ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5(2)(1), NOIDA, NOIDA V. RAJ KAMAL VERMA, NOIDA, GAUTAM BUDDH NAGAR

MA 24/RPR/2025

AI Insights

The case revolves around a dispute concerning the tax treatment of leave encashment received by Raj Kamal Verma, an Executive Director at Union Bank of India, for the assessment year 2019-20. The Assessing Officer (A.O.) initially disallowed a significant portion of the leave encashment amount, treating the assessee as a private sector employee, which was upheld by the CIT(Appeals)/NFAC. However, the Tribunal reversed this decision, recognizing the assessee as a government employee due to his position in a public sector bank. The revenue's miscellaneous application sought to challenge this recognition, but the Tribunal found no mistake in its earlier ruling.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793535 (ITAT-RAIPUR)
• Duration Of Justice: 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 12-09-2025
• Other Referred Cases: Kamal Kumar Kalia v. Union of India [2019] 111 taxmann.com 409 (Delhi), T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), CIT Vs. Ramesh Electric & Trading Company 203 ITR 497 (Bom.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: BHARAT KUMAR
• Keywords: Rectification of order
• Section: 10(10AA)

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR (Through virtual hearing) Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No.24/RPR/2025 (Arising out of ITA No.199/RPR/2023) Ǔनधा[रण वष[/Assessment Year : 2019-20 The Assistant Commissioner of Income Tax, Circle-1(1), Raipur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. Raj Kamal Verma Flat No.1401, Tower-12, Sun World, Vanalika, Sector-107, Noida, 31-Uttar Pradesh, 91-India, PAN: ABXPV5485A ……Ĥ×यथȸ / Respondent Assessee by : Shri Bharat Kumar, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 26.09.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 26.09.2025 Printed from counselvise.com 2 MA No.24/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned Miscellaneous Application has been filed by the revenue u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the order passed by the Tribunal in ITA No.199/RPR/2023 for assessment year 2019-20, dated 19.03.2025. 2. At the very outset, the relevant paras of the impugned order in ITA No.199/RPR/2023, dated 19.03.2025 are culled out as follows: “3. The facts on record are that the assessee is a Executive Director in the Board of Union Bank of India and admittedly, it is a public sector bank wherein the majority of the stake holding is with the goverment. In such scenierio, durign the assessment proceedings, it was observed by the A.O that the assessee had received leave encashment of Rs.21,05,880/-. The A.O was of the view that the assessee is an employee of a private sector bank, therfore, such amount could not be allowed as deduction. Accordingly, in this regard, the A.O allowed exemption only of Rs.3 lacs out of Rs.21,05,880/- and an amount of Rs.18,05,880/- was disallowed and added to the total income of the assessee. 4. On appeal before the first appellate authority, the Ld. CIT(Appeals)/NFAC upheld the disalloance of Rs.18,05,880/- . 5. The assessee being aggrieved with the order of the Ld. CIT(Appeals) has carried the matter in appeal before the Tribunal. 6. I have carefully considered the facts and submissions of the Ld. Sr. DR and examined the documents available on record. This is a case where leave encashment amount has been disallowed by the A.O which had been uphled by the Ld. CIT(Appeals)/NFAC on the ground that the concerned assessee is a private sector employee. However, it is an admitted fact that he is an Executive Director of the Board of Printed from counselvise.com 3 MA No.24/RPR/2025 Union Bank of India which is a public sector bank wherein goverment is having majority of share holding, In such scenerio, the assessee who is responsibly holding a position of such Executive Director in a public sector bank is a goverment employee and not a private employee. The Assessing Officer as well as the Ld. CIT(Appeals)/NFAC had not brought on record any material which would prove that the assessee is an employee of a private sector and not a goverment employee. Rather, on the contrary, as per the facts available on record, it is established that the assessee is an employee of the govement being Executive Director of Board of the Union Bank of India. Considering these facts, the addition of Rs.18,05,880/- made/sustained by the lower authorites is unjustified, arbitrary and bad in law and thus, the same is deleted. 7. As per the aforesaid terms the grounds of appeal raised by the assessee are allowed. 8. In the result, appeal of the assessee is allowed.» 3. That as discernible from the aforesaid, the Tribunal had passed well-reasoned order wherein it had observed that the assessee is an Executive Director in the Board of Union Bank of India which is admittedly, a public sector bank wherein the majority of the stake holding is with the government and therefore, the assessee who is responsibly holding a position of such Executive Director in such public sector bank, is a government employee and not a private employee. 4. At the same time, the Revenue has failed to bring on record any evidence as alleged that the assessee is an employee of private sector. In such scenario, the grounds that have been assailed by the Revenue in the present miscellaneous application are examined and considered which reads as follows: Printed from counselvise.com 4 MA No.24/RPR/2025 “1. That the Hon'ble Tribunal has erred in holding that the assessee who is responsibly holding a position of Executive Director in Union Bank of India, a public sector bank is a government employee and not a private employee. The reasoning opted by ITAT is untenable in view of settled law. 2. That the exemption under Section 10(10AA)(i) is available only to employees of the Central Government or State Government. Employees of public sector undertakings, even with 100% government ownership, are not entitled to this benefit, as held in multiple court decisions. 3. That the decision of the Hon'ble Tribunal is contrary to the judgment of the Hon'ble Delhi High Court in Kamal Kumar Kalia v. Union of India [2019] 111 taxmann.com 409 (Delhi), wherein it was categorically held that retirees of PSUs and nationalized banks are not eligible for exemption under Section 10(10AA). 4. That the order of the Hon'ble ITAT constitutes a 'mistake apparent from the record', as the Hon'ble Tribunal's decision is based on an erroneous interpretation of the status of an employee of a public sector bank in the context of eligibility for exemption under Section 10(10AA) of the Income-tax Act, 1961. 5. That the order of Hon'ble ITAT requires to be re-examined in light of the above grounds. The revenue craves leave to add, alter or amend the existing grounds of appeal during the appellate proceedings.” 5. I have heard the submissions of the parties herein and perused the grounds raised by the Revenue in the present miscellaneous application a/w. order of the Tribunal passed in ITA No.199/RPR/2023, dated 19.03.2025. That on a perusal of the order of the Tribunal (supra), I find that the Tribunal while adjudicating the appeal filed by the assessee, had adjudicated the issues on merits after detailed examination of facts on record. I am of the considered view that the Revenue had failed to point Printed from counselvise.com 5 MA No.24/RPR/2025 out any mistake apparent from record in the afore-stated order of the Tribunal and in the guise of the present miscellaneous application, it is seeking review of the order passed by the Tribunal in ITA No.199/RPR/2023, dated 19.03.2025, which is beyond the scope of jurisdiction as envisaged u/s. 254(2) of the Act. The Ld. Sr. DR failed to point out any mistake which is apparent, obvious, patent and glaring. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. I do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. 6. My aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein the Hon'ble Apex Court had held as under: Printed from counselvise.com 6 MA No.24/RPR/2025 \" ....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record........\" Also, a similar view had been taken by the Hon'ble Supreme Court in the case of Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), wherein it was held as under: \"From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that\" 7. The Hon'ble High Court of Bombay in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 (Bom.) has held Printed from counselvise.com 7 MA No.24/RPR/2025 that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 8. Accordingly, the miscellaneous application filed by the revenue u/s.254(2) of the Act is dismissed as devoid and bereft of any merit. 9. In the result, miscellaneous application filed by the revenue is dismissed. Order pronounced in open court on 26th day of September, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 26th September, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. Printed from counselvise.com 8 MA No.24/RPR/2025 आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur Printed from counselvise.com "