2025 (2) TMI 609 - AT - Income Tax

Addition of retrial benefits - apart from pension retiral benefits include gratuity and commutation of service pension - HELD THAT - The death-cum-retirement gratuity is exempt from tax u/s. 10(10) of the Act and commutation of pension is exempt u/s. 10(10A) of the Act. Hence the AO erred in making addition of amounts received under the above heads by the assessee. The AO is directed to exclude aforesaid amount from the addition made in impugned assessment year. In the result ground no. 3 of appeal is allowed pro tanto. Addition u/s. 56 under the head Income from Other Sources - HELD THAT - No submissions were made in respect of the above said ground of appeal. The ld. AR of the assessee made statement at Bar that he is restricting his submissions only on the issue of retiral benefits of gratuity and commutation of pension. Therefore ground no. 4 of appeal is dismissed. Appeal of the assessee is partly allowed.

Summary

The appeal in this case is directed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2019-20. The appellant, an ex-serviceman, received retiral benefits in the form of gratuity and commutation of pension, which are tax-free. The Assessing Officer made an addition of Rs. 27,89,735 under the head 'Income from Salary' based on Form 26AS, leading to an assessment under section 144 of the Income Tax Act, 1961. The appellant filed an appeal before the CIT(A) challenging the assessment order, which was time-barred by 189 days. The CIT(A) dismissed the appeal as the delay was not condoned. The appellant contended that the delay was unintentional and provided detailed reasons for the delay, which the CIT(A) did not appreciate.The appellant argued that the delay in filing the appeal was not intentional and provided bona fide reasons for the delay. The Tribunal noted that the Hon'ble Supreme Court has consistently held that the acceptance of reasons explaining delay should be the rule, and refusal should be the exception. The Tribunal criticized the CIT(A) for taking a pedantic view in rejecting the reasons for the delay, emphasizing that the expression "sufficient cause" should be liberally construed to serve the ends of justice. Citing relevant case law, the Tribunal stressed the need for a liberal approach in condoning delays to prevent meritorious matters from being dismissed at the threshold.On the merits of the case, the Tribunal found that the AO erred in adding the retiral benefits to the appellant's income. The Tribunal reviewed the Pension Payment Order and determined that the gratuity and commutation of pension were exempt from tax under sections 10(10) and 10(10A) of the Act, respectively. Consequently, the Tribunal directed the AO to exclude these amounts from the addition made in the assessment. As a result, ground no. 3 of the appeal was allowed partially.Regarding the addition under the head 'Income from Other Sources,' the appellant did not make any submissions, and the Tribunal dismissed this ground of appeal as the appellant focused only on the retiral benefits issue. Grounds no. 5 and 6, being general in nature, did not require separate adjudication. Ultimately, the Tribunal partly allowed the appeal of the assessee.In conclusion, the Tribunal emphasized the importance of liberally construing "sufficient cause" for condonation of delay and highlighted the need to consider the merits of the case thoroughly. The Tribunal's decision focused on ensuring justice and correct application of tax laws to the appellant's situation.