ITAT Guwahati Condones 1,659-Day Delay, Grants Section 10(10B) Exemption on BSNL VRS-2019 Compensation

Background and Context

A landmark ruling by the Income Tax Appellate Tribunal (ITAT), Guwahati Bench has brought significant relief to a large group of former Bharat Sanchar Nigam Limited (BSNL) employees who opted for the BSNL VRS-2019 Scheme. The Tribunal, while disposing of 64 appeals collectively through a common order, took the significant step of condoning a delay of 1,659 days in filing appeals and simultaneously held that compensation received under the BSNL VRS-2019 Scheme qualifies for exemption under Section 10(10B) of the Income Tax Act, 1961.

The lead case chosen for adjudication was Nongmeikapam Nando Singh Vs ITO (ITAT Guwahati), pertaining to Assessment Year 2020-21, with the decision rendered applicable mutatis mutandis to all remaining appeals given the commonality of facts and legal issues involved.

Factual Matrix of the Lead Case

The assessee in the lead matter was employed as a Telecom Office Assistant under the Central Government's Department of Telecom (DoT). Upon the formation of BSNL as a Public Sector Undertaking with effect from 1st October 2000, employees of DoT were placed on deemed deputation with BSNL. Subsequently, through a Presidential Order issued by DoT dated 28th November 2005, the assessee was formally absorbed into BSNL with retrospective effect from 1st October 2000.

The BSNL VRS-2019 Scheme

On 23rd October 2019, the Union Cabinet approved the BSNL Voluntary Retirement Scheme 2019. The Scheme was officially notified on 4th November 2019 and remained open for employee applications until 3rd December 2019. The Scheme offered a comprehensive exit package — commonly referred to as a "golden handshake" — comprising:

  • Ex-gratia payment calculated at 60 days' salary (basic pay plus Dearness Allowance) for each completed year of service, or the salary for the remaining months of service, whichever was lower, in accordance with Department of Public Enterprises (DPE) guidelines
  • Pension benefits
  • Other terminal benefits

Approximately 80,000 or more BSNL employees and officers participated in this large-scale workforce restructuring exercise.

The assessee opted for the Scheme and received compensation in two tranches — one portion in Financial Year 2019-20 and the balance in Financial Year 2020-21. Specifically, the assessee received:

  • Ex-gratia of Rs. 14,45,593/- attributable to AY 2020-21
  • An additional amount of Rs. 31,72,102/- also received in AY 2020-21 as part of scheme benefits

Filing of Return and Assessment

The assessee filed his return of income for AY 2020-21 on 30.11.2020, declaring total income of Rs. 23,35,050/-, acting on the advice of a professional accountant. The entire compensation received under the BSNL VRS-2019 Scheme was included in the taxable income, primarily owing to unawareness of the exemption available under Section 10(10B) of the Income Tax Act, 1961. The employer had also deducted tax at source (TDS) on the said compensation.

The return was processed under Section 143(1) of the Act by the Assessing Officer (ADIT, Centralized Processing Centre, Bengaluru) on 28.08.2021, accepting the declared income without granting any exemption on the VRS compensation.

Proceedings Before CIT(A) and the Delay Issue

It was only after the pronouncement of the judgment by the ITAT Chandigarh Bench in Harish Kumar V. Income-tax Officer – [2025] 175 taxmann.com 379 (Chandigarh – Trib.) that the assessee became aware of the availability of exemption under Section 10(10B) on compensation received under the BSNL VRS-2019 Scheme. Armed with this knowledge, the assessee filed an appeal before the Addl./Joint Commissioner of Income Tax (Appeals)-4, Hyderabad, electronically on 13.04.2026 — with a delay of 1,659 days from the prescribed time limit under Section 249(2) of the Act.

The assessee supported the delayed filing with an affidavit explaining that: