Kuppahally Venkatasubbaiah Vani Vs ITO (ITAT Bangalore)
Bengaluru ITAT: BSNL VRS Employee Entitled to Full Exemption for Ex Gratia and Leave Encashment Despite 1,577-Day Delay
The Bengaluru ITAT condoned a delay of 1,577 days and held that a BSNL VRS employee could not be denied statutory exemptions merely because the appeal was filed belatedly. The assessee had challenged the denial of exemption for ₹12.31 lakh received as ex gratia under section 10(10B) and ₹11.60 lakh received towards earned leave encashment under section 10(10AA). The Tribunal observed that the delay was attributable to genuine confusion arising from BSNL’s FAQs and clarifications on the taxability of VRS benefits and the assessee’s bona fide belief, based on professional advice, that only limited exemption was available. It reiterated that substantive statutory relief cannot be denied on account of procedural lapses where the assessee is otherwise eligible.
The Tribunal further held that the issue stood covered by several judicial precedents, including the Kerala High Court decision holding that former Department of Telecommunications (DoT) employees absorbed in BSNL continue to be treated as Central Government employees for the purpose of exemption under section 10(10AA). Following the Kerala High Court and its own earlier decision in Pradeep Hegde, the ITAT held that the assessee was entitled to the claimed benefits in respect of leave encashment and retrenchment compensation/ex gratia received under the BSNL Voluntary Retirement Scheme, 2019, and directed the Assessing Officer to grant the exemptions in accordance with law. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal, relating to Assessment Year 2020-21, is filed by Kuppahally Venkatasubbaiah Vani against the order dated 30 January 2026 passed by the Commissioner of Income-tax (Appeals)-1, Guwahati. The assessee had preferred the appeal before the CIT(A) on 21 January 2026 against the intimation dated 28 August 2021 issued under section 143(1) of the Income-tax Act, 1961.
