VIMAL KUMAR JAIN,ALWAR vs. INCOME TAX OFFICER, WARD 2(1)(1), KANPUR, KANPUR

I.T.A. No.7/LKW/2026 Assessment Year:2020-21 1

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘SMC’, LUCKNOW BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.7/LKW/2026 Assessment Year:2020-21 Vimal Kumar Jain Vs. Income Tax Officer, Ward-2(1)(1) 1 59, Hasan Khan Mevat Nagar, Aayakar Bhavan, Kanpur-208001. Burja, Alwar, Alwar-301001. PAN:ABJPJ2724Q (Appellant) (Respondent) Appellant by None Respondent by Shri R. R. N. Shukla, Addl. CIT (D.R.) O R D E R (A) This appeal vide I.T.A. No.7/LKW/2026 has been filed by the assessee for assessment year 2020-21 against impugned appellate order dated 01.11.2023 (DIN & Order No.ITBA/APL/S/250/2023-24/1057602827(1) of Addl/JCIT Commissioner of Income Tax (Appeals) [“CIT(A)” for short], the First Appellate Authority. The grounds of appeal are as under: -

“1. Under the facts and circumstances, the Ld. CIT(A) has erred in rejecting the claim of Leave Encashment amount received of Rs.1058658/- exempt u/s 10(10AA)(ii) of Act and has restricted the same to Rs.300000/-. 2. The CBDT Notification in S.O 2276(E) Notification No.31/2023/F. No.200/3/2023-ITA-I dated 24.05.2023 is with Retrospectively as made clarified by Board and thus applies on appellant. 3. Any other matter with prior permission of the chair.” (B) This appeal has been filed by the assessee, beyond time limit prescribed u/s 253(3) of Income Tax Act, 1961 (“Act”, for short). The assessee has submitted application, duly supported by affidavit, for condonation of delay in filing of the appeal pleading that the delay was unintentional and beyond the control of the assessee and has requested to

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admit the appeal for hearing. The learned Sr. Departmental Representative for Revenue did not express any objection to assessee’s application for condonation of delay in fling of the appeal. In view of the foregoing, and in specific facts and circumstances of the present appeal before us, the delay in filing of this appeal is condoned; and the appeal is admitted for hearing.

(B.1) In this case, the assessee filed his return of income on 21.09.2020, declaring total income of Rs.11,08,990/-. The assessee’s return was processed u/s 143(1) of the Income Tax Act, 1961 (“Act”, for short) by processing Center in Income Tax Department (CPC) whereby the assessee’s total income was determined at Rs.18,67,650/-, vide intimation dated 19.10.2021 issued u/s 139(1) of the Act. On gratuity in the return of the assessee had claimed deduction, u/s 10(10AA) of the Act amounting to Rs.10,58,658/- on account of granting. However, in the aforesaid intimation dated 19.10.2021 issued u/s 143(1) of the Act, the assessee’s claim of deduction u/s 10(10AA) of the Act was restricted at Rs.3,00,000/-. In effect, an addition of Rs.7,58,658/- was made to assessee’s returned income on account of partial disallowance out of assessee’s claim of deduction us/ 10(10AA) of the Act. The assessee’s appeal against the aforesaid addition of Rs.7,58,658/- was dismissed by the Ld. CIT(A) vide impugned appellate order dated 01.11.2023. The present appeal has been filed by the assessee against the aforesaid impugned appellate order of the Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal ("ITA”, for short), written submissions were filed from the assessee’s side. relevant portion of which is reproduced below:-

“1. Assessee retired from services of M/s Punjab National Bank in F.Y. 2019-20. 2. Received Rs. 10,58,658/- as "Leave Encashment” benefit in terms of sec 10(10AA) of Act. 3. Return of Income was filed on 21.09.2020 claiming whole of such amount of Leave Encashment of Rs. 10,58,658/-u/sec 10(10AA)(ii) of Act.

