Govardhan Deepchand Bhambhani Vs ITO (ITAT Ahmedabad)
The assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT) Ahmedabad against the order dated 9 December 2023 passed by the Additional Commissioner of Income Tax (Appeals)-9, Delhi. The appeal concerns the assessment year 2020-21 and arises from an intimation issued under section 143(1) of the Income Tax Act, 1961. The assessee, an individual retired from Punjab National Bank, filed a return of income on 25 December 2020 declaring total income of ₹5,82,970 and claimed exemption of ₹7,65,404 as leave encashment under section 10(10AA)(ii). The return was processed under section 143(1), and the Centralized Processing Centre restricted the exemption to ₹3 lakh.
The assessee appealed before the Commissioner of Income Tax (Appeals), arguing that the leave-encashment exemption limit had not been revised since 2002 and that the entire amount should be allowed. The CIT(A) rejected the claim, noting that the exemption limit had been increased to ₹25 lakh only with effect from 1 April 2023 through Notification No. 31/2023 dated 24 May 2023. The CIT(A) reproduced the notification, which specifies ₹25 lakh as the limit for employees covered under section 10(10AA)(ii), applicable from 1 April 2023. The order also cited a Patna High Court decision stating that although the increase was delayed, the revision does not benefit individuals who retired earlier because taxing statutes permit classification of taxpayers and do not necessarily create discrimination. On this basis, the CIT(A) held that the assessee, having retired in financial year 2019-20, could not avail the enhanced limit and upheld the restriction to ₹3 lakh.
