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Facts
The assessee received compensation under the BSNL Voluntary Retirement Scheme, 2019 and claimed exemption under section 10(10C) of the Income Tax Act, offering the remaining amount to tax. The assessee later claimed the entire compensation as exempt under section 10(10B) before the CIT(A), but the appeal was dismissed due to a significant delay without adjudicating the merits. This new claim was made for the first time before the CIT(A).
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) should be condoned in the interest of substantial justice, as the issue is covered by various coordinate bench decisions in favor of the assessee. The compensation received under the BSNL VRS-2019 scheme was held to be retrenchment compensation covered under section 10(10B) and thus exempt from tax.
Key Issues
Whether the delay in filing an appeal before the CIT(A) should be condoned when a substantive claim for exemption under section 10(10B) is involved, and whether compensation received under the BSNL VRS-2019 is exempt under section 10(10B).
Sections Cited
10(10B), 10(10C), 250, 143(1), 249(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H(SMC
Bajirao Shankar Jagdale vs ITO, Ward 42(2)(1), Mumbai C/o, Padvekar Law Chambers, Room No.715, Kautilya Bhavan, C- 408, Maker Bhavan No.3, 21, 41 to C-43, G Block Bandra Kurla New Marine Lines, Mumbai- Complex, Bandra East, Mumbai- 400020 400051 PAN:ACNPJ6118P APPELLANT RESPONDENT Assessee by : Shri Tanzil Padvekar Respondent by : Shri Pravin Salunkhe (Sr. DR) Date of hearing : 08/04/2026 Date of pronouncement : 10/04/2026 O R D E R Per:Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax (Appeal) ADDL/JCIT-A-3, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2020-21, date of order 22.12.2025. The impugned order emanated from the order of the CPC, Bengaluru (for brevity the ‘Ld. AO’) order passed under section 143(1) of the Act, date of order 30.11.2021.
Bajirao Shankar Jagdale 2. The brief facts of the case is that the assessee was employed with BSNL which is under administrative control of Department of Telecommunications, Govt. of India. In order to revive BSNL, the Union Cabinet in its meeting dated 23.10.2019 approved the revival plan of BSNL and Mahanagar Telephone Nigam Limited, Mumbai (MTNL) vide Office Memorandum dated 29.10.2019 issued by Department of Telecommunications. As part of the revival package the Government decided to reduce the work force through BSNL Voluntary Retirement Scheme, 2019 to the employees of aged 50 years and above and on such retirement Ex-gratia compensation has been paid. The amount so received by the instant employee is stated to have been offered to tax after claiming exemption u/s.10(10C) of the Act Rs.5 lakh and have paid the due taxes on the remaining amount of compensation over and above Rs.5 lakh. Admittedly, in this appeal the claim that the entire amount of compensation received from BSNL being Capital receipt is not liable to tax as per the provisions of section 10(10B) of the Act has been made for the first time before Ld.CIT(A). It is also noticed that the Ld.CIT(A) dismissed the appeals on account of delay for 1394 days in filing of the appeals and the Ld.CIT(A) has not entertained the new claim made for the first time holding that the same should have been made in the revised return of income. Aggrieved with the finding of Ld.CIT(A), the assessee is in appeal before us.
3. The Ld. AR argued and filed a paper book containing pages 1 to 57 which has been placed on record. The Ld. AR submitted for the assessee at the outset justifying the delay in filing of appeals before Ld.CIT(A) & stated that the issue of claiming benefit of exemption u/s.10(10B) of the Act for the amount received as compensation from BSNL for the force retirement has been adjudicated by the Bajirao Shankar Jagdale Coordinate Benches of Chandigarh as well as Ahmedabad and other Tribunals consistently holding in favour of the assessee. He also submitted that in various cases dealt by the Coordinates Benches, the alleged claim of exemption u/s.10(10B) of the Act has been made for the first time and the same has been admitted by the Tribunal and relief has been granted. Reliance placed on the decision of Coordinate Bench, Ahmedabad in the case of Jayesh Kumar Tulsidas Sutaria Vs. ITO reported in (2026) 183 taxmann.com 587 (Ahmedabad-Trib.).
The Ld. AR contended that the issue is no more res judicata. Though the appellate order was passed ex parte on the ground of limitation but the same issue is already dealt by the Coordinate Bench of ITATs as follows:- (i) Shraddha Pralhad Arote vs ITO Ward 2, and 261/Pun/2026 date of order 24.03.2026. (ii) Meghmala Sudhir Pathak vs. ITO, and 293/Pun/2026 date of order 27.03.2026
5. The Ld. AR further invited our attention in the order of the Coordinate Bench ITAT-Pune in the case of Rajendra Himmatrao Patil vs. ITO, and 303/Pun/2026 the date of pronouncement 27.03.2026. The observations of the Coordinate Bench noted in the respective paragraph are reproduced as below: “8. We are of the considered opinion that Ld.CIT(A) should have condoned the delay as assessee had filed elaborate explanation regarding delay and there was sufficient cause for delay. These Assessee have filed Returns of Income based on professional Advise received at that point of time. However, subsequently they made revised claim before CIT(A).
Bajirao Shankar Jagdale 8.1 Substantial justice is more important than the procedural delay. The Hon'ble Bombay High Court in the case of Vijay VishinMeghani vs DCIT [2017] 398 ITR 250 (Bombay) has condoned the delay of 2984days, which was on account of professional advice of a CA.
The identical issue of BSNL employees is decided by ITAT Pune in favour of assessee in and 293/PUN/2026, and 295/PUN/2026. ITAT Pune has relied on the decision of ITAT Ahmedabad in the case of Jayeskumar Sutaria vs ITO,ITAT has extensively reproduced the decision and finally allowed the appeal of the assessee. The relevant paragraph of the said order is reproduced here under:
Quote, "15. Further, I find the Coordinate Bench, Ahmedabad in the case of Jayesh kumarTulsidas Sutaria Vs. ITO (supra) following the decision of Coordinate Bench, Chandigarh in the case of Harish Kumar vs. ITO Ward-5(5), Chandigarh -ITA No. 42/CHD/2025 order dated 30.05.2025 has decided the issue in favour of the assessee by observing as under:
The assessee was employed with Bharat Sanchar Nigam Limited (BSNL), a Government of India enterprise. BSNL notified the Voluntary Retirement Scheme (VRS) 2019 on 04.11.2019,which was duly approved and implemented by the employer. The assessee opted for the scheme and accordingly received compensation under the VRS, as per the terms laid down by BSNL. It is submitted that the assessee had not been paid regular salary for several months prior to opting for the scheme and was under severe financial and professional uncertainty. In view of these circumstances, the assessee opted for the scheme as a measure of financial security. The compensation received by the assessee was in the nature of compensation under the BSNL VRS-2019 scheme. The compensation amount received under the scheme was offered to tax in the return of income due to lack of awareness regarding the exemption available under section 10(10B) of the Income-tax Act, 1961. The employer had also deducted tax at source on the said amount. No exemption was claimed in the original or revised return of income. The CPC, Bengaluru issued an intimation under section 143(1) for the said year without granting any exemption, and no rectification or appeal was initiated at that time. It was only upon learning about the recent judgment of the Hon'ble ITAT Chandigarh Bench in the case of Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025, dated 30.05.2025) that the assessee became aware that the compensation received under the BSNL VRS-2019 scheme is eligible for exemption under section 10(10B), subject to compliance with Rule 2BA.
4. Aggrieved by the orders of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who dismissed the appeal of the assessee as non maintainable by observing as follows:
Bajirao Shankar Jagdale ....In the present case, the delay in filing of the appeal is almost four years which is an inordinate and huge delay. Moreover, as has been elaborately discussed above, the appellant has also failed to provide any reasonable ground that could assist the first appellate authority to draw sufficient cause for the inordinate delay of 1,396 days in filing of this appeal. The inordinate delay in the present case, if condoned, would make the term "Sufficient cause" in section 249(3) of the Income Tax Act, 1961 hollow and meaningless.
In light of the facts of the case, provisions of the Income Tax Act, 1961 and judicial decisions in the matter as discussed above, I am constrained to conclude that the appellant has failed to submit any reasonable ground for condoning the inordinate delay of 1,396 days ie almost four years in filing this appeal. Being bereft of any sufficient cause as envisaged in section 249(3) of the Act, the appeal cannot be admitted. Since the appeal is not maintainable, there is no need to adjudicate on the merits therein.
Aggrieved by the orders of the Ld.CIT(A, the assessee is in further appeal before us.6. We have gone through the records and considering the merits of the case, we condoned the delay and proceed to adjudicate the issue.
The Ld. Counsel for the assessee submitted that due to lack of awareness of the legal provisions at the time of filing the return of income, the assessee inadvertently offered the compensation received under BSNL VRS-2019 to tax Subsequently, based on the decision of the Hon'ble ITAT Chandigarh Bench in Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), wherein compensation under the same BSNL VRS-2019 scheme was held to be exempt under section 10(10B), the assessee now seeks exemption of such compensation. We find that the assessee filed the claim before the Ld. CIT(A) and since the income of the assessee is not taxable, the assessee is eligible for the refund of the TDS.
In the result, both the appeals of the assessee are allowed."
The contention of ld. DR that only a 'workman' as defined under the Act is eligible for benefit u/s.10(10B) of the Act has no force as the Hon'ble High Court of Madras in the case of Hindustan Photo Film Workers Welfare Centre vs. Govt. of India (2018) 400 ITR 299 (Madras) has held that benefit u/s.10(10B) would be applicable to all employees covered by the scheme.
In light of the above decisions which are squarely applicable on the facts of instant cases and the consistent view taken by the Coordinate Benches, I am of the considered view that the alleged sum is in the nature of Retrenchment Compensation received by the assessee(s) in Bajirao Shankar Jagdale appeal, under the forced retirement scheme as per the standing orders dated 29.10.2019 issued by the Union Cabinet for the revival plan of BSNL/MTNL and such compensation falls under the provisions of section 10(10B) of the Act and not u/s.10(10C) of the Act and therefore the alleged sum is in the nature of Capital receipt exempt from tax. In order to get relief as has been directed in this order, assessee(s) are directed to place revised computation of income before the respective Jurisdictional Assessing Officers claiming the exemption u/s.10(10B) of the Act as discussed (supra) and thereafter the Revenue authorities shall grant the refund (if any) entitled to the assessee(s) after due verification of such revised computation of income. Impugned findings of ld.CIT(A) are set aside. Common issue raised in the Grounds of appeal
raised by respective assessee(s) stands allowed."
9. Since the facts in the instant bunch of appeals are same, therefore, following the same parity of reasoning, I hold that the alleged sum received under BSNL Voluntary Retirement 2019 Scheme is in the nature of Retrenchment Compensation received by the assessee(s) in appeal and such compensation falls under the provisions of section 10(10B) of the Act and not u/s.10(10C) of the Act and is in the nature of Capital receipt exempt from tax. Assessee(s) are directed to place revised computation of income before the respective Jurisdictional Assessing Officers claiming the exemptionu/s.10(10B) of the Act of the alleged sum and thereafter the Revenue authorities shall compute the tax liability and grant the refund (if any) entitled to the assessee(s) after due verification of such revised computation of income. Impugned findings of ld.CIT(A) are set aside and the common issue raised in the Grounds of appeal by respective assessee(s) stands allowed. Unquote.”
The Ld. DR argued and relied on the orders of the revenue authorities. However, the Ld. DR was unable to place on record any judicial precedent contrary to the submissions advanced by the Ld. AR.
7. We have heard the rival submissions and perused the material available on record, including the judicial precedents relied upon by the Ld. AR. It is an undisputed fact that the Ld. CIT(A) has dismissed the appeal in limine on account of delay without adjudicating the issue on merits. We find that the assessee had placed on record an explanation for the delay and the issue involved relates to a substantive claim of exemption, which has been consistently adjudicated in Bajirao Shankar Jagdale favour of similarly placed assessees by various Coordinate Benches of the Tribunal. Respectfully following the decisions of the Coordinate Benches, including the ITAT-Pune Bench in Rajendra Himmatrao Patil (supra), Shraddha Pralhad Arote (supra), Meghmala Sudhir Pathak (supra), and the ITAT- Ahmedabad Bench in Jayesh Kumar Tulsidas Sutaria (supra), we are of the considered view that the delay in filing the appeal before the Ld. CIT(A) deserves to be condoned in the interest of substantial justice, particularly when the issue is covered in favour of the assessee and the delay is attributable to bona fide reasons, including reliance on professional advice. The Ld. CIT(A) was not justified in dismissing the appeal solely on the ground of limitation without appreciating the merits of the claim and the settled legal position. On merits, following the consistent view taken by the Coordinate Benches, we hold that the compensation received by the assessee under the BSNL Voluntary Retirement Scheme, 2019 is in the nature of retrenchment compensation and is squarely covered under the provisions of section 10(10B) of the Act. Accordingly, the same is to be treated as a capital receipt exempt from tax, and not merely eligible for limited exemption under section 10(10B) of the Act. In view of the above, the impugned order passed by the Ld. CIT(A) is set aside. The delay in filing the appeal is condoned and the claim of the assessee is admitted. The Ld. Jurisdictional Assessing Officer (JAO) is directed to allow the exemption under section 10(10B) of the Act in respect of the compensation received under the BSNL VRS-2019 Scheme, subject to verification of necessary details. The assessee is also directed to file a revised computation of income before the Ld. JAO. Needless to say, the Ld. JAO shall grant due opportunity of