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“S.O. 2276(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 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. 2. This notification shall be deemed to have come into force with effect from the 1st day of April, 2023. [Notification No. 31/2023/F. No. 200/3/2023-ITA-I] SOURABH JAIN, Under Secy. Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving retrospective effect to this notification.” (B.2.1) The assessee placed reliance on order of Jaipur Bench of ITAT, dated 31.07.2025 in the case of Sujata Gupta vs ITO (in ITA. No.915/JPR/2025).

(c) The Ld. Departmental Representative left the matter to the discretion of the Bench.

(D) Similar issue had come up in the case of Bhagat Singh Rawat vs ADIT in ITA. No.911/LKW/2025 reported at (2026) 151 TLC 071 in which, vide order dated 10.03.2026, the issue was decided by Lucknow Bench of ITAT, in favour of the assessee. The relevant portion of the order in the case of Bhagat Singh Rawat vs ADIT (supra), is reproduced below: -

“(B.1) For assessment year 2016-17, assessment order dated 30.03.2022 was passed by the Assessing Officer u/s 147 read with section 144B of the Income Tax Act, 1961 (“Act”, for short) whereby the assessee’s total income was determined at Rs.7,92,005/- as against returned income of Rs.2,27,170/-. The

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assessee filed appeal in the office of the learned CIT(A). The learned CIT(A) dismissed the assessee’s appeal without going into merits of the case. The present appeal vide I.T.A. No.108/LKW/2026 is filed by the assessee against the aforesaid impugned appellate order dated 21.11.2025 of the learned CIT(A). (C) At the time of hearing, none was present on behalf of the assessee. In absence any representation from assessee’s side, learned Departmental Representative was heard and materials available on record were perused. In these appeals, the assessee has agitated against validity of proceedings u/s 147 of the Act. It is further found that the assessee had filed objections against re- assessment proceedings u/s 147 of the Act. However, there is no discussion either in the assessment order or in the impugned appellate orders of the Ld. CIT(A), also what the objections were; and the reasons why objections were rejected by the Assessing Officer. In the present appeal in Income Tax Appellate Tribunal (ITAT) also the assessee has raised objections regarding validity of re- assessment proceedings u/s 147 of the Act. In the absence of any discussion anywhere on the records of ITAT as to what objections were raised by the assessee during assessment proceedings against the validity of the re- assessment proceedings and reasons why objections were rejected; it is not possible at this stage to take a final view regarding the validity of the re- assessment proceedings u/s 147 of the Act. Considering these facts and circumstances of the present appeal; the Ld. Departmental Representative for Revenue submitted that all the issues in dispute in the present appeal may be restored back to the file of the Assessing Officer with the direction to pass de novo assessment order, which should be a speaking order containing detailed reasoning also why the objections of the assessee against validity of re- assessment proceedings were not acceptable. In view of the foregoing, the impugned appellate orders of the Ld. CIT(A) are set aside and the issues in dispute in the present appeals are restored back to the files of the Assessing Officer with the direction to pass de novo assessment order in accordance with law after providing reasonable opportunity to the assessee; which should be a speaking order containing detailed reasoning also why the objections of the assessee against validity of re-assessment proceedings were not acceptable.” (D.1) The case of the assessee is squarely covered in the assessee’s favour by the aforesaid order in the case of Bhagat Singh Rawat vs. ADIT (supra). Respectfully following the same, it is held that aforesaid notification dated 24.05.2023 of CBDT, enhancing the exemption limit for exemption u/s 10(10AA) to Rs.25,00,000/- is applicable with retrospective effect and extends the benefit to non-government employees as well. Accordingly, the assessee’s claim of exemption u/s 10(10AA) of the Act amounting to Rs.18,67,650/- is hereby allowed, and the addition of Rs7,58,658/- is hereby deleted. All the grounds of appeal are treated as disposed of in accordance with the aforesaid order.

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(D) In the result, the appeal of the assessee is allowed.

(Order pronounced in the open court on 17/04/2026)

Sd/- (ANADEE NATH MISSHRA) Accountant Member Dated: 17/04/2026 Vijay Pal Singh, (Sr. PS) Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A)