Dinesh Kumar Mittal Vs ITO (ITAT Jaipur)
The appeal before the Income Tax Appellate Tribunal (ITAT), Jaipur, arose from an order of the Additional/Joint Commissioner of Income Tax (Appeals), Vadodara, relating to Assessment Year 2021-22. The dispute concerned the assessee’s claim for exemption of leave encashment amounting to ₹20,29,482 under Section 10(10AA) of the Income Tax Act. While processing the return and subsequent rectification proceedings under Section 154 read with Section 143(1), the CPC, Bengaluru restricted the exemption to ₹3,00,000 and denied the balance claim.
The assessee, who had superannuated from the Department of Medical and Health Services, Government of Rajasthan on 30 September 2020, filed a return declaring total income of ₹18,41,580 and claimed exemption for the entire leave encashment amount received on retirement. The CPC processed the return by restricting the exemption to ₹3 lakh, thereby increasing the assessed income to ₹35,71,060. Two rectification applications filed by the assessee were rejected, following which an appeal was filed before the CIT(A).
Before the CIT(A), the assessee contended that, being a State Government employee, the leave encashment received at the time of superannuation was fully exempt under Section 10(10AA)(i). The appellate authority examined documents such as the departmental identity card and pension certificate. However, the CIT(A) observed that despite notices and reminders, the assessee had not furnished Form 16 for the relevant assessment year. According to the CIT(A), in the absence of Form 16, the amount and genuineness of the leave encashment claim could not be verified. Although the CIT(A) acknowledged that Section 10(10AA)(i) provides exemption to State Government employees in respect of leave encashment received on retirement, the claim was not accepted due to lack of verification. Consequently, the order under Section 154 was upheld and the appeal was dismissed.
