Ram Dev Daiya Vs ITO (ITAT Jaipur)
Claim of Leave enhanced Encashment Limit allowed;₹13.12 Lakh Leave Encashment Fully Exempt: ITAT Jaipur Applies Liberal Justice in condning 476-Day Delay
The Jaipur Bench (SMC) of the ITAT, vide order dated 01.01.2026 in Ram Dev Daiya v. ITO (ITA No. 1280/JPR/2025, AY 2020-21), condoned an extraordinary delay of 476 days and granted full relief to the assessee by allowing complete exemption of ₹13,12,806 on account of leave encashment u/s 10(10AA).
The assessee, a 65-year-old retired LIC employee, had claimed exemption for leave encashment received on retirement. While processing the return u/s 143(1), CPC restricted the exemption to ₹3 lakh, resulting in an addition of ₹10.12 lakh, which was confirmed by the CIT(A). The appeal before the ITAT was filed with a delay of 476 days, attributed to late knowledge of the appellate order served through email, coupled with negligence and inaction of the consultant.
After an elaborate discussion of Supreme Court jurisprudence on condonation of delay—particularly Collector, Land Acquisition v. Katiji and N. Balakrishnan v. M. Krishnamurthy—the Tribunal held that the delay was bonafide, unintentional and not a dilatory tactic. The Bench emphasised that refusal to condone delay would result in tax being collected without authority of law, especially when the issue on merits stood squarely covered in favour of the assessee.
On merits, the Tribunal noted that as many as 22 coordinate bench decisions across Jaipur, Delhi, Ahmedabad, Agra, Chandigarh and Pune had consistently held that the enhanced ₹25 lakh exemption limit for leave encashment u/s 10(10AA) applies to the relevant years. The Revenue fairly conceded that the issue was covered. Accordingly, the ITAT deleted the entire addition of ₹13.12 lakh and allowed the appeal in full.
Thus, the Tribunal reaffirmed that procedural delay cannot defeat substantive justice, particularly in the case of senior citizens, and reiterated the settled position that leave encashment exemption up to ₹25 lakh is available under Section 10(10AA)
FULL TEXT OF THE ORDER OF ITAT JAIPUR
