Chamblon Reeta Vs ITO (ITAT Bangalore)
BSNL VRS: A Return Filed on the Employer’s Tax Treatment Does Not End the Exemption Claim
Many BSNL employees who opted for the 2019 Voluntary Retirement Scheme (VRS) filed their returns using the exemptions reflected by BSNL in Form 16. Some claimed only ₹5 lakh under section 10(10C) against their VRS compensation. They also offered part of their leave encashment to tax. After decisions in other BSNL employees’ cases, they sought exemption for the full receipts under different provisions.
By then, their returns had been processed and their appeals before the Commissioner of Income Tax (Appeals) were substantially delayed. Could the claims be considered despite that delay and despite not having been made in the original returns? In a common order covering six appeals, the Bengaluru ITAT answered in the employees’ favour. It directed the Assessing Officers (AOs) to grant appropriate relief under sections 10(10B) and 10(10AA)(i).
What Chamblon Reeta had originally claimed
Chamblon Reeta, who had been absorbed into BSNL from the Department of Telecommunications, opted for retirement under BSNL VRS 2019. The Tribunal’s order records that she received ₹14,28,453 as VRS ex gratia during the relevant year. BSNL deducted tax after allowing an exemption of ₹5 lakh under section 10(10C), and her return followed that treatment.
The order also records receipt of ₹10,96,968 as leave encashment, of which ₹5,90,807 was claimed as exempt in the return. The return was processed under section 143(1) on 6 May 2021, accepting the income as declared.
Later, relying on decisions involving other BSNL employees, she appealed against the intimation. She sought exemption of the entire VRS compensation under section 10(10B) and the entire leave encashment under section 10(10AA)(i), together with the consequential refund.
Why the first appeal failed
The CIT(A) declined to condone the long delay in filing the appeal. The appellate order treated the later discovery of a favourable legal position as insufficient cause. It also reasoned that the CPC had merely processed the return as filed: because the fuller exemption had not been claimed in that return, the intimation had not rejected such a claim.
The CIT(A) pointed to other routes, including a revised return under section 139(5) or an application under section 119(2)(b), and held that a new claim should not be entertained in the delayed first appeal. On leave encashment, it further reasoned that the ₹25 lakh ceiling notified in 2023 could not be applied to assessment year 2020–21.
Before the ITAT, the employees maintained that they had followed the tax treatment then understood to apply, including the treatment adopted by the employer. Their later claims followed Tribunal decisions concerning the same BSNL scheme. The department supported the CIT(A)’s order and opposed condonation of the delay.
How the ITAT dealt with the delay
The Bengaluru Bench followed earlier Tribunal orders involving similarly placed BSNL retirees. Those orders had addressed appeals dismissed for delay, for failure to claim the exemption in the return, and for objections to raising a fresh claim against a section 143(1) intimation.
The Tribunal accepted the explanation that the employees had initially proceeded on an incorrect understanding of their entitlement and acted after becoming aware of decisions allowing the claims. It distinguished Supreme Court decisions relied on by the department concerning unexplained delay or lack of diligence. A long delay still required an explanation, but the Bench found the explanation in these BSNL cases bona fide and reasonable.
It also followed the earlier Bengaluru view that the Supreme Court’s decision in Goetze (India) Ltd. did not bar appellate authorities from considering these claims merely because they had not been made through a revised return.
The two exemptions allowed
On VRS compensation, the ITAT followed the Tribunal decisions treating compensation received under BSNL VRS 2019 as eligible for exemption under section 10(10B). This was the provision invoked in the employees’ later claims; their original reliance on the limited section 10(10C) exemption did not prevent the appeals from being considered.
On leave encashment, the Bench relied on the Kerala High Court decision in Sanchar Nigam Pensioners’ Welfare Association v. Union of India, as discussed in the earlier Bengaluru orders. It treated the employees absorbed from the Department of Telecommunications as entitled to exemption for their entire leave encashment under section 10(10AA)(i).
That distinction is important. Although the CIT(A) and the arguments discussed the enhanced ₹25 lakh limit for non-government employees, the operative reasoning adopted by the ITAT for full leave encashment relief was the employees’ treatment under section 10(10AA)(i).
The result
The ITAT set aside the adverse appellate orders and allowed all six appeals. It directed the AOs to grant the appropriate relief claimed for VRS compensation and leave encashment.
Author’s comment
This order is particularly useful where a BSNL retiree’s return simply followed Form 16 and the employer’s TDS treatment. The Tribunal recognised that accepting that treatment at the time of filing need not permanently close an exemption claim subsequently raised in appeal, where the delay is satisfactorily explained.
The two receipts should, however, be kept analytically separate. The VRS claim was allowed under section 10(10B); the full leave encashment claim was allowed under section 10(10AA)(i) on the footing adopted for employees absorbed from the Department of Telecommunications. The decision should therefore not be reduced to a general proposition that the 2023 increase in the non-government employee leave encashment ceiling applies retrospectively to every earlier year.
The order contains differing figures for Chamblon Reeta’s leave encashment and differing descriptions of the length of delay in separate passages. Anyone using the ruling for a refund claim should verify the individual return, Form 16 and appeal record before calculating the amount due.
Cases Discussed
- Harish Kumar Vs ITO (ITAT Chandigarh), ITA No. 42/CHD/2025 dated 30.05.2025 — relied upon for exemption of BSNL VRS-2019 compensation under section 10(10B).
- Sanchar Nigam Pensioners’ Welfare Association Vs Union of India (Kerala High Court), WP(C) No. 16360 of 2023 — relied upon for treating eligible DoT employees absorbed in BSNL at par with Central Government employees for leave encashment exemption.
- Majji Sannemma @ Sanyasirao Vs Reddy Sridevi & Ors. (Supreme Court), Civil Appeal No. 7696 of 2021 — distinguished on condonation of delay.
- H. Guruswamy & Ors. Vs A. Krishnaiah Since Deceased by Lrs. (Supreme Court), Civil Appeal No. 317 of 2025 — distinguished on condonation of delay.
- Brijesh Kumar & Ors. Vs State of Haryana & Ors. (Supreme Court), SLP (Civil) Nos. 6609-6613 of 2014 — distinguished on condonation of delay.
- Goetze (India) Ltd. Vs CIT (Supreme Court), 284 ITR 323 — held not to restrict the powers of appellate authorities to entertain the claim.
- Somerset Place Co-operative Housing Society Ltd. Vs ITO 16(2)(1) (Bombay High Court), 374 ITR 307 — relied upon by the CIT(A) while refusing condonation.
- Jute Corpn. of India Ltd. Vs CIT (Supreme Court), 187 ITR 688 — considered regarding powers of the appellate authority.
- CIT Vs Pruthvi Brokers & Shareholders (Bombay High Court), 349 ITR 336 — considered regarding additional claims before appellate authorities.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These appeals are filed by the different Assessees against the different orders of Ld. Commissioner of Income Tax-Appeal for the Assessment Years 2018-19, 2020-21 and 2021-22. The issues involved in all appeals are common and interconnected. Therefore, all the appeals were clubbed together for convenience and brevity.
First, we take up ITA No. 1996/Bang/2026 by the assessee Smt Chamblon Reeta, for the A.Y. 2020-21
2. The assessee has raised multiple grounds in the appeal memo. However, the issues raised revolve around the allowability of exemption under section 10(10B) of the Act with respect to the receipt of ex gratia compensation under the BSNL Voluntary Retirement Scheme 2019 (VRS 2019) and claim of exemption of leave encashment u/s 10(10AA)(i) of the Act.
3. The facts in brief are that the assessee is an individual, employed with Bharat Sanchar Nigam Limited (BSNL), was absorbed from the Department of Telecommunications. The assessee opted for voluntary retirement under the BSNL VRS scheme 2019. Accordingly, the assessee was entitled to receive ex gratia compensation on account of VRS in two years, viz., the year under consideration and the next year (F.Y. 2019-20 & 2020-21). The assessee received Rs. 14,28,453/- during the year under consideration as ex-gratia compensation, which was subject to TDS by BSNL after providing exemption under section 10(10C) of the Act for Rs. 5 Lakh.
3.1 In the return of income filed for the year, the assessee offered income on account of the impugned receipt of VRS compensation after claiming exemption of Rs. 5 Lakh under section 10(10C) of the Act as per Form 16 issued by BSNL. Likewise, the assessee also received leave encashment on earned leave during the employment amounting to Rs. 10,96,968/-, out of which a sum of Rs. 5,90,807/- was claimed as exempt under section 10(10AA) of the Act. The return was processed under section 143(1) of the Act, accepting the return income vide intimation order dated 06-05-2021.
