Case Law Details
Rasikutti Chinnapaiyan Vs ITO (ITAT Chennai)
The Tribunal condoned a 56-day delay considering reasonable causes like illness and advanced age. On merits, it held that gratuity disallowance made without examining supporting evidence was unsustainable. Accordingly, the matter was remanded to the AO for fresh adjudication after proper verification of documents.
In this case before the Income Tax Appellate Tribunal Chennai, the assessee, an individual and retired salary employee, challenged the assessment order and appellate order for the Assessment Year 2018–19. The assessee had filed a return declaring income of ₹3,56,726, which was later reassessed by the Assessing Officer (AO) at ₹23,54,830. The AO denied deduction of gratuity amounting to ₹20 lakhs under Section 10(10CC) on the ground that the assessee failed to furnish supporting documentary evidence. The assessee contended that gratuity, being a retirement benefit, should be excluded from taxable income and that the employer had wrongly included it while deducting tax at source.
The assessee’s appeal before the Commissioner of Income Tax (Appeals) was dismissed for non-prosecution and delay, without examining the merits or evidences. The assessee then approached the Tribunal with a delay of 56 days, attributing it to age, illness, and health issues. The Tribunal accepted the explanation, condoned the delay, and admitted the appeal.
On merits, the Tribunal observed that the AO had disallowed the gratuity claim solely due to lack of documentary evidence at the assessment stage. However, before the Tribunal, the assessee produced a certificate from the employer confirming receipt of gratuity amounting to ₹20,47,027. Considering this new evidence, the Tribunal held that the issue required reconsideration by the AO. It directed that the matter be remanded to the AO to examine the allowability of the gratuity deduction under Section 10(10CC), irrespective of the fact that tax had been deducted at source by the employer.
Accordingly, the appeal was partly allowed for statistical purposes, with the matter restored to the AO for fresh adjudication based on the evidence now submitted.
Assessee was represented by Mr. R.S.Balaji – Advocate & Mr.B Shakthivel – Advocate
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the Assessee directed against the order of ld.Additional/Joint Commissioner of Income Tax(Appeal)[NFAC], Delhi passed under section 250 of the Income Tax Act, 1961 for the A.Y.2018-19 dated 09.10.2025.
2. The Assessee raised the following grounds of appeal :
“1. The Assessee is an Individual, Salary employee, retired from Madras Central Co-operative Bank Ltd and filed his Return of Income for the 13th July 2018 vide acknowledgement assessment year on No.765739040130718.
2. My case was selected for scrutiny through CASS to check salary income & Refund Claim and in this connection a Notice u/s 143(2) of the Income Tax act 1961 was issued on 28.09.2019. Subsequently notice U/s.142 (1) issued on 23.01.2020 and I submitted the copies of ITR, Form 26AS and a written submission through e response in the portal and stating that my retirement benefits, like gratuity – an exempted category, which was included on my taxable income have to deduct for tax calculation purposes. So, I pleaded that my gross total income has to be computed only after deducting the retirement benefits and for this purpose I attached a detailed tax computation sheet also.
3. Without considering the facts and Circumstances of the case & documentary evidence, the Ld. AO has passed the Assessment Order under Sec 143(3) read with sections 143(3A) & 143(3B) of the Income-tax Act dated on 15.03.2021.
4. Further the Ld. AO while issuing the Assessment order, wrongly re-computed my total income as Rs.26,97,349/- in page no.3 and again made one another re-computation of total assessed income as Rs.23,54,830 in page No.4 of the assessment order.
5.Here the Ld. AO has disallowed the entire retirement benefits Gratuity amount is bad in law and against the principles of natural justice.
6.Aggrieved by the above arbitrary proceedings, I preferred an appeal petition before CIT (Appeals), NFAC, and the Commissioner of income, (Appeals), NFAC, without verifying the facts & circumstances and documentary evidences of my case has dismissed my appeal petition only on the ground of delay in filing the Appeal on 09.10.202.5
7. Further, the Ld. CIT (Appeals), without going into merits of my case has simply reproduced all my facts and grounds in the appellate order and dismissed my case without mentioning any valid reason.
8. For that the balance of convenience and merit of this appeal is lying in favour of the appellant.
9. For these and other grounds that may be adduced at the time of hearing the appellant prays that the Hon’ble ITAT be pleased to allow the appeal and render justice.
10. PRAYER:
Your Honour,
Since the findings of the A O are based on wrong assumptions and not based on the evidences on record, the Ld. CIT (A) ought to have set-aside the assessment order & whereas the Ld. CIT (A) has passed the impugned order without taking into consideration of the documentary as well as circumstantial evidences placed on records, we humbly request your Honour to set aside the same and render justice thus.”
3. Briefly, the facts of the case are that the appellant is an Individual deriving income under head ‘Salary’. The Return of Income for the Assessment Year 2018-19 was filed on 13.07.2018 declaring income of Rs.3,56,726/-. Against the said return of income, the assessment was completed by National Faceless Assessment Centre(NFAC) hereinafter called ‘AO’ order dated 15.03.2021 passed u/s.143(3) read with sections 143(3A) & 143(3B) of the Income Tax Act, 1961 of Rs.23,54,830/-. While doing so, Assessing Officer denied the claim for deduction of Gratuity amount of Rs.20 lakhs u/s.10(10CC) of the Act for the alleged failure of the appellant to furnish the documentary evidence in support of the claim made.
4. Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) who vide impugned order dismissed the appeal for non-prosecution.
5. Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.Authorised Representative submits that during the previous year relevant to assessment year under consideration, the appellant had retired from the service of Madras Central Cooperative Bank Limited, on retirement received Gratuity amount of Rs.20,47,027/-. However, the employer has wrongly included in taxable income, accordingly, deducted tax at source. He submits that the CBDT vide notification no.402/92/2006MC dated 11.06.2010 enhanced exemption limit to Rs.20 lakhs. He also filed in support this a Certificate from his employer which is placed at page no.7 of the paper book.
6. At the outset, we find that there is a delay of 56 days in presenting the appeal before this Tribunal. The appellant had filed an Affidavit seeking for the condonation of delay on the ground that the delay had occurred ‘due to ageing factor, prolonged illness and severe medical health issues’. We have perused the affidavit and found that there is sufficient and reasonable cause for delay, accordingly delay is condoned.
7. On the other hand, ld.Sr.DR opposed the above submission.
8. We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in confirming disallowance of Rs.20 lakhs u/s.10(10CC) of the Act. On perusal of the assessment order, it would be evident that the Assessing Officer disallowed the claim for deduction of Gratuity of Rs.20 lakhs u/s.10(10CC) of the Act merely on the ground that the appellant had failed to furnish the documentary evidence in support of the claim made. Admittedly, the employer had deducted the tax at source on Gratuity payment also. However, before us, the appellant furnished a Certificate from the Employer to show that he was paid Gratuity amount of Rs.20,47,027/-. In view of this evidence filed before us, we are of the considered opinion that the matter requires remand to the file of Assessing Officer to deicide the allowability of the claim for deduction of Gratuity amount u/s.10(10CC) of the Act notwithstanding the fact that the Employer deducted the tax on the said amount.
9. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
Order pronounced in the open Court on 15th April, 2026.
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