What did the Tribunal hold?

The Tribunal found that the additions were wrongly made by the AO based on incorrect facts. The assessee had already suo motu added back these provisions in its computation of total income.

The assessee's appeal was barred by limitation by 30 days, but the delay was condoned due to bonafide reasons. The Assessing Officer (AO) made additions of Rs. 64,80,050/- comprising provisions for gratuity and leave encashment.

What were the issues?

Whether the disallowance of provisions for gratuity and leave encashment was justified.

Sudesh Chander Talwar vs DCIT | ITAT Kolkata 2026

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Date of concluding the hearing : 13.01.2026 Date of pronouncing the order : 20.01.2026 O R D E R Per Rajesh Kumar, AM

The present appeal filed by the assessee arises from order dated 25.04.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), Addl./JCIT(A), Gwalior [hereafter “the Ld. Addl./JCIT(A)].

At the outset, we observe from the appeal folder that the appeal of the assessee is barred by limitation by 30 days for which the condonation petition has filed by the assessee. After going through the contents of the application, we find that the delay is attributable to reasonable and Bonafide reasons. Therefore, the reasons cited by the assessee is being

The only issue raised by the assessee in the various grounds of appeal is against the confirmation of disallowance of Rs. 64,80,050/- as made by the AO comprising of Rs. 58,44,065/- in respect of provision for gratuity and Rs. 6,35,985/- in respect of provision of leave encashment.

The facts in brief are that the AO-CPC while processing the return of income made two additions aggregating to Rs. 64,80,050/- on account of i) provisions for gratuity of Rs. 58,44,065/- and ii) Rs. 6,35,985/- provision for leave encashment.

In the appellate proceedings, the Ld. CIT(A) restored the issue to the file of AO for necessary verification and adjudication.

After hearing the rival contentions and perusing the material available on record, we find that the additions were wrongly been made by the AO-CPC upon assumption of wrong facts. For the sake of ready reference, the details of the provisions for leave encashment/gratuity coming over the years are as under:

Particulars Leave Gratuity Encashment Opening balance as on 1st April 2017 6,35,985 49,66,166 Add: Provision during the year 1,61,121 8,77,899 Closing balance as on 31 March 2018 7,97,106 58,44,065

We observe from the above, that during the year the assessee has only created provisions to the tune of Rs. 1,61,121/- in respect of leave encashment and Rs. 8,77,899/- in respect of gratuity. We further note from page no. 2 which is computation of total income that the assessee has suo motto added back these provisions created during the year to the total

Sudesh Chander Talwar income while computing the total income. We have also examined the copy of ITR filed by the assessee as is available in the paper book from page no. 36 to 104 and particularly on page no. 47-48 at para no. 9(c) and para no. 11(f), the assessee has disallowed the provisions for gratuity at Rs. 8,77,899/- and provisions for leave encashment of Rs. 1,61,121/-. Therefore, we are not in a position to sustain the order of the Ld. CIT(A) as the facts are apparent from record and this being an open and shut case. Consequently, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition.

In result, appeal of the assessee is allowed.

SUDESH CHANDER TALWAR,KOLKATA vs. D.C.I.T., CIRCLE - 29, , KOLKATA

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