3.2 Subsequently, based on several Tribunal decisions in cases involving different BSNL employees, the assessee came to know that the entire amount of retrenchment compensation received under the BSNL VRS scheme 2019 was exempt from tax u/s 10(10B) of the Act. Likewise, regarding the leave encashment, he realised that the CBDT has increased the limit of exemption u/s 10(10AA)(ii) of the Act to Rs. 25 lakh and the various Benches of the Tribunal have held such increase in exemption limit to be retrospective.
3.3 Therefore, the assessee opted to file an appeal before the learned CIT(A) against the intimation order dated 6th May 2021, requesting the learned CIT(A) to grant the exemption on the full amount of retrenchment compensation on account of the VRS scheme and exemption of the full amount of leave encashment from BSNL. Accordingly, the assessee requested a refund of the taxes paid. The appeal filed before the learned CIT(A) was delayed by 1689. However, the learned CIT(A), after considering the facts in totality, dismissed the assessee’s appeal by observing as under:
The appellant submitted that the delay in filing the appeal occurred due to the appellant’s lack of awareness regarding the correct legal position relating to exemption u/s. 10 of the Act, which came to his knowledge subsequently.
6.1.3 Reasons for delay cited by the appellant have been considered, however are not found acceptable. Reliance is placed on the decision of the Hon’ble Bombay High Court In Somerset Place Co-operative Housing Society Ltd. vs. Income-tax Officer 16(2)(1) [2015] 57 taxmann.com 7 (Bombay)/[2015] 231 Taxman 806 (Bombay)/[2015] 374 ITR 307 (Bombay)/[2015] 279 CTR 146 (Bombay)[13-02-2015], where the Hon’ble High Court has held that, “We are of the considered opinion that only because the applicant has succeeded on the same issue for the Assessment Year 2008-09, the same cannot be said to be a sufficient cause so as to condone the delay of five years for the applicant to approach this Court in filing the appeal.” In the case of the appellant, the decision based on which the present appeal is filed is not even in his own case. In fact, the claim attempted to be raised by the appellant was not ever contested as it neither formed the part of the return of income, not raised before the authority passing the impugned order.
6.1.4 Moreover, there is a prescribed procedure, both for the Revenue and the appellant, to make their respective claims. At the same time, they are bound by the provisions of the law. Such rights and liabilities arising out of these claims and restrictions, are provided within the framework provided by the Legislature by way of Income Tax Act 1961. Neither the Revenue can raise a demand on the assessee if it goes beyond the time limit and the procedure provided in the Act, nor the assessee may take a benefit of any claim if it is not prescribed by the Act. In the instant case, the assessee had two options to revise his claim as provided by the provisions of the Act. First being the revised return u/s 139(5) of the Act, and the other a condonation petition u/s 119(2)(b) of the Act. As can be seen from the records, the assessee failed to file the revised return of income within the time allowed by the Act. However, the assessee still had a legal remedy in the form of condonation of delay through the provisions of section 119(2)(b) of the Act. However, the assessee did not move any such application before the jurisdictional Pr. Commissioner of the Income Tax, rather disputed the intimation u/s 143(1), in the form of First Appeal that too after inordinate delay. The legal authority to consider such a claim as per the provisions of the Act would be Ld. Pr. Commissioner of Income Tax, and not the first appellate authority. Consideration of such a claim at the level of the FAA shall defeat the Scheme of the Act which contains specific provisions u/s 139(5) & 119(2)(b) of the Act for the revised claims of the assessee.
6.1.5 Thus, the Claim regarding exemption u/s 10(10B) was never made in the original return of income. The intimation u/s 143(1) merely processed the return as filed. The jurisdiction u/s. 251 is to confirm, reduce, enhance, or annul the assessment. Where a claim was never made in the return, the intimation u/s 143(1) cannot be said to have ‘decided’ anything against the assessee in respect of such claim.
6.1.6 In Jute Corpn. of India Ltd. vs. Commissioner of Income-tax [1990] 53 Taxman 85 (SC)/[1991] 187 ITR 688 (SC)/[1990] 88 CTR 66 (SC)[04-09-1990], the Hon’ble Supreme Court held that, “In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter.” And that, “The satisfaction of the AAC depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose.” In the Jute Corporation (Supra), the Appellant was of the belief that it was not liable to pay purchase tax, and it was only after the assessment order was passed and it was assessed to purchase tax, that such demand came up, and appellant raised an additional ground. However, in the instant case no such circumstances exist, and the appellant did not make the claim u/s 10(10B) in original return of income, consciously. Also, for the same reason the appellant did not revise its return of income. When the said decision of Jute Corporation (Supra) is read with decision of the Hon’ble Bombay High Court in Somerset Place Co-operative Housing Society Ltd. (Supra), it is clear that such ground cannot be raised before the JCIT(A).
6.1.7 Further, the appellant has relied on the decision of Bombay High Court in the case of Commissioner of Income-tax, Central-I, Mumbai v Pruthvi Brokers & Shareholders [2012] 23 taxmann.com 23 (Bom.) and Federal Mogul Goetze (India) Ltd. vs. Assistant Commissioner of Income-tax [2022] 134 taxmann.com 322 (Delhi)/[2022] 285 Taxman 129 (Delhi)/[2021] 439 ITR 204 (Delhi)[22-10-2021]. However, both these decisions pertain to the powers of the Hon’ble ITAT to entertain additional claims, and not the First Appellate Authority. In Pruthvi Brokers (Supra), the Hon’ble Bombay High Court referred to the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation, where the Apex Court specifically decided the power of the ITAT and not CIT(A)/JCIT(A). Goetze India (Supra) is again specific to power of the Hon’ble ITAT in this regard.
6.1.8 In view of the given facts and circumstances of the case, the Appeal filed by the Appellant is filed beyond the time prescribed u/s 249(2) of the Act, and no sufficient reason for such delay could be established, and therefore cannot be condoned. Also, no appealable issue which can be admitted for adjudication, is made out. Therefore, the ground is dismissed in limine.
6.2 The other contention of the appellant is related to the issue whether the enhanced monetary limit of Rs. 25,00,000 notified vide Notification No. 31/2023 dated 24.05.2023 is applicable to Assessment Year 2020-21.
6.2.1 During the year under consideration the appellant received an amount of Rs. 8,06,161/- in respect of leave encashment on retirement, pertaining to service under BSNL and claimed exemption of Rs.3,00,000 at the time of filing the return u/s. 10(10AA). The return was processed u/s. 143(1) by CPC, wherein the exemption was of Rs.3,00,000/- was allowed. Subsequently, pursuant to the issuance of Notification No. 31/2023 dated 24.05.2023 by the Central Board of Direct Taxes, enhancing the exemption limit to Rs. 25,00,000, the appellant now contends that he is entitled to the benefit of the enhanced limit. The relevant notification is reproduced hereunder for ready reference.
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6.2.2 6.2.3 It is noted that the Central Board of Direct Taxes has issued Notification No. 31/2023 dated 24.05.2023 enhancing the monetary ceiling for exemption of leave encashment for non-government employees to Rs. 25,00,000/-. The notification clearly specifies that it shall come into force with effect from 01.04.2023, i.e., applicable from the financial year 2023-24 relevant to A.Y. 2024-25 onwards. However, in the present case, the year under consideration is A.Y. 2020-21 and therefore the maximum exemption permissible under section 10(10AA) of the Act at the relevant time was Rs. 3,00,000/-.
6.2.3 Moreover, as the notification was issued on 24.05.2023 and the provisions are effective from 01.04.2023, an explanatory note was provided stating that no person would be adversely affected by giving retrospective effect. The retrospective operation referred to therein is limited to the period between the effective date and the date of issuance of the notification and cannot be construed as extending the benefit to earlier assessment years. The note is only a clarification and cannot override the specific effective date mentioned in the notification. Since notifications issued under the Act are binding on the tax authorities and are to be applied in accordance with the effective date specified therein, the enhanced exemption limit cannot be extended to the year under consideration. Accordingly, the claim of the appellant for exemption beyond Rs. 3,00,000/- u/s. 10(10AA) is not sustainable and the grounds raised on this issue are dismissed.
4. Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us.
5. The learned AR for the assessee before us submitted that due to the lack of awareness of the legal provisions at the time of filing the return of income, the assessee inadvertently offered the compensation received under BSNL VRS-2019 over 5 lakh and receipt of leave encashment over 3 lakhs to tax. Subsequently, based on the decision of the Hon’ble Chandigarh Bench of the Tribunal in the case of Harish Kumar vs. ITO, Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), wherein compensation under the same BSNL VRS-2019 scheme was held to be exempt under section 10(10B) of the Act, and based on various other decisions of Tribunal, the assessee now seeks exemption of such compensation and earned leave.
6.1 The learned AR further submitted that the Hon’ble Tribunal, dated 29-04-2026, involving more than 100 cases of BSNL employees in ITA Nos. 1117 & 1449/Pune/2026, condoned the delay in filing of appeal before the learned CIT(A) in identical facts and circumstances and allowed the assessee’s appeals on merit.
6.2 Regarding the receipt of leave encashment pertaining to the period of leave earned with BSNL employment. The learned AR submitted that the Hon’ble Kerala High Court in its recent judgment in the case of SANCHAR NIGAM PENSIONERS’ WELFARE ASSOCIATION vs UNION OF INDIA IN WP(C) No. 16360 of 2023 has held that BSNL employees who were absorbed from the Department of Telecommunications shall be deemed to be government employees for the purpose of exemption under section 10(10AA) of the Act. Accordingly, the learned AR contended that the assessee shall be entitled to the full amount of receipt of leave encashment as a government employee.
7. On the contrary, the learned DR supported the order of the Ld. CIT(A) and submitted that the assessee had failed to explain the delay of 1614 days. Relying on the judgments of the Hon’ble Supreme Court in the case of Majji Sannemma @ Sanyasirao v. Reddy Sridevi & Ors. in Civil Appeal No. 7696 of 2021, in the case of H. GURUSWAMY & ORS vs A. KRISHNAIAH SINCE DECEASED BY LRS in Civil Appeal No. 317 of 2025 and in the case of Brijesh Kumar & Ors. vs State of Haryana & Ors. in SPECIAL LEAVE PETITION (CIVIL) NOS.6609-6613 OF 2014, he argued that such a long delay could not be condoned in the absence of sufficient cause. On merits, he submitted that the assessee retired from BSNL and was therefore eligible only for the limited exemption under the provisions of the Act.
8. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that a coordinate bench of this Tribunal has considered the identical issue vide common order dated 12th August 2026 in ITA Nos. 2440, 2438, 2430, 1647/Bang/2026 and decided the issue in the assessee’s favour. The finding of the coordinate bench in the lead case in ITA No. 2240/Bang/2026 is extracted as under:
9. We have heard the rival contentions of both the parties and carefully perused the materials available on record. We find that the appeal before the Ld. CIT(A) was filed with a delay of 1614 days. The assessee explained that at the time of filing the return of income, the compensation received under the BSNL VRS-2019 was offered to tax based on the understanding and professional advice then available. Similarly, the receipt of earned leave pertaining to BSNL employment was also offered to tax on account of a wrong understanding and available professional advice. Subsequently, on becoming aware of the decisions of the Coordinate Benches granting exemption u/s 10(10B) of the Act in identical cases of BSNL employees, the assessee raised the claim by filing an appeal before the Ld. CIT(A), who, however, declined to condone the delay and dismissed the appeal in limine.
9.1 At the outset, we note that a coordinate bench of this Tribunal vide order dated 22nd July 2026 has passed a consolidated order involving 13 appeals filed by 10 different assessee who were the employees of BSNL in ITA Nos. 1624 & 1625, 1646, 1662, 1663, 1664, 1666, 1675 & 1697, 1692, 1694 &1695 /Bang/2026. In the mentioned appeals, some involve the issue of exemption of ex-gratia/retrenchment compensation received on opting for the BSNL Voluntary Retirement Scheme 2019, some involve exemption of receipt of leave encashments at the time of retirement, and some involve both the issues. The appeals filed by these assessees before the learned CIT(A) were dismissed on account of various reasons which are broadly categorised as under:
i. Dismissed on account of limitation being the delay in filing of appeal not condoned
ii. Dismissed on account of non-maintainability since no adjustment was made in the intimation issued under section 143(1) of the Act and no mistake was found in the intimation issued under section 143(1) of the Act.
iii. Dismissed on the ground that exemption was not claimed in the return of income and claimed before the authority without filing a revised return.
iv. Dismissed on the ground that the assessee is not a workman, the provisions of section 10(10B) of the Act are not applicable.
9.2 The Bench in the above-mentioned appeals, after considering all the material aspects and rival arguments, decided both the issues viz exemption of receipt of exgratia/retrenchment compensation under section 10(10B) of the Act and leave encashment under section 10(10AA)(i) of the Act, in favour of those assessees. In deciding the issue of claim of exemption under section 10(10B) of the Act for receipt of retrenchment compensation, the bench referred to the decision of the Chandigarh Bench of the Tribunal in the case of Harish Kumar vs ITO (supra) and other decisions of Tribunals also. Likewise, while deciding the issue of the exemption of leave encashment under section 10(10AA)(i) of the Act, the bench referred to the judgment of the Hon’ble Kerala High Court in the case of SANCHAR NIGAM PENSIONERS’ WELFARE ASSOCIATION vs UNION OF INDIA IN WP(C) No. 16360 of 2023.
9.3 In our considered opinion, since the facts involved in the case of the present assessee and the assessees in the above-mentioned appeals are identical, the finding of the coordinate bench vide order dated 22nd July shall be fully applicable to the present appeals before us. The consolidated finding of the coordinate bench in ITA Nos. 1624 & 1625, 1646, 1662, 1663, 1664, 1666, 1675 & 1697, 1692, 1694 &1695 /Bang/2026 for ready reference is extracted as under:
11. In all the appeals, the merits involved are that the assessees were not granted the benefit u/s. 10(10B) of the Act since the assessees themselves voluntarily filed their return of income and claimed the deduction only u/s. 10(10C) of the Act. The said return was processed and the return was accepted as such. Now the assessees had claimed the deduction under the correct provision 10(10B) of the Act based on the order of the Chandigarh Bench of this Tribunal and the said claims were rejected by the Ld.CIT(A)s on the ground of delay and maintainability. In some cases, the Ld.CIT(A)s hold that there is no mistake in the intimation made u/s. 143(1) and therefore, the proper course of action to be taken by the assessees are that they have to file a revised return by claiming the deduction and got the delay condoned from the authorities. In some cases, the Ld.CIT(A)s had rejected the appeals on the ground that the new plea cannot be raised for the first time before them.
12. We have considered the facts and also the order of the Chandigarh Bench of this Tribunal in which the Tribunal had granted the deduction u/s. 10(10B) of the Act on the retrenchment compensation received by the BSNL employees pursuant to the Voluntary Retirement Scheme, 2019. Similarly, the assessees had restricted their claim of deduction on the leave encashment at Rs. 3,00,000/- as per the limit prescribed during such period. Before us, it was demonstrated that the issues have been decided by the several benches of this Tribunal and therefore the benefits could not be denied to the same set of employees by citing the delay in filing the appeals. We have also considered the various orders pronounced by the several Tribunals in which the Tribunals had condoned the similar delays in filing the appeals and also granted exemption u/s. 10(10B) of the Act on the compensation received on retrenchment. The Tribunals also accepted that the claim was made by the assessees mistakenly since the employer had deducted the TDS while making the said payments.
13. We have also considered the order of the Coordinate Bench of this Tribunal in ITA No. 992/Bang/2026 dated 29/05/2026 wherein the Tribunal had given the findings as follows:
“15. However, with respect to condonation of delay, the ld. AR submitted that the ld. CIT(A) should have condoned the delay as in the case of 72 cases before the Coordinate Benches across the country in the case of BSNL employees on identical facts and circumstances, delay has been condoned by the ld. CIT(A) itself ranging from 900 to 2000 days. The assessee has produced the list of 72 cases where the delay is condoned by the ld. CIT(A). Further in case of 144 appeals, the Coordinate Benches have condoned the delay in the case of BSNL employees on identical facts and circumstances. Thus on the parity itself, the appeal of the assessee should have been admitted by the ld. CIT(A). Accordingly, I reverse the order of the ld. CIT(A) in not condoning the delay.”
14. We have also considered the reasoning given by the Ld.CIT(A)s in some of the appeals that the assessees had not claimed such deductions in their return of income and also not filed any revised return or application u/s. 154 before the AO and therefore the appeals are not maintainable. It is not the case of the revenue that the assessees are not entitled for such deduction but on technical grounds, the revenue had denied the deductions. Further, the Ld.CIT(A) had also relied on the judgment of the Hon’ble Supreme Court reported in 284 ITR 323 in the case of Goetze (India) Ltd. vs. CIT and rejected the appeals on the ground of maintainability. We have also gone through the above cited judgment and we do not find that the Hon’ble Supreme Court had restricted the powers of the appellate authorities. In fact, the judgment had restricted the power of the AO and therefore the above said judgment would not be applicable to the facts of the present case. Further, the assessees had mistakenly claimed the deduction in the original return of income and therefore there is no question of saying that the assessees cannot raise the issue for the first time before the Ld.CIT(A). Further, the department had accepted that the benefit should be granted in respect of the employees of BSNL and therefore the plea that they are not workman to get the benefit is not correct. Therefore, the orders of the Ld.CIT(A)s are liable to be interfered.
15. Similarly, the other issue of exemption claimed on the leave encashment was also addressed by the Hon’ble Kerala High Court in the above referred judgment by holding that the retired employees from BSNL under the Voluntary Retirement Scheme, 2019 are entitled for the leave encashment tax exemption as they are deemed to be Central Government employees. We have also considered the decisions of the Hon’ble Jaipur and Indore Benches in ITA No. 1139/JPR/2025 dated 07/10/2025 and ITA No. 233/IND/2025 dated 27/02/2026 wherein it was held that the enhanced limit of exemption of Rs. 25,00,000/- introduced by the Gazette Notification No.31/2023 dated 24.05.2023 w.e.f. 01/04/2023 u/s. 10(10AA) is a beneficial one and it should be applied at the time of the appellate jurisdiction. In all the appeals, the assessees had on the wrong understanding, had claimed a deduction of Rs. 3 Lakhs u/s. 10(10AA) of the Act whereas they are entitled for the entire leave encashment as eligible for deduction u/s. 10(10AA) of the Act. This dispute was also accepted by the various Tribunals and also by the Ld.CIT(A)s and by following the principle of equity, we are also allowing the entire leave encashment as eligible for deduction u/s. 10(10AA) of the Act. Further, the Hon’ble Patna High Court in its judgment in Civil Writ Jurisdiction Case Number 12326 of 2017 dated 26/02/2024 had decided about the provision that whether the same would be equally applicable to the employees of the State Bank of India or not since it discriminates between the employees of State Bank of India and government employees. In that context, the Hon’ble Patna High Court had held that there is no discrimination and therefore it is not ultra virus to the Constitution of India. Therefore, the said principles could not be applied to the facts of the present case.
16. Therefore, both the issues are covered by the earlier orders of the Coordinated Benches of this Tribunal and against which no further proceedings were taken up by the revenue and therefore the said orders have become final and in that circumstances, we are also taking the same view. Insofar as the delay in filing the appeals before the Ld.CIT(A), we have taken note of the fact that the Ld.CIT(A)s had condoned the delay in filing the appeals of 72 assessees on identical facts in which the delays are ranging from 900 to 2000 days. We have also taken note of another fact that the Coordinated Benches had condoned the similar delays in the 144 appeals filed by the employees on similar facts and circumstances. In view of the above said facts, we are of the view that the Ld.CIT(A) ought to have condoned the delay and entertained the appeals and decided the appeals on merits instead of dismissing the appeals. Similarly, the orders of the Ld.CIT(A)s dismissing the appeals on the ground of maintainability is also not correct. Therefore, in the interest of justice, instead of condoning the delays and remitting this issue back to the Ld.CIT(A), we are passing these orders on merits after condoning the said delays and allow the appeals filed by the assessees and granted the relief of exemption u/s. 10(10B) and also granted the entire leave encashment received as eligible for exemption u/s. 10(10AA) of the Act. Considering the several orders of the Coordinated Benches of this Tribunal as well as the orders of the Ld.CIT(A), we are allowing the appeals filed by the assessees insofar as the claims made u/s. 10(10B) and 10(10AA) of the Act.
17. In the result, the appeals filed against the dismissal orders of the Ld.CIT(A) are allowed and the benefits of exemption u/s. 10(10B) as well as benefit of the entire leave encashment is allowed u/s. 10(10AA) of the Act.
9.4 We further note that the Coordinate Bench of Chandigarh Tribunal, Pune Tribunal, Ahmedabad Tribunal, etc also in a batch of appeals involving BSNL employees on identical facts and circumstances, has allowed the assessee’s appeal in those cases even though there was considerable delay in filing the appeal before the learned CIT(A) and the learned CIT(A) dismissed the appeal without condoning the delays.
9.5 Before parting, we also feel it pertinent to deal with case laws relied by the learned DR in the context of condonation of delay.
9.6 The reliance placed by the Ld. DR on the judgment of the Hon’ble Supreme Court in Majji Sannemma @ Sanyasirao v. Reddy Sridevi & Ors. in Civil Appeal No. 7696 of 2021, in our humble understanding, does not assist the Revenue in the facts of the present case. In that case, there was a substantial delay in filing a second appeal arising from a civil suit. The explanation furnished by the parties related only to illness for the period from 01.01.2017 to 15.03.2017. There was no explanation whatsoever for the period after 15.03.2017 until the filing of the second appeal in the year 2021. On those facts, the Hon’ble Supreme Court recorded a specific finding that there was gross negligence and want of due diligence. The Hon’ble Supreme Court further found that the Hon’ble High Court had condoned the delay merely by observing that the appeal should be heard on merits and that no prejudice would be caused. The Hon’ble High Court had not recorded any finding that sufficient cause was actually shown. It was in those circumstances that the order condoning the delay was set aside.
9.7 The present cases/appeals before us, in our humble understanding, stand on a materially different footing. As such, the assessee has explained the circumstances which led to the delay. The assessee earlier filed the return as per the wrong legal understanding by claiming only partial exemption on receipt of compensation under the BSNL VRS Scheme 2019. On the realisation of the correct legal position after the decision of the coordinate bench of Chandigarh in Harish Kumar vs. ITO, Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), which was further followed by several benches of the Tribunal, the assessee proceeded to file an appeal before the learned CIT(A) seeking exemption of the full amount of receipt of VRS compensation. Thus, it is not a case where the assessee wilfully and knowingly filed a delayed appeal. We have independently examined the cause of delay and find it to be bona fide and reasonable. The ratio of the Hon’ble Supreme Court in the above-mentioned case relied by the learned DR, in our humble understanding, is that delay cannot be condoned where no sufficient explanation is furnished, and gross negligence or lack of bona fides is established. The said judgment does not lay down that every long delay must be rejected irrespective of the explanation furnished. In fact, the judgment itself recognises that where sufficient cause is shown and no negligence, inaction or want of bona fides is attributable to the party, the discretion should be exercised to advance substantial justice.
9.8 Similarly, the judgments of the Hon’ble Supreme Court in the case of H. GURUSWAMY & ORS vs A. KRISHNAIAH SINCE DECEASED BY LRS in Civil Appeal No. 317 of 2025 and in the case of Brijesh Kumar & Ors. vs State of Haryana & Ors. in SPECIAL LEAVE PETITION (CIVIL) NOS.6609-6613 OF 2014, relied on by the learned DR, is also distinguishable from the facts of the present case on a similar line as discussed in the above paragraphs.
9.9 In view of the above detailed discussion and respectfully following the decision of the Coordinate Bench on identical facts, we are of the view that the assessee is entitled to exemption under section 10(10B) of the Act in the context of receipt of retrenchment compensation on opting for BSNL VRS-2019. Likewise, the assessee shall be entitled to exemption of the entire amount of receipt of leave encashment under section 10(10AA)(i) of the Act as the BSNL employees are deemed as employees of the Department of Telecommunications. Accordingly, we hereby set aside the order of the learned CIT(A) and direct the AO to allow appropriate relief claimed by the assessee. Hence, the ground of appeal raised by the assessee is hereby allowed.
10. In the result, the appeal of the assessee is hereby allowed.
8.1 Respectfully following the above decision of the coordinate bench of this Tribunal in identical facts and circumstances, we are of the view that the assessee is entitled to exemption under section 10(10B) of the Act in the context of receipt of retrenchment compensation on opting for BSNL VRS-2019. Likewise, the assessee shall be entitled to exemption of the entire amount of receipt of leave encashment under section 10(10AA)(i) of the Act, as the BSNL employees are deemed to be employees of the Department of Telecommunications. Accordingly, we hereby set aside the order of the learned CIT(A) and direct the AO to allow the appropriate relief claimed by the assessee. Hence, the ground of appeal raised by the assessee is hereby allowed.
9. In the result, the appeal of the assessee is allowed.
Coming to ITA Nos. 1197, 2308-2309, 2407 and 2409/Bang/2026 for the asst. years 2021-22, 2020-21-2021-22, 2020-21 and 2020-21 respectively
10. At the outset, we note that the issues raised by the assessee in its grounds of appeal for the ITA Nos. 1197, 2308 -2309, 2407 and 2409/Bang/2026 are identical to the issues raised by the assessee in ITA No. 1696/Bang/2026 for the assessment year 2020-21. Therefore, the findings given in ITA No. 1696/Bang/2026 shall also be applicable to ITA Nos. 1197, 2308 -2309, 2407 and 2409/Bang/2026. The appeal of the Assessee for ITA No. 1697/Bang/2026 has been decided by us vide paragraph No. 8 of this order in favour of the assessee. The learned AR and the DR also agreed that the findings in ITA No. 1696/Bang/2026 shall also apply to ITA Nos. 1197, 2308 -2309, 2407 and 2409/Bang/2026.
Hence, the grounds of appeal filed by the assessee in ITA Nos. 1197, 2308 -2309, 2407 and 2409/Bang/2026 are hereby allowed.
11. In the result, all the appeals of the different assessees are hereby allowed.
12. In the combined result, all the appeals of the different assessees are hereby allowed.
Order pronounced in the open court on 24th Sept. 2026.
