CHANDUBHAI UKAJI CHAUDHARI,VYARA vs. ITO WARD -1 BARDOLI, BARDOLI

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH "SMC", SURAT Before: Shri T. R. Senthil Kumar, Judicial Member & Shri Ratnesh Nandan Sahay, Accountant Member ITA No: 78/SRT/2026 Assessment Year: 2019-20

Chandubhai Ukaji Chaudhari, Vs ITO, Kevalnagar CHS, Dhodiyawad, Ward – 1, Vyara -394650, Gujarat Bardoli PAN: ABKPC2803L (Appellant) (Respondent)

Assessee Represented by : Shri Bhupendra Mehta, AR Revenue Represented by : Shri Ajay Uke, Sr. DR Date of hearing : 30.04.2026 Date of pronouncement : 16.06.2026 आदेश/ORDER PER RATNESH NANDAN SAHAY, AM:

I.T.A No.78/SRT/2026/AY.2019-20 Page No 2 Chandubhai Ukaji Chaudhari vs. ITO 2. The Ld AA grossly erred on facts and in law in dismissing the raised Modified Ground No 3 in appeal that the Ld AO has grossly erred in law by exercising the powers conferred u s 154 to rectify the mistake which is not on record but exercised the powers which is in the nature of change of opinion for which sec 154 does not confer any power. 3. The Ld AA is not justified in not holding that the order u s 154 appealed against is not a speaking order though it is not incompliance with the binding nature of Instruction no 2 2016 dated 15.02.2016 issued by CBDT etc and therefore it deserves to be quashed. 4. The Ld AA grossly erred on facts and in law in upholding that the action of the Ld AO allowing the Leave Encashment claim of the Appellant on superannuation not exceeding RS 3 lakhs only and making the addition of RS 491680 to the determined income is as per law. 5. Your appellant craves leave to add amend alter withdraw any ground of appeal."

I.T.A No.78/SRT/2026/AY.2019-20 Page No 3 Chandubhai Ukaji Chaudhari vs. ITO 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.” 3. The ADIT, CPC, Bengaluru however, rejected the claim of the assessee Suo Motu without giving any opportunity of being heard to the assessee. The assessee, therefore, filed an appeal before the CIT(A), who vide the impugned order dated 28.11.2025, dismissed the appeal of the assessee on the ground that the claim made by the assessee cannot be sustained because it is not supported by any law, for the time being in force and without having any statutory authority or binding judicial precedents. 4. Aggrieved by the impugned order, this present appeal has been filed before us. The appellant, though, taken many grounds of appeal but the sole issue arising from the order of the AO u/s 143(1)(a) of the Act and subsequently before the CIT(A) is the admissibility of exemption of leave encashment u/s 10(10AA)(ii) of the Act, which allowed the exemption limit up to Rs.3,00,000/- as per CBDT Notification dated 31.05.2002. The appellant’s main ground is that before rejecting the claim of the assessee, a reasonable opportunity of being heard must be given to the appellant before rejecting its claim as it violates the principles of natural justice.

I.T.A No.78/SRT/2026/AY.2019-20 Page No 4 Chandubhai Ukaji Chaudhari vs. ITO 5. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) supported the orders of lower authorities. 6. We have considered the rival submissions of both parties and perused the material availed on record. We are of the opinion as has been held time and again in several cases including the Hon’ble Supreme Court that principles of natural justice cannot be denied to the assessee and any modification/rectification cannot be made without giving the opportunity of being heard to the assessee. In the present case, no opportunity of being heard was provided to the appellant, therefore, we set aside the impugned order of the ld. CIT(A) and remand the matter back to the file of AO for giving the appellant adequate opportunity of being heard before rejecting its claim made u/s 10(10AA)(ii) of the Act. 7. In the result, the appeal of the is allowed for statistical purposes. Order is pronounced under the provisions of Rule 34 of IT(AT) Rules, 1963 on 16/06/2026.

Sd/- Sd/- (T. R. SENTHIL KUMAR) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Dated 16/06/2026 *Ranjan आदेश�ȧĤǓ�ͧ �ͪ �\ Ē ȯͪ��/ Copy of Order Forwarded to:- 1. Assessee 2. Revenue

I.T.A No.78/SRT/2026/AY.2019-20 Page No 5 Chandubhai Ukaji Chaudhari vs. ITO 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेशसे,

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