YASHAVANTH NAYAK,MANGALORE vs. INCOME TAX OFFICER WARD 1, MANGALORE

ITA 37/BANG/2026Status: DisposedITAT Bangalore28 September 2026AY 2020-215 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay of 1,102 days, finding sufficient cause for the delay due to circumstances beyond the assessee's control, including reliance on a tax consultant and subsequent guidance from a pensioners' association. The Tribunal respectfully followed the decisions of coordinate Benches which held that the enhanced leave-encashment exemption limit of ₹25 lakh, introduced by CBDT Notification No. 31/2023, applies retrospectively to Assessment Year 2020-21. The reasoning was that the amendment rationalised and updated an existing provision to reflect current economic realities, intended to alleviate hardship and ensure parity. It was considered beneficial legislation that should be construed liberally and applied retrospectively where no vested right of the Revenue was adversely affected. Denying the enhanced exemption would create an unjust distinction and defeat the amendment's purpose. The Tribunal directed the Assessing Officer to grant exemption for the entire leave-encashment amount of ₹9,22,762 received by the assessee. No issue was expressly left undecided.

What were the facts?

The assessee, Yashavanth Nayak, an ex-employee of State Bank of India, retired on July 31, 2019, and received ₹9,22,762 as leave encashment. For Assessment Year 2020-21, he claimed the entire amount as exempt under Section 10(10AA) of the Income-tax Act, 1961. The CPC, via an intimation dated November 29, 2021, under Section 143(1), restricted the exemption to ₹3,00,000. The assessee's appeal to the National Faceless Appeal Centre (NFAC), Delhi, was dismissed by an order dated October 14, 2022. The assessee's appeal to the ITAT was delayed by 1,102 days, attributed to reliance on a tax consultant and lack of timely advice regarding a subsequent CBDT notification that increased the exemption limit.

What were the issues?

1. Whether the appeal filed by the assessee is liable to be admitted despite a delay of 1,102 days, considering the circumstances explained by the assessee for the delay? (Question of fact and law) 2. Whether the enhanced leave-encashment exemption limit of ₹25 lakh, as per CBDT Notification No. 31/2023 dated May 24, 2023, applies retrospectively to Assessment Year 2020-21, despite the notification specifying an effective date of April 1, 2023? (Question of law) Assessee's Arguments: For Issue 1: The delay was caused by circumstances beyond the assessee's control, including reliance on a tax consultant and lack of clear guidance. The subsequent CBDT notification and guidance from a pensioners' association prompted timely action. Refusal to condone the delay would cause prejudice. (Relied on facts in condonation application and Circular No. 66/2025). For Issue 2: Coordinate Benches have consistently held that the enhanced exemption limit is retrospective beneficial legislation, applicable to pending matters and earlier assessment years as it remedies hardship and an anomaly. (Relied on decisions in ITA No. 408/JPR/2022, ITA No. 1179/Ahmedabad/2024, Shyam Sundar Sahni v. Assistant Director of Income Tax, Vinayaka Margin v. Income Tax Officer, On Income Country v. Income Tax Officer, Satheesh Kumar v. ITO, and ITA No. 3852/109/2025). Revenue's Arguments: For Issue 1: The assessee has not shown sufficient cause for the delay. (No specific authorities cited). For Issue 2: The notification's express wording makes the revised limit effective from April 1, 2023, and thus it cannot apply to the present case. Coordinate Bench decisions taking a contrary view require reconsideration. (Relied on the express wording of the notification).

Which sections of the Income-tax Act were involved?

Section 10(10AA),Section 143(1),Section 250,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT

This appeal by Yashavanth Nayak (appellant/assessee) for Assessment Year 2020–21 challenges the appellate order dated 14 October 2022 passed by the National Faceless Appeal Centre (NFAC), Delhi, dismissing the assessee’s appeal against the intimation dated 29 November 2021 issued under section 143(1) of the Income-tax Act, 1961 (the Act). The sole issue is whether the enhanced leave-encashme

The order continues below.

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