DINESH KUMAR MITTAL,JAIPUR V. ITO WARD 1(1), JPR, JAIPUR

ITA 1570/JPR/2024

AI Insights

The case involves Dinesh Kumar Mittal, a retired employee of the Rajasthan government, who appealed against the order of the CIT(A) which upheld the restriction of his leave encashment claim under section 10(10AA) of the Income Tax Act, 1961, to Rs. 3,00,000 from Rs. 20,29,482 claimed. The Assessing Officer (AO) had initially restricted the claim citing non-verification of the leave encashment amount due to non-submission of Form 16. The CIT(A) upheld this decision, leading to Mittal's appeal to the Tribunal. The Tribunal noted that the limit for leave encashment had been revised to Rs. 25,00,000 post the AO's decision and found merit in Mittal's claim, directing the AO to allow the deduction within the revised limit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46819 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2021-2022
• Other Referred Cases: Kamal Kumar Kalia & Ors. Vs. Union of India & Ors in WP(C) 11846/2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: ASHOK KUMAR GUPTA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 154; 143(1); 10(10AA)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1570/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2021-22 Dinesh Kumar Mittal C-154, Sunder Marg Tilak Nagar, Jaipur cuke Vs. ITO Ward 1(1), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABDPM9782D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Ashok Kumar Gupta, Adv. jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 02/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 07/04/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM On being aggrieved by the order of the leaned Addl. / Jt. Commissioner of Income Tax, Vadodara dated 29/10/2024 [ for short CIT(A)] the above named assessee preferred the present appeal. The dispute relates to the assessment year 2021-22. The said order of the ld. CIT(A) arises because the assessee has challenged the order dated 27.01.2023 passed under section 154 of the Income Tax Act, 1961 [ for short “Act”] by CPC, Bangalore [ for short AO]. 2 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO 2. Succinctly, the fact as culled out from the records that the assessee while filling return of income claimed deductions u/s 10(10AA) of the Act for an amount of Rs. 20,29,482/- which was not granted to the assessee and the same was granted to the extent of Rs. 3,00,000/- only. The relevant extract from the intimation is extracted hereinbelow. 3. Aggrieved by that order passed u/s 154 r.w.s 143(1) of the Act by ld. AO CPC assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “6. Decision 6.1. Ground 1: The grounds of appeal and statement of facts and the order uis 154 of the act in the case of the appellant have been carefully considered. It is 3 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO observed that the CPC had computed total income of the appellant at Rs. 35,71,070/-restricting claim of Rs. 20,29,482/-for leave encashment of the appellant u/s 10(10AA) to Rs. 3,00,000/- only. 6.1.2 The appellant pleads that he has superannuated on 30.09.2020 from the services of Rajasthan government obtaining leave encashment of Rs. 20,29,482/- . The appellant claims that the same is fully exempt to him u/s 10(10AA) of the act as the appellant was a state government employee. However, the AO, CPC vide order u/s 154 of the act dated 27.01.2023 restricted the claim to Rs. 3,00,000/- only. In this regard it is noted that the appellant filed the ITR within the extended due date. Further, on verification of the submissions made by the appellant such as I- Card of the department where the appellant was serving before superannuation, Pension certificate issued by the department of the appellant. However, to verify the claim of the appellant and the amount of leave encashment obtained by the appellant, it was specifically requested to the appellant vide notices dated 15.10.2024 and 25.10.2024 to submit Form 16 for the given AY. However, despite repeated reminders the appellant failed to submit the same and therefore the claim of the appellant regarding the amount and genuineness of leave encashment obtained cannot be verified. The provisions of section 10(10AA) of the act are reproduced below for ready reference INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (10A) (i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or a corporation established by a Central, State or Provincial Act. 4 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO (10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise. It is quite clear from the provisions of section 10(10AA) as highlighted above, that the amount of cash equivalent received by the appellant in respect of the period of learned leave does not form part of total income, but since the amount of leave encashment received by the appellant cannot be verified due to non submission of Form 16 by the appellant despite repeated reminders the benefit of section 10(10AA) of the act cannot be extended to the appellant. Therefore, the AO, CPC has rightly limited the leave encashment received by the appellant to Rs.3,00,000/- only. In view of the above, the order u/s 154 of the act dated 27.01.2023 is upheld. The appeal on this ground is Dismissed. 7. In the result, the appeal is \"Dismissed\".” 4. Since the appeal of the assessee was dismissed by the ld. CIT(A) by an order dated 29.10.2024, the assessee is in appeal challenged that the finding of ld. CIT(A) on the various grounds which reads as under; 1. The impugned Ex-party order U/s 143(1) dated 23/01/2023 which confirmed by Ld. CIT(A) (NFAC) through Appellate order as well as complete proceedings and further issued Notices in respect thereto are illegal, bad in law and on the facts of the case for want of jurisdiction, barred by limitation and various other reasons (grounds), against the provisions and procedure as per law and further contrary to the real facts of the case hence all the consequent notices as well as the subsequent proceedings and orders are invalid, illegal and bad in law hence liable to be quashed. 2. The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 17,29,482/- made by the Ld. CPC on account of alleged non verification of leave encashment amount, due to non- submission of Form 16 and deemed it as income, and also erred without bringing any cogent material in support of his contention and without bringing corroborative evidence and without considering the materials and explanations available on records in their true perspective and sense. Hence the addition so 5 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO made by Ld. CPC and confirmed by the Ld. CIT (A) is being contrary to the provisions of the law and facts of the case therefore the same may kingly be deleted in toto, 3. The Ld. CIT(A) has grossly erred in deciding the appeal against the assessee without providing opportunity of being heard therefore violation of natural justice hence appeal should be restored. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B and C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 5. That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 5. As the assessee did not find any favour, from the appeal filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds raised by the assessee, ld. AR of the assessee, has filed the written submissions in respect of the various grounds raised by the assessee and the same is reproduced herein below: The brief facts are that the appellant an individual superannuated from the department of Medical and health services, Government of Rajasthan on 30.09.2020. The appellant during the year filed return of income on 07.09.2021 declaring total income at Rs. 18,41,580/-. Further the appellant received an intimation u/s 143(1) of the act dated 01.12.2022 wherein the income was computed at Rs. 35,71,060 by the AO, CPC on account of restricting the claim of leave encashment u/s 10(10AA) to Rs. 3,00,000/- instead of Rs. 20,29,482 as claimed by the appellant. 6 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO The appellant filed 2 rectification requests which were disposed off vide order dated 23.01.2023 and 27.01.2023 upholding the additions made in the intimation u/s 143(1) of the act. Further the appellant preferred an appeal, before CIT(A)/NFAC against the order u/s 154 dated 27.01.2023 upholding the intimation u/s 143(1) of the act wherein the leave encashment u/s 10(10AA) of the act was restricted to Rs 3,00,000/- against Rs. 20,29,482/- as claimed by the appellant thus making an addition of Rs. 17,29,482/- to the total income of the appellant and computing the total income at Rs. 35,71,060/-. Further the CIT(A) vide his order dated 29/10/2024 upheld the order passed u/s 154 dated 27.01.2023, and aggrieved by the same the assessee preferred this instant appeal by raising following grounds:- Grounds of Appeal:- 1. The impugned Ex-party order U/s 143(1) dated 23/01/2023 which confirmed by Ld. CIT(A) (NFAC) through Appellate order as well as complete proceedings and further issued Notices in respect thereto are illegal, bad in law and on the facts of the case for want of jurisdiction, barred by limitation and various other reasons (grounds), against the provisions and procedure as per law and further contrary to the real facts of the case hence all the consequent notices as well as the subsequent proceedings and orders are invalid, illegal and bad in law hence liable to be quashed. 2. The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 17,29,482/- made by the Ld. CPC on account of alleged non verification of leave encashment amount, due to non- submission of Form 16 and deemed it as income, and also erred without bringing any cogent material in support of his contention and without bringing corroborative evidence and without considering the materials and explanations available on records in their true perspective and sense. Hence the addition so made by Ld. CPC and confirmed by the Ld. CIT (A) is being contrary to the provisions of the law and facts of the case therefore the same may kingly be deleted in toto, 3. The Ld. CIT(A) has grossly erred in deciding the appeal against the assessee without providing opportunity of being heard therefore violation of natural justice hence appeal should be restored. 7 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B and C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 5. That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. Submission Ground No. 2 Apropos to this ground we submit that during the relevant assessment year the assessee superannuated from the department of Medical and health services, Government of Rajasthan on 30.09.2020 and while filing his return of income he declared and claimed leave encashment u/s 10(10AA) to for Rs. 20,29,482, as the same was received by him at the time of his superannuation, however, the same was restricted by the Ld. CPC to Rs. 3,00,000/- only. Further the assessee filed 2 rectification applications but he did not get the relief and further approached CIT(A) by filing first appeal, however, the Ld. CIT(A) uphold the order of the Ld. CPC as the assessee could not submit his FORM 16 for concerned assessment year. The FORM 16 of the assessee is annexed with this written submission for your kind perusal, wherein the amount on account of leave encashment is clearly mentioned. Further we submit that as per section 10(10AA) of the income tax act it is clear that an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise shall not be included in the total income of the assessee. Below the pertinent part of the section 10(10AA) of the act:- Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— . . 8 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO (10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise ; PRAYER In view of the above submission, humbly prayed; 1. The all Addition made should be deleted, 2. That Interest charged u/s 234A,234B & 234C, 234D should be deleted. 3. Any other relief as your honour deem fit for necessary in the interest of assessee. 6. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the limit of leave encashment which has been enhanced by CBDT should be given benefit to the assessee considering the facts of the case. That circular was issued after the direction of the Hon’ble Delhi High Court and therefore, that clarification so issued by CBDT equally applies to the facts of the assessee. The ld. CIT(A) has dismissed the appeal of the assessee merely on the grounds that the assessee has not filed form No. 16 and thereby he could not verify the claim of the assessee u/s 10(10AA) of the Act and therefore, the appeal was dismissed restricting the leave encashment received to the extent of Rs. 3,00,000/- only. Ld. AR thus submitted that the what applies to Rs. 3 lac were also applied for the full claim of the assessee and thereby the reasons 9 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO advanced were not correct. In support of the contention ld. AR of the assessee also filed a paper book containing the following evidence / records: S. No. Particulars Page No. Docs submitted before AO Docs submitted before CIT(A)/NFAC 1 Original ITR along with computation dated 07/09/2021 1-4 Yes Yes 2 Assessee’s pensioner’s identity Card valid from 01/10/2020 5 Yes No 3 Assessee’s pension payment order dated 09/11/2020 6 Yes No 4 Form 16 for AY 2021-22 7-12 No No 7. Per contra, ld. DR relied upon the orders of the lower authority and submitted that the claim of the assessee was considered based on the direction available at the time when the order was passed and thereby he supported the orders of the lower authority. 8. We have heard the rival contentions and perused the material placed on record. The bench noted that apple of discord in this case is that whether the assessee being retired employee of State Govt. of Rajasthan, and upon retirement of the assessee he was granted leave encashment 10 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO benefit for an amount of Rs. 20,29,482/- whether the same exempt to that extent or not. When the matter carried before the ld. CIT(A) he did not considered the claim of the assessee merely because the assessee has not filed the form no. 16 before him. Records reveals in the order under challenged passed by the ld. AO CPC that CPC was having information that the assessee has claimed Rs. 20,29,482/- as per provision of section 10(10AA) of the Act and the same is extracted here in above in para 2. Thus, contention of the ld. CIT(A) has no leg to stand. Now coming to the issue as to allowability of the claim between Rs. 3 or to Rs. 20,29,482/- as claimed by the assessee, the bench noted that the limit of leave encashment to be claimed by the assessee was revised to Rs. 25,00,000/- as specified vide notification No. 31/2023/F. NO. 200/3/2023-ITA-1 dated 24th May, 2023. Therefore, the assessee is eligible to claim Rs. 20,29,482/- as deduction which was restricted to Rs. 3 lac as the limit was revised on 24th May 2023. Since the issue has already been decided by the bench vide ITA No. 408/JP/2022 and same was followed in ITA no. 542/JP/2023. The finding recorded by the bench in ITA no. 408/JP/2022 reads as under : 8. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee relying the decision of Hon’ble Delhi High Court has issued a notice to the Union of India in the case of Kamal Kumar 11 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO Kalia & Ors. Vs. Union of India & Ors in WP(C) 11846/2019 dated 08.11.2019 wherein the court has given following directions :- “8. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10(10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect. 9. Issue notice, learned counsel for the respondents accepts notice. Respondents should file counter affidavits be filed within six weeks. Rejoinder thereto, if any, be filed before the next date.” 8.1 Recently the Central Board of Direct Taxes Suo motu revised the limit for deduction u/s 10(10AA) of the Act and the revised limit now stood at Rs. 25,00,000 as specified vide notification no. 31/2023 issued by the ministry of finance. Since the leave encashment amount as claimed by the assessee is amount to Rs. 6,97,100/- which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said Rs. 6,97,100/-. Based on these observations the ld. AO is directed to allow the claim of the assessee u/s. 10(10AA) of the act within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed. On being consistent with that finding we direct the Id. AO to allow the claim to the extent of the revised limit as per the circular as referred herein above. Based on that observation ground no. 1 to 3 are allowed. Ground no. 4 related to the charge of interest which is consequential in nature does not require our finding and ground no. 5 being general in nature does not require our finding. In the result, the appeal of the assessee is allowed. 12 ITA No. 1570/JP/2024 Dinesh Kumar Mittal vs. ITO Order pronounced in the open court on 07/04/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 07/04/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Dinesh Kumar Mittal, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward- 1(1), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1570/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "