 2026AY 2021-226 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay, holding that bona fide ignorance of legal provisions constitutes sufficient cause. The Tribunal allowed the exemption under Section 10(10B), following its own prior decisions on identical facts.

What were the facts?

The assessee received ex-gratia compensation under a BSNL VRS scheme and inadvertently offered it to tax due to a misunderstanding of Section 10(10B). The CIT(A) dismissed the appeal primarily on grounds of delay and the inability to entertain a fresh claim at the appellate stage.

What were the issues?

Whether the delay in filing the appeal can be condoned due to bona fide ignorance of law, and whether a claim for exemption not made in the original return can be entertained at the appellate stage.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 249(3),Section 250,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE- & SHRI RAHUL CHAUDHARY

For Appellant: Shri Vivek Pandya, AR
For Respondent: Smt. Mamta Singh, Sr. DR
Hearing: 23.06.2026Pronounced: 09.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT & SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA Nos.676-677/Ahd/2026 (Assessment Years: 2020-21 & 2021-22) Arun Gokaldas Bhankar, Income Tax Officer, Vs. I-205, Akshardham Appartment, Ward-7(2)(1), Judges Bunglow Road, Ahmedabad. Bodakdev, Ahmedabad-380054.

[PAN :ACHPB3159 N] (Appellant) .. (Respondent) Appellant by : Shri Vivek Pandya, AR Respondent by: Smt. Mamta Singh, Sr. DR Date of Hearing 23.06.2026 Date of Pronouncement 09.07.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

The captioned two appeals have been filed by the Assessee against the orders passed by the learned Addl/Jt. Commissioner of Income Tax (Appeals)-5, Chennai vide orders dated 19.02.2026 & 18.02.2026 for the Assessment Years 2020-21 and 2021-22. Since the issues involved in both the appeals are common and identical, we extract the grounds of appeal raised in ITA No.676/Ahd/2026 for Assessment Year 2020-21 for the purpose of adjudication. The decision rendered in the said appeal shall apply mutatis mutandis to the other appeal bearing ITA No. 677/Ahd/2026 for Assessment Year 2021-22.

ITA Nos.676-677/Ahd/2026 Asst. Years : 2020-21 & 2021-22 - 2–

ITA No.676/Ahd/2026 for Assessment Year 2020-21 2. The Assessee has taken the following ground of appeal:-

1.

The learned CIT(A) has erred both in law and on facts in declining to condone the delay in filing the appeal, without properly appreciating that the delay arose solely due to the appellant's bona fide ignorance of the correct legal position regarding the availability of exemption under section 10(10B) of the Income-tax Act, 1961 and lack of professional guidance at the relevant time. The circumstances leading to the delay clearly constitute "sufficient cause" within the meaning of section 249(3) of the Act. "It is respectfully submitted that the expression "sufficient cause" used in section 249(3) of the Income-tax Act, 1961 is not defined under the Act and is therefore to be interpreted in a liberal and justice-oriented manner. The provision confers discretionary power upon the learned CIT(A) to admit an appeal if he is satisfied that the appellant was prevented by reasonable and bona fide circumstances from filing the appeal within the prescribed time. It is well settled that "sufficient cause" should receive a liberal construction so as to advance substantial justice rather than defeat it on technical grounds". 2. The learned CIT(A) failed to apply the well-settled principles laid down by the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy, wherein it has been consistently held that substantial justice should prevail over technical considerations, that a liberal approach must be adopted while considering condonation of delay, and that the length of delay is not decisive so long as the explanation offered is bona fide and reasonable. 3. The learned CIT(A) has erred in concluding that the appellant was raising a "new claim" and therefore not entitled to relief, without appreciating that appellate authorities are vested with wide and plenary powers to examine all questions of fact and law arising from the assessment proceedings. It is a settled position that legitimate relief cannot be denied merely because the claim was not made in the original return of income. CBDT Circular No. 14 (XL-35) of 1955 itself casts a duty upon tax authorities to grant all lawful reliefs to which an assessee is entitled, even if not specifically claimed. This principle has been consistently upheld by various judicial precedents, including decisions of the Hon'ble Supreme Court and several High Courts. Therefore, the refusal to entertain the

ITA Nos.676-677/Ahd/2026 Asst. Years : 2020-21 & 2021-22 - 3– appellant's claim solely on technical grounds is contrary to the settled legal position. 4. The learned CIT(A) has erred in dismissing the appeal at the threshold without properly appreciating that the appellant's case is on identical facts to the decision of the Hon'ble ITAT, Chandigarh Bench in Harish Kumar v. ITO (ITA No. 42/CHD/2025), wherein compensation received under the very same BSNL VRS-2019 scheme was held to be fully exempt under section 10(10B). The learned CIT(A) summarily brushed aside the reliance placed on the said decision by observing that it was distinguishable and that the present issue pertained to maintainability and limitation. However, once the appellant had demonstrated that the delay was bona fide and that the claim was legally sustainable, the learned CIT(A) ought to have examined the matter on merits rather than rejecting it on technical grounds. The existence of a directly applicable and reasoned Tribunal decision on the same scheme warranted judicial consideration. The failure to do so has resulted in denial of adjudication of a legitimate claim, contrary to the settled principle that substantive justice should not be defeated by procedural technicalities. 5. The learned CIT(A) has erred in placing reliance on the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT (284 ITR 323) to hold that the appellant's claim is not maintainable in the absence of a revised return. It is respectfully submitted that the said judgment itself clearly restricts its applicability to the powers of the Assessing Officer and does not impinge upon the powers of appellate authorities. The Hon'ble Supreme Court in the very same decision has expressly clarified that the issue therein was limited to the authority of the Assessing Officer and did not affect the jurisdiction of appellate forums. It is well settled that the CIT(A) and the Hon'ble ITAT possess plenary and co-terminus powers to examine questions of law and fact arising from the assessment proceedings and to grant lawful relief. Numerous judicial precedents have consistently held that a legitimate claim can be entertained at the appellate stage to determine the correct tax liability, even if such claim was not made in the return of income. Therefore, the refusal to consider the appellant's claim solely on the ground that no revised return was filed is contrary to the settled legal position and amounts to abdication of appellate jurisdiction. 6. It is respectfully submitted that the reasoning adopted by the learned CIT(A) is legally unsustainable. Merely because the appellant did not claim exemption under section 10(108) in the original or revised return does not preclude appellate authorities from granting lawful relief. The processing under section 143(1) is a summary procedure based solely on the returned income and does not determine the correct tax liability on merits. The absence of an "error" in the intimation from the CPC's perspective cannot

