Om Prakash Khandelwal Vs ITO (ITAT Jaipur)
The appeal before the Income Tax Appellate Tribunal (ITAT), Jaipur, concerned a retired employee who had received ₹15,16,271 as leave encashment during the relevant assessment year. While processing the return under Section 143(1) of the Income Tax Act, the Central Processing Centre (CPC), Bengaluru, issued an intimation on 31 January 2023 allowing exemption under Section 10(10AA) only to the extent of ₹3,00,000 and disallowing exemption on the balance amount of ₹12,16,271. Aggrieved by the restriction, the assessee filed an appeal before the CIT(A). However, by order dated 25 March 2025, the CIT(A) dismissed the appeal and upheld the CPC’s action.
The assessee thereafter approached the Tribunal. There was a delay of three days in filing the appeal, which was condoned as the Revenue raised no objection and the Tribunal found the explanation satisfactory.
On merits, the assessee contended that the leave encashment amount of ₹15,16,271 was eligible for exemption under Section 10(10AA) and relied on CBDT Notification No. 31/2023 dated 24 May 2023. It was submitted that the notification enhanced the exemption limit for non-government employees to ₹25 lakh and should be applied while considering the assessee’s claim. The assessee argued that the CIT(A) erred in not granting the benefit of the notification.
