RATHINDRA RABINDRA DUTTA,AHMEDABAD vs. ITO, WARD 7(2)(1), AHMEDABAD, AHMEDABAD

ITA 708/AHD/2026Status: DisposedITAT Ahmedabad22 October 2026AY 2021-2210 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal. The Tribunal noted that both parties fairly submitted that the issue was covered by the order in Goverdhan D Bhambhani Vs. ITO and also by a co-ordinate bench in ITA Nos. 2387 & 2388/Ahd/2025 in the case of Jayeshkumar Tulsidas Sutaria. The Tribunal held that the assessee is entitled to exemption under Section 10(10B) of the Act on the entire amount of retrenchment compensation (termed as VRS Compensation) and any leave encashment. The Assessing Officer was directed to grant the relief accordingly. The Tribunal found no change in the legal proposition or factual matrix from the cited precedents. The ratio is that compensation received under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B), and appellate authorities can entertain such claims even if not made in the original return, especially when the assessee was unaware of the legal provisions at the time of filing the return.

What were the facts?

The assessee, Rathindra Rabindra Dutta, an employee of Bharat Sanchar Nigam Limited (BSNL), opted for the BSNL VRS-2019 scheme and received compensation. Due to a lack of awareness regarding Section 10(10B) exemption, the assessee offered this compensation to tax in the original return for Assessment Year 2021-22. Tax was also deducted at source. The Centralised Processing Centre (CPC) processed the return under Section 143(1) without allowing the exemption. The assessee then filed an appeal before the Ld. CIT(A) challenging the order. The Ld. CIT(A) dismissed the appeal, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the claim of exemption under Section 10(10B) could be entertained by appellate authorities even if not made in the original return of income, considering the reliance on Supreme Court and Bombay High Court judgments versus the restriction on Assessing Officer's powers as per Goetze (India) Ltd. v. CIT? 2. Whether the Ld. CIT(A) erred in dismissing the appeal without appreciating that the assessee's case was factually identical to Harish Kumar vs. ITO, where compensation under the same BSNL VRS-2019 was held exempt under Section 10(10B)? 3. Whether the Ld. CIT(A) passed the impugned order without granting a reasonable opportunity of hearing and without issuing statutory notice under Section 250, thus vitiating the order for breach of natural justice? Assessee's Contentions: - Appellate authorities are empowered to entertain fresh legal claims not made in the original return, citing Jute Corporation of India Ltd. v. CIT, NTPC Ltd. v. CIT, and CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. The reliance on Goetze (India) Ltd. v. CIT is misplaced as it restricts AO's powers, not appellate authorities'. - The case is factually identical to Harish Kumar vs. ITO, where BSNL VRS-2019 compensation was held exempt under Section 10(10B). - The Ld. CIT(A) order is bad in law due to breach of natural justice, as no reasonable opportunity of hearing or statutory notice was provided. Revenue's Contentions: - The Revenue supported the order passed by the lower authorities and requested confirmation of the disallowance.

Which sections of the Income-tax Act were involved?

Section 10(10B),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-

For Appellant: Shri Vipul Gohil, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 21.10.2026Pronounced: 22.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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The captioned appeal has been filed by the assessee against the order passed by the Ld. Addl./JCIT Commissioner of Income Tax(Appeal), Lucknow, vide order dated 28.01.2026. (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2021-22. ITA No.708 /Ahd/2026 Asst. Year :(2021-22 ) - 2–

The assessee has raised the following grounds of appeal:

2.1.

The learned CIT(A) has erred in law in holding that the claim of exemption under section 10(10B) could not be entertained merely because it was not made in the original return of income. The learne

The order continues below.

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