ITA Nos.676-677/Ahd/2026 Asst. Years : 2020-21 & 2021-22 - 4– override the statutory entitlement of the appellant to exemption under section 10(108), if otherwise eligible in law. It is a settled principle that tax authorities are duty-bound to assess the correct income in accordance with law. If, due to a bona fide mistake or misunderstanding of the legal position, an assessee fails to claim a legitimate exemption in the return, such omission cannot deprive him of substantive relief at the appellate stage. The powers of the appellate authority are wide and co-terminus with those of the Assessing Officer, and the appellate proceedings are a continuation of the assessment proceedings. Therefore, once all primary facts relating to receipt of compensation were fully disclosed in the return, the legal claim for exemption can and ought to be examined in appeal. The denial of relief merely on the ground that the CPC processed the return as filed defeats the object of appellate jurisdiction and results in taxation contrary to the provisions of the Act. 7. The learned CIT(A) has failed to appreciate that in an identical matter concerning compensation received under the same BSNL VRS-2019 scheme, the Hon'ble ITAT, Ahmedabad Bench in Suman Nandlal Raval v. ITO (ITA Nos. 2389 & 2390/Ahd/2025, order dated 18.02.2026) has condoned similar delay and allowed full exemption under section 10(108), holding that bona fide ignorance of the legal position constitutes sufficient cause and that the assessee is entitled to lawful relief notwithstanding non-claim in the return ITAT Ahmedabad Order. The impugned order, having failed to follow the binding Co-ordinate Bench decision on identical facts, is contrary to principles of judicial discipline and liable to be set aside.

3.

The brief facts of the case are that assessee is an individual and a resident of India who was employed with Bharat Sanchar Nigam Limited (BSNL). Pursuant to the Government of India-approved revival and restructuring package for BSNL, notified on 29.10.2019, the appellant separated from service under the Voluntary Retirement Scheme (VRS) and received ex-gratia compensation of ₹25,61,359/-.For Assessment Year 2021-22, the appellant filed his return of income declaring a total income of ₹28,84,890/-. Owing to a bona fide misunderstanding regarding the applicability of section 10(10B) of the

ITA Nos.676-677/Ahd/2026 Asst. Years : 2020-21 & 2021-22 - 5– Income-tax Act, 1961, the appellant inadvertently offered the ex-gratia compensation to tax. The return was processed under section 143(1) of the Act by the CPC, Bengaluru, vide intimation dated 01.02.2022, accepting the returned income without allowing exemption in respect of the ex-gratia amount. Subsequently, on becoming aware of judicial pronouncements holding that the ex-gratia compensation received by BSNL employees under the restructuring scheme is exempt as retrenchment compensation under section 10(10B) of the Act, the appellant preferred an appeal before the learned Commissioner of Income-tax (Appeals) seeking the benefit of the exemption. However, the learned CIT(A), vide order passed under section 250 of the Act, dismissed the appeal primarily on the ground of delay and further held that a fresh claim could not be entertained at the appellate stage, without appreciating the bona fide reasons for the claim or the subsequent judicial developments governing the issue.

4.

We have gone through the records and considering the merits of the case, we condoned the delay and proceed to adjudicate the issue.

5.

At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeals stands covered by the order of the Tribunal in the case of Suman Nandlal Raval Vs. ITO in ITA Nos.2389 & 2390/Ahd/2025 dated 18.02.2026 for A.Ys 2020- 21 & 2021-22. For the sake of ready reference, the operative portion of said order is reproduced as under:

“…6. The Ld. Counsel for the assessee submitted that due to lack of awareness of the legal provisions at the time of filing the return of income, the assessee inadvertently offered the compensation received under BSNL VRS-2019 to tax. Subsequently, based on the decision of the Hon’ble ITAT

ITA Nos.676-677/Ahd/2026 Asst. Years : 2020-21 & 2021-22 - 6– Chandigarh Bench in Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), wherein compensation under the same BSNL VRS-2019 scheme was held to be exempt under section 10(10B), the assessee now seeks exemption of such compensation. We find that the assessee filed the claim before the Ld. CIT(A) and since the income of the assessee is not taxable, the assessee is eligible for the refund of the TDS. 7. In the result, both the appeals of the assessee are allowed. …” 6. In the absence of any change in factual matrix and legal proposition brought to our notice, the appeal of the assessee is hereby allowed.

7.

In the result, both the appeals filed by the assessee are allowed.

The order is pronounced in the open Court on 09.07.2026.

Sd/- Sd/- (RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 09.07.2026 MV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy

सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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