T M HAJA SAHIB,NAGORE vs. CHE-W-(112)(6), CHENNAI, TAMILNADU

ITA 2799/CHNY/2026Status: DisposedITAT Chennai23 September 2026AY 2021-226 pages
AI SummaryAllowed

What were the facts?

The assessee, T M Haja Sahib, filed appeals before the Income Tax Appellate Tribunal (ITAT) against orders of the Commissioner of Income Tax (Appeals) for Assessment Years (AY) 2020-21 and 2021-22. The assessee had filed appeals before the CIT(A) with significant delays (1386 and 1639 days respectively). The CIT(A) dismissed these appeals in limine, refusing to condone the delay. The assessee's contention was that the Centralized Processing Centre (CPC) failed to grant exemption under Section 10(10B) of the Income Tax Act, 1961, for ex-gratia payments received under the BSNL Voluntary Retirement Scheme (VRS). The amounts in dispute were Rs. 15,02,839/- for AY 2020-21 and Rs. 32,98,562/- for AY 2021-22. The ITAT noted that a coordinate bench had dealt with an identical issue.

What did the Tribunal hold?

The Tribunal decided both issues in favour of the assessee. Firstly, it condoned the significant delay in filing the appeals before the CIT(A) for both assessment years, finding the assessee's explanation of being unaware of the legal position and gaining knowledge later through employee circulation to be a sufficient and reasonable cause. The Tribunal emphasized that denying substantial justice due to a time lapse from the Tribunal's order to the appeal filing, especially when knowledge was acquired subsequently, would be inappropriate. Secondly, the Tribunal held that the ex-gratia compensation received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B) of the Income Tax Act, 1961. The reasoning was that the scheme was formulated pursuant to a Government of India-approved revival package and funded by Government budgetary support, thus partaking in the character of a Government-approved retrenchment compensation scheme. The Tribunal respectfully followed judicial precedents, including the Chandigarh Bench's decision in Harish Kumar vs. ITO and other appellate authorities' orders, which consistently held similar compensation as eligible for exemption under Section 10(10B). The additions made by taxing the ex-gratia compensation were directed to be deleted, and the AO was also directed to grant consequential relief for exemption claimed under Section 10(10AA) if otherwise eligible. No issue was expressly left undecided.

What were the issues?

1. Whether the delay in filing the appeals before the Commissioner of Income Tax (Appeals) for AY 2020-21 and 2021-22 is to be condoned, turning on the interpretation of 'sufficient cause' under Section 250 of the Income Tax Act, 1961. 2. Whether the ex-gratia compensation received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B) of the Income Tax Act, 1961, as a retrenchment compensation. Assessee's Arguments: - The delay was due to the assessee being a senior citizen and a retrenched BSNL employee who was unaware of the correct legal position regarding Section 10(10B) exemption for VRS compensation. Knowledge of this exemption was gained later through circulation of Tribunal orders among employees. - The BSNL VRS-2019 scheme was approved by the Union Cabinet and funded by the Government of India, making it a Government-approved retrenchment scheme, not an ordinary voluntary retirement scheme. - Reliance was placed on various judicial precedents, including the Chandigarh Bench of the ITAT in Harish Kumar vs. ITO, and orders from other appellate authorities, which held that compensation under BSNL VRS-2019 is eligible for exemption under Section 10(10B). Revenue's Arguments: - The Revenue supported the order of the Assessing Officer (AO). No specific arguments against condonation of delay or the exemption claim were detailed in the judgment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

PER PADMAVATHY.S, A.M: These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals), Addl./JCIT(A)-1, Nasik (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") both dated 20.03.2026 for Assessment Year (AY) 2020-21 & 2021-22. 2. The assessee is an individual and filed the return of income for AY 2020-21 on 30.12.2020 declaring total income of Rs

The order continues below.

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