Ahmedabad ITAT Condones 1,701-Day Delay, Grants BSNL VRS Exemption and Orders Income Tax Refund

Ismail Nurmahmad Sipai Vs ITO (ITAT Ahmedabad)

Ahmedabad ITAT Condones 1,701-Day Delay, Grants BSNL VRS Exemption and Orders Income Tax Refund

The Ahmedabad ITAT allowed the appeals of a former BSNL employee by condoning an extraordinary delay of 1,701 days in filing appeals against intimation orders passed under section 143(1). The assessee had inadvertently offered the BSNL VRS-2019 compensation to tax due to lack of awareness of the exemption available under section 10(10B) and because tax had already been deducted at source by the employer. The CIT(A) had dismissed the appeals solely on the ground of limitation.

The Tribunal observed that the issue was squarely covered by its earlier decisions in Jayeshkumar Tulsidas Sutaria, Kirtida Rajeshkumar Shah, and Chhaganlal Bhimabhai, where identical delays were condoned and exemption under section 10(10B) was allowed in respect of BSNL VRS-2019 compensation. Relying on the Supreme Court’s decision in Collector, Land Acquisition v. Katiji and CBDT Circular No. 14 of 1955, the Tribunal held that substantial justice should prevail over technicalities and that tax authorities are duty-bound to assist taxpayers in securing legitimate reliefs and refunds rather than taking advantage of their ignorance. It further held that the CIT(A) had wrongly relied on Goetze (India) Ltd., as appellate authorities are fully empowered to entertain fresh claims even if they were not made in the return of income.

Accordingly, the Tribunal held that the compensation of ₹16,50,354 received for AY 2020-21 and ₹37,23,228 received for AY 2021-22 under the BSNL VRS-2019 Scheme was fully exempt under section 10(10B). The Assessing Officer was directed to recompute the taxable income, grant the consequential refund, and allow the exemption after verifying the details of the compensation received. Both appeals were thus partly allowed in favour of the assessee.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

1. These are two appeals filed by the same Assessee against two separate Orders passed by the Commissioner of Income Tax, Appeal ADDL/JCIT(A)-2 Guwahati [hereinafter referred to as ‘the CIT(A)’] for the Assessment Years 2020-2021 and 2021-2022. Since the issues involved in both the appeals are common and arise from the same factual matrix identical, both the appeal were heard together and are therefore, being disposed off by way of a common order.

ITA No.665/AHD/2026

2. We would first take up ITA No.665/AHD/2026 pertaining to Assessment Year 2020-2021 preferred by the Assessee against the Order, dated 09/01/2026, passed by CIT(A) whereby the Learned CIT(A) had dismissed the appeal against the Intimation Order, dated 28/03/2021, passed under Section 143(1) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’]as barred by limitation.

3. The grounds raised by the Assessee read as under:

“1. The learned CIT(A) has erred in law and on facts in refusing to condone the delay 1,701 days in filing the appeal without appreciating that the delay occurred solely due to the Appellants bonafide ignorance regarding the availability of exemption under Section 10(108) and lack of legal knowledge. These circumstances constitute a reasonable cause within the meaning of Section 249(3) of the Income-tax Act, 1961. The learned CIT(A) failed to apply the settled legal principles laid down by the Honorable Supreme Court in Collector, Land Acquisition vs. Katiji and N. Balakrishnan vs. M. Krishnamurthy, wherein it has been held that substantial justice must prevail over technicalities and that the length of delay is immaterial when the explanation is bona fide.

2. The learned CIT(A) has erred in holding that the Appellant is making a new claim, ignoring that appellate authorities have plenary powers to grant all legitimate reliefs, even if not claimed in the return, as mandated by CBDT Circular No. 14 of 1955 and upheld by various judicial precedents including decisions of the Honorable Supreme Court and High Courts.

3. The learned CIT(A) has erred in dismissing the appeal at the threshold without appreciating that the Appellants case is factually identical to Harish Kumar vs. ITO (ITA No. 42/CHD/2025 dated 30.05.2025), where compensation received under the same BSNL VRS-2019 was held fully exempt under Section 10(108). The CIT(A) failed to adjudicate the merits despite the existence of a legitimate, legally sustainable, and directly applicable claim under Section 10(108).

4. The learned CIT(A) has passed the impugned order without granting reasonable opportunity of hearing and without issuing statutory notice under Section 250 of the Act during appellate proceedings. The order is thus vitiated for breach of natural justice and is bad in law.”

4. We have heard both the sides and have perused the material on record.

5. The Assessee in the present case is an individual. During the relevant previous year the Assessee received compensation under Bharat Sanchar Nigam Limited Voluntary Retirement Scheme – 2019 [for short ‘BSNL VRS-2019’]. Due to lack of awareness of the legal provisions at the time of filing the return of income and on account of the fact that the employer deducted tax at source from the said compensation received under the BSNL VRS-2019, the Assessee inadvertently offered the same to tax in the return of income for the Assessment Year 2020-2021 which was processed under Section 143(1) of the Act. Subsequently, based on the decision of the 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 BSNL VRS-2019 scheme was held to be exempt under Section 10(10B), the Assessee filed appeal before the Learned CIT(A) raising additional claim of exemption under Section 10(10B) of the Act in respect of the compensation received. It was contended by the Assessee that the compensation was not taxable and therefore, the Assessee was eligible for the refund of the amount of tax deducted at source from such compensation. However, the Learned CIT(A) dismissed the appeal declining to condone the delay in filing the appeal. Therefore, the Assessee has preferred the present appeal.

6. We find that identical issue had come up for consideration before the Tribunal in the case of Jayeshkumar Tulsidas Sutaria Vs. The Income Tax Officer, Ward 7(2)(1), Ahmedabad: ITA Nos.2387 & 2388/AHD/2025 (Assessment Years: 2020-21 & 2021-22) wherein in the case of identically placed employee of BSNL, the Tribunal accepted contentions of the Assessee; condoned similar delay in filing appeal before the Learned CIT(A) against intimation issued under Section 143(1) of the Act; and directed the Assessing Officer to grant refund to the Assessee holding that the compensation received by the assessee under the same BSNL VRS – 2019 was exempt under Section 10(10B) of the Act. The aforesaid decision of the Tribunal was followed in the case of Kirtida Rajeshkumar Shah Vs. The Income Tax Officer, Ward 7(2)(1), Ahmedabad: :ITA Nos.151/AHD/2026 (Assessment Years: 2020-21) and ChhaganlalBhimabhai Vs. The Income Tax Officer, Ward 1(2), Bhavnagar: ITA Nos.2547 & 2548/AHD/2025 (Assessment Years: 2020-21 & 2021-22).

7. There is no change in the legal proposition and the factual matrix. Revenue has failed to distinguish the above decisions of the Tribunal either on facts or in law. Further, the view taken by the Tribunal finds support in the (a) judgment of the Hon’ble Supreme court in the case of Collector, Land Acquisition, Anantnag and Ors. vs. Katiji and Ors.(1987) 167 ITR 471 (SC) – on the issue of condonation of delay; and (b) Circular No. 14 of 1955 issued by the Central Board of Direct Taxes directing officers not to take advantage of ignorance of an assessee as to their rights and assist them in claiming and securing reliefs/refunds. On the other hand, the reliance placed by the Learned CIT(A) on the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Ltd V CIT: 284 ITR 323 is clearly misplaced as the Learned CIT(A) could entertain a fresh claim raised by an assessee for the first time in the appellate proceedings.

8. In view of the above, accepting the claim of the Assessee we hold that the compensation of INR.16,50,354/- received by the Assessee during the relevant previous year under BSNL VRS – 2019 is exempt under Section 10(10B) of the Act. The Assessing Officer is, therefore, directed to computed the taxable income of the Assessee accordingly and grant refund due, if any, as per law. Thus, in terms of the aforesaid, Ground No 1 to 3 raised by the Assessee are allowed while Ground No. 4 is dismissed as being infructuous.

9. In result the present appeal preferred by the Assessee is partly allowed.

ITA No.666/AHD/2026

10. We would next take up ITA No.666/AHD/2026 pertaining to Assessment Year 2021-2022 preferred by the Assessee against the Order, dated 09/01/2026, CIT(A) whereby the Learned CIT(A) had dismissed the appeal against the Intimation Order, dated 25/12/2021, passed under Section 143(1) of the Act as barred by limitation.

11. During the course of hearing both the sides had agreed that our finding/adjudication in ITA No.665/AHD/2026 pertaining to the Assessment Year 2020-2021 shall apply mutatis mutandis to the present appeal for the Assessment Year 2021-2022. Therefore, adopting the reasoning given while allowing appeal for the Assessment Year 2020-2021 hereinabove, we hold that the compensation of INR. 37,23,228/- received by the Assessee during the relevant previous year under BSNL VRS – 2019 is exempt under Section 10(10B) of the Act. The Assessing Officer is, therefore, directed to computed the taxable income of the Assessee for the Assessment Year 2021-2022 accordingly and grant refund due, if any, to the Assessee as per law. The Assessee is directed to place before the Assessing Officer the details of compensation received under BSNL VRS – 2019 and the computation of income claiming exemption under Section 10(10B) of the Act for the same. Thus, in terms of the aforesaid, Ground No 1 to 3 raised by the Assessee are allowed while Ground No. 4 is dismissed as being infructuous.

12. In result the present appeal preferred by the Assessee is partly allowed.

13. In conclusion both the appeal preferred by the Assessee are partly allowed.

Pronounced on 24.06.2026