Sunil Kumar Bhilare Vs ITO (ITAT Pune)
Leave Encashment Exemption Limit Raised to ₹25 Lakh — ITAT Restores Case for Fresh Adjudication in Light of CBDT Notification 24-05-2023
Assessee, a retired employee of SBI, filed return for AY 2020-21 claiming exemption of ₹9,60,574 u/s 10(10AA)(ii) towards leave encashment. CPC while processing u/s 143(1) restricted exemption to ₹3 lakh as per the old limit, resulting in addition of ₹6,60,574. CIT(A) (NFAC) confirmed the adjustment, holding that the 2002 notification restricted exemption to ₹3 lakh & that the enhanced limit introduced later was not applicable.
Before the Tribunal, Assessee explained that delay of 938 days in filing appeal was due to confusion & later knowledge of CBDT Notification No. 31/2023 dated 24-05-2023, which enhanced the limit of exemption u/s 10(10AA)(ii) for non-government employees from ₹3 lakh to ₹25 lakh. The Bench, applying the liberal approach of the Supreme Court in Collector, Land Acquisition v. Mst. Katiji (1987 2 SCC 107) & Inder Singh v. State of MP (2025 INSC 382), condoned the delay.
On merits, Tribunal observed that the impugned appellate order was passed before the said CBDT notification. Since the issue of retrospective applicability & the effect of the notification had not been examined by CIT(A), ITAT deemed it proper to restore the matter for fresh adjudication in light of the new notification & subsequent Tribunal rulings cited by the Assessee.
