Satish Kumar Thakur Vs ITO (ITAT Chandigarh)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chandigarh, arose from an order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), which had upheld a rectification order passed under Section 154 of the Income Tax Act, 1961. The dispute concerned the tax exemption available on leave encashment received by the assessee. The assessee had claimed exemption of ₹18,13,500 under Section 10(10AA)(i), whereas the CPC, Bengaluru, through a rectification order, allowed exemption only under Section 10(10AA)(ii), restricting the exemption to ₹3,00,000.
The assessee had originally filed the return of income declaring income of ₹11,59,150 and claimed exemption under Section 10(10AA)(i). The return was processed under Section 143(1), and a refund along with interest was granted. Subsequently, the CPC passed a rectification order under Section 154 allowing exemption under Section 10(10AA)(ii) instead of Section 10(10AA)(i), resulting in a reduction of the exemption claimed.
Before the CIT(A), the assessee contended that he was eligible for exemption under Section 10(10AA)(i) as a State Government employee in terms of Clause 5(5) of the transfer scheme of the Government of Himachal Pradesh. The assessee also argued that the rectification order was passed without providing an opportunity of hearing as required under Section 154(3), thereby violating the principles of natural justice. Further, it was submitted that the order was non-speaking, mechanically passed, and ignored relevant facts and legal submissions. The assessee also challenged the appellate proceedings, alleging that the CIT(A) had disposed of the appeal without granting an opportunity of hearing and without adequately considering the submissions and judicial precedents relied upon.
