Bharat Harisingh Shengar Vs ITO (ITAT Pune)
Leave Encashment Exemption Cannot Be Denied Merely Because Form 16 Omits It: ITAT Remands Only for Verification of Quantum
The Pune ITAT held that exemption under section 10(10AA) for leave encashment received on retirement cannot be denied merely because the employer did not disclose the exempt amount in Form 16. The assessee, a retired employee of Maharashtra State Power Generation Company Ltd., had claimed exemption of ₹8,49,501 towards leave encashment. The Assessing Officer rejected the claim solely on the basis that the exemption was not reflected in Form 16, and the CIT(A) affirmed the disallowance despite the assessee producing supporting documents such as the retirement order, leave encashment slip and bank statement.
The Tribunal admitted the additional evidence, observing that these documents went to the root of the controversy and were necessary for determining the assessee’s statutory entitlement. Relying on the Delhi ITAT decision in Shyam Sunder Sahni v. ACIT, the Tribunal reiterated that leave encashment received on retirement is eligible for exemption under section 10(10AA), subject to verification of the amount received. Accordingly, it restored the matter to the Assessing Officer only for the limited purpose of verifying the quantum of leave encashment, directing that the exemption be allowed if the receipt is established from the retirement records and supporting documents. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (the Act’) for AY 2020-21 on 09.12.2025, emanating from the Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 27.01.2025.
