RAVINDER KUMAR,KARNAL VS. INCOME TAX OFFICER, WARD-1, KARNAL, ITA 5553/DEL/2024
In a notable ruling, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) provided major relief to an ex-serviceman by deleting tax additions on his retiral benefits. The case involved Ravinder Kumar, a retired serviceman from Karnal, Haryana, who faced income tax addition of ₹27.89 lakhs, wrongly assessed under the head “Income from Salary.”
The appeal, although filed with a delay of 189 days, was condoned by the Tribunal considering the bona fide reasons provided and a liberal interpretation of “sufficient cause” as laid down by the Supreme Court.
Background of the Case
The assessee had received retirement benefits during Assessment Year (AY) 2019–20, including:
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Gratuity: ₹7,30,471
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Commutation of Pension: ₹13,83,329
These amounts were tax-free under:
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Section 10(10) – Exempts death-cum-retirement gratuity
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Section 10(10A) – Exempts commutation of pension
However, the Assessing Officer (AO) taxed the entire credited amount reflected in Form 26AS under “Salary” while passing the assessment under Section 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act.
Appeal Dismissed by CIT(A) for Delay
Ravinder Kumar filed an appeal before the National Faceless Appeal Centre (NFAC), but it was dismissed in limine by the CIT(A) due to the 189-day delay in filing.
The assessee had submitted detailed reasons for the delay, but the CIT(A) chose not to condone it, taking a technical and rigid view.
ITAT’s Observations and Ruling
The Tribunal noted that:
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The assessee had genuine reasons for the delay.
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The CIT(A) adopted a pedantic approach by refusing condonation.
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Courts must adopt a liberal stance while interpreting “sufficient cause,” as laid down in landmark Supreme Court rulings like:
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Collector, Land Acquisition vs. Katiji – 167 ITR 471
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Ram Nath Sao vs. Gobardhan Sao – AIR 2002 SC 1201
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The ITAT emphasized that substantial justice must not be sacrificed at the altar of technicality.
Tax Addition on Gratuity and Pension Deleted
On merits, the ITAT examined the Pension Payment Order (PPO) and held:
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The AO erred in including tax-free amounts like gratuity and commutation of pension in taxable income.
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These components were clearly exempt under the Income Tax Act.
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The AO was directed to delete the said additions, bringing partial relief to the assessee.
Other Grounds
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Addition of ₹17,408 u/s 56 (Income from Other Sources) was not contested, and hence dismissed.
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General grounds were deemed non-substantive and required no adjudication.
Final Outcome
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Appeal Partly Allowed
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Delay Condoned
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Tax on Exempt Retirement Benefits Deleted
Conclusion
This ruling reiterates that retiral benefits like gratuity and pension commutation are tax-free under Indian tax law. It also showcases the Tribunal’s commitment to ensuring justice over procedural rigidity, especially when taxpayers present genuine causes for delay.
This case serves as a vital precedent for other retired personnel facing incorrect tax demands on their exempt retirement incomes.