IMRAN AZAD WALLANI,HYDERABAD. V. ITO., WARD-8(1), SIGNATURE TOWERS, HYDERABAD.

ITA 720/HYD/2025

AI Insights

This case involves an appeal by Shri Imran Azad Wallani against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which dismissed his appeal ex parte. The primary issue in the appeal was the taxability of Rs.18,08,973 received by the assessee as a superannuation fund from his employer, J.P. Morgan Services India Private Limited, upon his cessation of employment. The assessee argued that the payment was an ex gratia amount and not taxable, relying on a release agreement dated 24.10.2017. In contrast, the Departmental Representative contended that the payment was a compensation for cessation of employment and thus taxable under section 17(3)(i) of the Income Tax Act, 1961. The Tribunal decided to remand the matter back to the CIT(A) for a thorough examination of the release agreement and other relevant evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711258 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: ITO vs. Avirook Sen [2024] 161 taxmann.com 462 (Delhi \\u2013 Trib.), Yatindra Kumar Vs. ITO (2011) 14 taxmann.com 154 (Pune), Sam Patel Vs. ITO (2007) 11 SOT 566 (Mumbai), ITO Vs. V.R. Ganti (1985) 13 ITD 901, V. Pathoor Vs. ITO (1982) 1 ITD 1127 (Madras)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: SAI PRASAD
• Keywords: Opportunity of being heard; Additional evidence; Salary income
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री विजय पाल राि, उपाध् यक्ष एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.720/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2018-19) Shri Imran Azad Wallani, Hyderabad. PAN:AAMPW2967J Vs. Income Tax Officer, Ward-8(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri K.A. Sai Prasad, C.A. रधजस् व द्वधरध/Revenue by: Dr. Sachin Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 17/07/2025 घोर्णध की तधरीख/Pronouncement: 25/07/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Imran Azad Wallani (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 18.02.2025 for the A.Y. 2018-19. 2. The assessee has raised the following grounds of appeal : Printed from counselvise.com ITA No.720/Hyd/2025 2 3. The brief facts of the case are that, the assessee is an individual who was employed with J.P. Morgan Services India Private Limited and left the said employment on 17th November 2017. The return of income of the assessee for Assessment Year 2018–19 was selected for complete scrutiny. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was served on the assessee on 28.09.2019. During the course of assessment proceedings, the learned Assessing Officer (“Ld. AO”) observed that the assessee had claimed Printed from counselvise.com ITA No.720/Hyd/2025 3 various exemptions/deductions aggregating to Rs.20,19,743/- during the year under consideration. In the absence of documentary evidences furnished by the assessee in support of such claims, the Ld. AO disallowed the said amount and completed the assessment under section 143(3) read with sections 143(3A) and 143(3B) of the Act, vide order dated 24.03.2021 by making addition of Rs.20,19,743/- in the hands of the assessee. 4. Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A). However, the assessee failed to comply with the notices issued by the Ld. CIT(A), and accordingly, the appeal of the assessee was dismissed ex parte. 5. Aggrieved with the order of Ld. CIT(A), the assessee has preferred the present appeal before this Tribunal. At the outset, the Learned Authorised Representative (“Ld. AR”) submitted that the assessee is pressing only Ground No. 6 of the total seven grounds raised in the appeal. Accordingly, ground no.1 to 5 and 7 of the appeal is dismissed being not pressed. Printed from counselvise.com ITA No.720/Hyd/2025 4 6. The ground no.6 of the assessee pertains to the allowability of exemption in respect of superannuation fund received by the assessee amounting to Rs.18,08,973/- from his employer upon cessation of employment. In this regard, the Ld. AR submitted that the said amount was received pursuant to a release agreement dated 24.10.2017, and the nature of payment was ex gratia, falling outside the ambit of “salary” or “profits in lieu of salary” and, therefore, not taxable. The Ld. AR placed reliance on the decision of the Hon’ble ITAT, Delhi Bench, in the case of ITO vs. Avirook Sen [2024] 161 taxmann.com 462 (Delhi – Trib.), wherein similar receipt was held to be non-taxable in the hands of the employee. It was contended that the payment was not made as compensation for termination of employment, but rather as a voluntary ex gratia amount, which is not covered under the deeming provisions of section 17(3)(i) of the Act. 7. Per contra, the learned Departmental Representative (“Ld. DR”) submitted that the payment received by the assessee was clearly in the nature of compensation for cessation of employment, and therefore squarely falls within the ambit of section 17(3)(i) of the Act, which deems such compensation as taxable salary income. The Ld. DR Printed from counselvise.com ITA No.720/Hyd/2025 5 relied upon the decisions of the Hon’ble ITAT in the case of Yatindra Kumar Vs. ITO (2011) 14 taxmann.com 154 (Pune); Sam Patel Vs. ITO (2007) 11 SOT 566 (Mumbai); ITO Vs. V.R. Ganti (1985) 13 ITD 901 and V. Pathoor Vs. ITO (1982) 1 ITD 1127 (Madras), wherein similar termination-related payments were held to be taxable. It was submitted that there is no error in the order of the Ld. AO and the payment is rightly brought to tax. 8. We have considered the rival submissions and gone through the orders of the lower authorities and documents placed on record. The short issue under consideration is whether the amount of Rs.18,08,973/- received by the assessee on cessation of employment from J.P. Morgan Services India Private Limited constitutes a taxable receipt under section 17(3)(i) of the Act or is in the nature of non- taxable ex gratia payment. 8.1 It is noted that the assessee relied on the release agreement dated 24.10.2017 to support his claim that the amount was voluntary in nature and not contractual or compensatory. However, the Ld. CIT(A) has dismissed the appeal ex parte, as the said release agreement could Printed from counselvise.com ITA No.720/Hyd/2025 6 not be produced by the assessee before the Ld. CIT(A). Therefore, the Ld. CIT(A) could not adjudicate the appeal on merits. Accordingly, in the interest of substantive justice, we deem it appropriate to remand the matter back to the file of the Ld. CIT(A) for de novo adjudication of Ground No. 6, after examining the release agreement and any other additional evidence the assessee may wish to furnish in support of his claim. The Ld. CIT(A) shall grant proper opportunity of being heard to the assessee before deciding the issue. 9. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 25th July, 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 25.07.2025. * Reddy gp Printed from counselvise.com ITA No.720/Hyd/2025 7 Copy of the Order forwarded to : 1. Shri Imran Azad Wallani, C/o Katrapati & Associates, 1-1-298/2/B/3, Sowbhagya Avenue Apartments, 1st Floor, Ashok Nagar, Street No.1, Hyderabad-500 020 2. ITO, Ward 8(1), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "