Haresh Vishnudas Zaveri Vs ITO (ITAT Rajkot)
BSNL VRS Exemption Claim: ITAT Directs Condonation of 1,485-Day Delay and Fresh Decision on Merits
Delayed Appeal Restored for Examination of Exemption Claim
The Income Tax Appellate Tribunal, Rajkot Bench, directed the Commissioner of Income Tax (Appeals) to condone a delay of 1,485 days and examine an assessee’s claim for exemption of compensation received under the BSNL Voluntary Retirement Scheme, 2019.
The assessee had omitted to claim exemption under Section 10(10B) in his income-tax return. He subsequently pursued the claim after learning of a favourable decision of the Chandigarh Bench involving another BSNL employee.
The Tribunal did not directly grant the exemption. It restored the issue to the Commissioner (Appeals) for a fresh decision on merits after condonation of the delay.
Background of the Case
The assessee, an individual, filed his return for Assessment Year 2021-22, declaring total income of ₹13,40,170.
He had received compensation under the BSNL VRS Scheme, 2019, but did not claim exemption for that compensation under Section 10(10B).
The return was processed under Section 143(1) through an order dated 11 January 2022.
Subsequently, the assessee became aware of the Chandigarh Tribunal’s decision in Harish Kumar (BSNL Employee) v. ITO, ITA No. 42/CHD/2025, dated 30 May 2025. As recorded in the Rajkot Tribunal’s order, that decision allowed exemption under Section 10(10B) for compensation received under the same BSNL scheme.
The assessee then filed an appeal before the Commissioner (Appeals), seeking consideration of his exemption claim.
Commissioner (Appeals) Refused to Condonе Delay
The first appeal was filed with a substantial delay of 1,485 days.
The Commissioner (Appeals), through an order dated 29 June 2026, declined to condone the delay and dismissed the appeal at the threshold.
Consequently, the assessee’s substantive claim concerning the tax treatment of the VRS compensation was not examined on merits.
The assessee challenged that dismissal before the Rajkot Tribunal. The dispute therefore involved both the procedural barrier created by the delayed appeal and the need to examine the underlying exemption claim.
Assessee Relied on Favourable BSNL VRS Decision
Before the Tribunal, the assessee’s authorised representative submitted that relief had already been granted in similar matters concerning BSNL VRS Scheme, 2019 compensation.
He relied on the Chandigarh Bench’s decision and argued that the entire compensation qualified for exemption under Section 10(10B).
On that basis, he requested that the appeal be allowed.
The Revenue’s representative supported the Commissioner (Appeals)’s decision. The Revenue maintained that the dismissal was justified and supported the position arising from the processing of the return by the Centralised Processing Centre.
The Tribunal considered these rival submissions and examined the material available on record.
Tribunal Finds Merits Had Not Been Examined
The Tribunal noted that the Commissioner (Appeals)’s order was an ex parte order passed without examining the merits of the assessee’s case.
It considered that the exemption issue required examination on the basis of the available material and the favourable decision cited by the assessee.
The Bench specifically referred to Harish Kumar (BSNL Employee) v. ITO, observing that the Chandigarh Tribunal had allowed the claim of a similarly placed assessee.
Rather than deciding the exemption claim itself, the Rajkot Bench restored the matter to the first appellate authority so that the factual and legal aspects could receive substantive consideration.
Express Direction to Condonе the Delay
The Tribunal’s operative direction required the Commissioner (Appeals) to re-examine the issue afresh on merits after condoning the delay of 1,485 days.
The remand therefore did not merely ask the appellate authority to reconsider whether the delay should be excused. It expressly directed condonation before examination of the claim.
The Commissioner (Appeals) must now consider the exemption issue with reference to the record and the Chandigarh Bench decision identified in the order.
This direction removes the limitation-related obstacle that had prevented a decision on the assessee’s substantive grievance.
Exemption Was Not Finally Allowed
The distinction between restoration of an appeal and grant of exemption is central to the outcome.
Although the assessee sought exemption for the VRS compensation, the Tribunal did not finally determine his entitlement or quantify any resulting relief.
The order records the favourable precedent as the basis for requiring a fresh examination. It leaves the actual merits for the Commissioner (Appeals) to decide.
Accordingly, the decision should not be read as an unconditional exemption ruling covering every recipient of BSNL VRS compensation.
Appeal Allowed for Statistical Purposes
The Tribunal allowed the appeal for statistical purposes and restored the issue for fresh adjudication.
The assessee secured condonation of the 1,485-day delay and an opportunity to have his Section 10(10B) claim examined on merits. The final tax treatment of his compensation remains subject to that appellate determination.
Cases Discussed
- Harish Kumar (BSNL Employee) Vs ITO (ITAT, Chandigarh Bench), ITA No. 42/CHD/2025, dated 30 May 2025: Cited for allowing Section 10(10B) exemption on BSNL VRS 2019 compensation; the Rajkot Tribunal ordered fresh consideration in its light.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2021-22, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the Commissioner of Income Tax (Appeals) [hereinafter referred to as ‘Ld.CIT(A)’], dated 29.06.2026, which in turn arises out of an order passed by assessing officer u/s. 143(1) of the Act, dated 11.01.2022.
02. Brief facts of the case that the assessee is an individual, filed its return of income for the Assessment Year 2021-22, by declaring total income of Rs.13,40,170/-. The assessee has failed to claim exemption under the provision of section 10(10B) of the Act on compensation received from his employee, under the BSNL Voluntary Retirement Scheme (VRS scheme-2019). Subsequently to the above facts the assessee come to knowledge about the Income Tax Appellate Tribunal, Chandigarh Bench, in the case of Harish Kumar (BSNL Employee) vs. ITO (ITA No. 42/CHD/2025), order dated 30.05.2025, held that compensation received under the BSNL VRS, 2019 is fully exempt under section 10(10B) of the Income-tax Act, 1961.
03. Upon becoming aware of the judgement, the assessee filed an appeal before the Ld.CIT(A), with considerable delay of 1485 days. However, the Ld.CIT(A) dismissed the appeal in lemini without condoning the delay.
04. Still aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this tribunal.
05. At the time of hearing, the Ld. AR of the assessee clearly stated that on similar type of issues tribunal categorically allowed, the entire compensation received under the BSNL VRS scheme-2019 as exemption under provision of section 10(10B) of the Act. Therefore, appeal of the assessee may be allowed.
06. On the other hand, the Ld. DR for the revenue supported the decision of the authority. He stated that the Ld. CIT(A) rightly dismissed the appeal of the assessee by sustaining the order of the CPC.
07. We are after hearing the rival submission of both the parties and pursued the material available on record. While examining the impugned order, we noticed that the impugned order which was passed by the Ld.CIT(A) is an ex-parte order passed without examining the merit of the case, therefore the issue needs to be examined on the basis of material available on record and considering the judgement of the Co-ordinate Bench of ITAT, Chandigarh in the case of Harish Kumar (BSNL Employee) vs. ITO (ITA No. 42/CHD/2025), order dated 30.05.2025, where tribunal passed an order in favour of similar type of assessee by allowing the claim as made. We therefore set aside the issue back to the file of Ld.CIT(A) with the direction to the re-examine the issue afresh on merits of the case after the condoning the delay of 1485 days in filing the appeal before him. In terms of above the appeal of the assessee is allowed, for statistical purposes.
08. In the result, the appeal of the assessee is allowed, for statistical purposes.
Order pronounced in the open court on this 3rd day of November, 2026.
