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Facts
The assessee received compensation under the BSNL VRS-2019 scheme and inadvertently offered it to tax, not claiming exemption under section 10(10B) in the original return. An intimation under section 143(1) was issued without granting this exemption. Later, discovering a relevant ITAT judgment, the assessee sought to claim the exemption before the CIT(A).
Held
The Tribunal found that the CIT(A) erred by dismissing the appeal as "not maintainable" and refusing to consider the exemption claim on merits, despite ample judicial precedent allowing appellate authorities to entertain new claims. The Tribunal held that the BSNL VRS-2019 compensation was indeed eligible for exemption under section 10(10B), entitling the assessee to a refund of TDS.
Key Issues
1. Whether an appeal against an intimation under section 143(1) is maintainable for an exemption claim (u/s 10(10B)) not made in the original return. 2. Whether the CIT(A) has the jurisdiction and duty to adjudicate such a claim on merits. 3. Whether BSNL VRS-2019 compensation is exempt under section 10(10B).
Sections Cited
143(1), 10(10B), 246A, 250(6), 251, 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KAMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
The captioned two appeals have been filed by the Assessee against the orders passed by the learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi, vide orders dated 14.10.2025, for the Assessment Years 2020-21 and 2021-22. Since the issues involved in both the appeals are common and identical, we extract the grounds of appeal raised in Assessment Year 2020-21 for the purpose of adjudication. The decision rendered in the said appeal shall apply mutatis mutandis to the other appeal bearing for Assessment Year 2021-22.
& 2388/Ahd/2025 Jayesh T Sutaria Vs. ITO Asst. Year: 2020-21 & 2021-22 - 2–
The assessee has raised the following grounds of appeal:
The Ld. CIT(A) has erred in law in holding that the appellant's grievance does not emanate from the Intimation u/s 143(1) and in directing the appellant to seek condonation and file a revised return, Ignoring the settled legal position that appellate authorities are fully empowered to entertain and adjudicate a new claim even if not made in the return of income. The refusal to consider the exemption u/s 10(108) is contrary to the binding decisions of the Hon'ble Supreme Court in Jute Corporation of India Ltd. v. CIT (1991 taxmann.com 30 (SC)/(1991) 57 ELT 176 (SC)|04-09-1990), NTPC Ltd. v. CIT (1998) 229 ITR 383 (SC) and the Hon'ble Bombay High Court in Pruthvi Brokers & Shareholders Pvt. Ltd, which categorically hold that filing a revised return is not mandatory for making a new claim. The finding of the CIT(A) is therefore illegal, perverse and liable to be set aside 2. The Ld. CIT(A) has erred in dismissing the appeal as "not maintainable" on the incorrect assumption that the issue does not arise from the intimation u/s 143(1), without appreciating that the said Intimation has assessed VIRS compensation without granting exemption u/s 10(100). This has resulted in an adverse tax consequence, thereby giving rise to a valid, appealable grievance under section 246A. The conclusion of the CIT(A) is contrary to facts and law. 3. The Ird. CIT(A) has erred in refusing to adjudicate the exemption claim u/s 10(108) on merits, thereby violating section 250(6) mandating a reasoned and speaking order on each ground of appeal
. The impugned order is non- speaking, arbitrary, contrary to statutory requirements, and deserves to be quashed.
4. The Ld. CIT(A) has committed a serious error in law by directing the appellant to approach the PCIT for condonation and filing of a revised return, thereby unlawfully bypassing and abandoning his own statutory appellate jurisdiction. The powers vested in the CIT(A) under section 251 are wide and Include the authority to entertain and allow a fresh legal claim. in contrast, the PCIT acting under section 119(2)(b) cannot adjudicate or grant exemption u/s 10(108). The impugned direction amounts to abdication of duty, rendering the order bad in law.
5. The Ld. CIT(A) has failed to appreciate that the appellant received compensation under the duly approved "BSNL VRS-2019" scheme, which fully satisfies the conditions prescribed under Rule 2BA and is eligible for exemption u/s 10(108). The CIT(A) ignored relevant judicial precedents, & 2388/Ahd/2025 Jayesh T Sutaria Vs. ITO Asst. Year: 2020-21 & 2021-22 - 3– including the recent decision of the Hon'ble ITAT Chandigarh in Harish Kumar vs. ITO (ITA No. 42/CHD/2025, dated 30.05.2025), wherein identical BSNL VRS-2019 benefits were held eligible for exemption. The order is therefore contrary to law and merits reversal.
The learned CIT(A) erred in refusing to consider the exemption u/s 10(108) merely because it was not claimed in the return, in complete disregard of CBDT Circular No. 14 of 1955, which obligates tax authorities to grant all lawful reliefs even if not claimed by the assessee. The impugned order is therefore contrary to binding CBDT directions and bad in law.
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 & 2388/Ahd/2025 Jayesh T Sutaria Vs. ITO Asst. Year: 2020-21 & 2021-22 - 4– 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.
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 by observing as follows:
“…The Appellant was employed with Bharat Sanchar Nigam Limited (BSNL), a Government of India enterprise. BSNL had notified the Voluntary Retirement Scheme (VRS) 2019 on 04.11.2019, which was duly approved and implemented by the employer. The Appellant opted for this scheme and accordingly received compensation under the VRS, as per the terms laid out by BSNL. The compensation amount received under the scheme was offered to tax by the appellant in the return of income due to lack of awareness about the availability of exemption under Section 10(108) of the Income Tax Act. 1961. The employer had also deducted TDS on the said amount. No exemption was claimed in the original or revised return for the year by the appellant. The CPC, Bengaluru issued an intimation u/s 143(1) for the said year without granting any exemption, and no rectification or appeal was initiated at that time. The issue on this appeal pertains to exemption u/s 10(10B) of the Income Tax Act. The appellant in his written submission has stated that it was only upon learning about the recent judgment of the Hon'ble ITAT Chandigarh, in the case of Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025, dated 30.05.2025), that the Appellant came to know that the compensation received under the BSNL VRS 2019 scheme is eligible for full exemption u/s. 10(10B), subject to Rule 2BA compliance. The grievance raised in the grounds of appeal does not emanate from the order appealed against. It is not a case where the appellant claimed exemption u/s.10(10B) and it was denied by the Assessing Officer. The appellant having omitted to claim relief in the return of income can claim the relief by filing the revised return. In cases where the time limit for filing the & 2388/Ahd/2025 Jayesh T Sutaria Vs. ITO Asst. Year: 2020-21 & 2021-22 - 5– revised return has expired, the appellant may seek condonation of delay from the jurisdiction PCIT and then proceed with filing the revised return. The issue raised in grounds of appeal does not emanate from the order of intimation u/s.143(1). Hence, the appeal is dismissed…”
Aggrieved by the orders of the Ld.CIT(A, the assessee is in further appeal before us.
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 order is pronounced in the open Court on 17.02.2026
Sd/- Sd/- /- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 17.02.2026 MV & 2388/Ahd/2025 Jayesh T Sutaria Vs. ITO Asst. Year: 2020-21 & 2021-22 - 6– आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy
सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad