Govind Chhatwani Vs CIT (Appeals) (ITAT Jaipur)
The appeal before the Income Tax Appellate Tribunal (ITAT), Jaipur, arose from an order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2020-21. The dispute concerned the assessee’s claim for exemption of leave encashment amounting to ₹17,68,479 under Section 10(10AA) of the Income Tax Act. The Central Processing Centre (CPC), while processing the return under Section 143(1), restricted the exemption to ₹3,00,000 and added the balance amount of ₹14,68,480 to the assessee’s income. The assessee’s appeal before the CIT(A) was dismissed, with the appellate authority holding that exemption under Section 10(10AA) was allowable only up to ₹3,00,000 in accordance with the notification applicable at the time.
The assessee submitted that he had retired from the services of Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. (RVPN), a Rajasthan Government undertaking, and had received leave encashment of ₹17,68,479, which was claimed as exempt in the return of income. It was further contended that the restriction imposed during processing of the return had subsequently been rectified by the ADIT, CPC, Bengaluru, through an order under Section 154 dated 07.12.2022, allowing the claim of ₹17,68,479. The assessee argued that the CIT(A) nevertheless denied the exemption on the ground that he was not a State Government employee and therefore was not eligible under Section 10(10AA)(i), but instead fell under Section 10(10AA)(ii).
