Devendra Kumar Gupta Vs CIT (ITAT Jaipur)
Summary: The Jaipur Bench of the Income Tax Appellate Tribunal, comprising Judicial Member Dr. S. Seethalakshmi and Accountant Member Rathod Kamlesh Jayantbhai, considered the miscellaneous application of Devendra Kumar Gupta for Assessment Year 2020-21. The assessee sought recall of the Tribunal’s order dated 17 May 2023 in ITA No. 17/JP/2023, contending that his electronic adjournment application filed on 27 April 2023 had not been considered and that the issue of leave encashment exemption was awaiting a government notification.
The Tribunal found that the adjournment request had indeed been filed and that the appeal should be decided after giving the assessee an opportunity of hearing. Holding that the principles of natural justice had been violated, it recalled the earlier order. As all materials were already on record, both parties consented to the Tribunal deciding the substantive appeal on the same day.
The assessee, a former employee of Ajmer Vidhyut Vitran Nigam Ltd., had received ₹12,09,600 as leave encashment on retirement and claimed exemption under Section 10(10AA)(ii) of the Income-tax Act. The CPC had restricted the exemption to ₹3,00,000 and the CIT(A) upheld that restriction. The assessee relied on Notification No. 31/2023 dated 24 May 2023, which increased the notified exemption ceiling to ₹25,00,000, and on consistent Jaipur Tribunal decisions.
The Tribunal held that the ₹12,09,600 claim fell within the revised ₹25 lakh ceiling and directed the Assessing Officer to allow it. It referred to its earlier decisions in ITA Nos. 408/JP/2022 and 542/JP/2023. Both the miscellaneous application and the appeal were allowed. The decision applies the revised ceiling to the claim in this case; it should not be read as establishing that every employee of a state-owned undertaking automatically qualifies for the unlimited exemption available to government employees.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The Present Miscellaneous Application has been filed by the assessee u/s 250 of the Act against the order of ITAT, Jaipur Benches, Jaipur in ITA No. 17/JP/2023 dated 17.05.2023 praying therein following reasons to suitably modify or recalled of its order as under:
1. That the case was last fixed for hearing on 03/05/2023, the assessee applied for e-adjournment e-filed on 27/04/2023.
2. The adjournment was filed for the reason that the issue of leave encashment to non government employees was requested to keep in abeyance for want of government clarification (notification as per Central Budget ‘2023).
3. The said notification has since been later issued on 24/05/2023 No. 31/2023/F. No. 200/3/2023-ITA-1. Copy as enclosed and is also with retrospective effect.
4. The other facts are same as per appeal filed before Hon’ble bench and thus request to recall the decision/rectify the apparent mistake to amend the same in light of said notification.
2. Ld. AR of the assessee in addition to the prayer so made in the Miscellaneous Application vehemently submitted that the appeal of the assessee was dismissed without hearing the assessee even though the adjournment application was filed by the assessee which was not discussed as to why the same was rejected and therefore, he prayed that the assessee’s is right of being heard is violated and therefore, the appeal may be recalled so as to hear the assessee case on the merits in the interest of justice.
3. On the other hand, Id. DR supported the order of ITAT, Jaipur (supra) praying that the assessee wants to get ITAT’s order reviewed in the grab of Miscellaneous Application.
4. We have both parties and perused the material available on record. The bench prima facie notice that the case was fixed for hearing on 03.05.2023, the assessee has applied for adjournment on 27.04.2023 with a request to grant the assessee adjournment as the issue of leave encashment to nongovernment employees was under review by the CBDT based on the order of Delhi High Court dated 08.11.2019.
5. Considering the overall set of facts, bench note that in this case, the assessee filed an adjournment application which was not disputed. However, the Bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Therefore, considering the principle of nature justice which was violated based on the facts narrated and therefore, we hold that no body’s right is scuttled down and therefore, considering that aspect of the matter, we recalled the order dated 17.05.2023.
6. Now after recalling the order the case needs to be fixed for hearing afresh. But in the present case, since the assessee has already placed on record all the material so as to decide the issue on hand in ITA No. 17/JP/2023. Therefore, with consent of both the parties, the bench decided to proceed for considering the appeal of the assessee on its merits on the same day after recalling the order.
7. The assessee in this appeal has raised following grounds: –
“1. That the Id. CIT(A), NFAC has without appreciating the facts has restricted the claim under section 10(10AA)(ii) upto Rs. 3,00,000/-(Against actual receipt of Rs. 12,09,600/- as employee of M/s Ajmer Vidhyut Vitran Nigam Ltd., Ajmer (A Rajasthan State Government Employee).
2. Any other matter with prior permission of the chair.”
8. The brief facts of the case are that the appellant who retired as an ex-employee of M/s Ajmer Vidhyut Vitran Nigam Ltd. and has claimed an amount of Rs. 12,09,600/- being leave encashment received as exempt u/s 10(10AA) of the Act. However, the AO, CPC while processing the return of income has allowed exemption of only Rs. 3,00,000/- as against 100% exemption claimed by the assessee. When the matter carried to Id. CIT(A), he confirmed the finding of the Assessing Officer and thereby dismissed the appeal of the assessee.
9. Aggrieved from that finding of lower authorities, the assessee carried the matter before this Tribunal. At the time of hearing, Id. AR of the assessee submitted the notification No. 31/2023/F. No. 200/3/2023-ITA-1 dated 24th May, 2023 wherein the limit of leave to be claimed as exempt and the limit was extended to Rs. 25,00,000/- and the claim of the assessee in this case being an amount of Rs. 12,09,600/- thereby squarely covered with that revised limit and the similar issue has been decided by the tribunal vide ITA No. 542/JP/2023 on 04.10.2023.
10. On the other hand, Id. DR relied upon the order of lower authorities but at the same time, when he confronted on the fact argued by the Id. AR of the assessee, he did not dispute the facts stated by the Id. AR of the assessee.
11. We have heard the rival contentions and perused the material placed on record. The bench noted that apple of discord in this case whether the claim of the assessee for leave encashment received at the time of retirement for an amount of Rs. 12,09,600/-be considered as exempt as per provisions of section 10(10AA)(ii) of the Act. The bench noted that the limit of leave encashment be claimed by the assessee was revised from Rs. 25,00,000/- as specified vide notification No. 31/2023/F. NO. 200/3/2023-ITA-1 dated 24th May, 2023 and therefore, the assessee is eligible to claim deduction of the said amount of Rs. 12,09,600/- and Id. AO is directed to allow the claim of the assessee within the revised limit as prescribed. Since the issue has already been decided by the bench vide ITA No. 408/JP/2022 and 542/JP/2023 therefore, on being consistent to that we direct the Id. AO to allow the claim to the extent of the revised limit as per the circular as referred herein above.
In the result, Miscellaneous Application as well as appeal of the assessee is allowed as indicated hereinabove.
Order pronounced in the open Court on 18/02/2025 (give maximum linking
