ITAT Bangalore Allows Appeal of Retired Defence Personnel: Delay Condoned and Additions on Retirement Benefits Deleted

Background of the Appeal

The appeal was filed by Biju Pappachan Vs ITO before the ITAT Bangalore against the order dated 31.07.2025 passed by the ld. CIT(A)/NFAC under Section 250 for Assessment Year 2019-20. The ld. CIT(A)/NFAC had dismissed the assessee’s appeal at the threshold, solely on the ground that it was filed with a delay of 298 days, without examining the substantive issues raised.

The assessee, a retired Indian Air Force personnel, had challenged:

  • Disallowance of exemption of gratuity of ₹7,19,063 claimed under Section 10(10)
  • Disallowance of exemption of commuted pension of **₹15,25,689** claimed under Section 10(10A)`
  • Addition of ₹3,84,000 as unexplained money under Section 69A relating to a fixed deposit

The Assessing Officer (AO) had also invoked Section 115BBE on the additions, treating the amounts as taxable at special rates, even though they were reflected as part of salary and investments.

The Tribunal was therefore required to consider:

  1. Whether the delay of 298 days in filing the appeal before the ld. CIT(A)/NFAC should be condoned; and
  2. Whether the additions made by the AO on account of gratuity, commuted pension, and fixed deposit were sustainable in law.

Issue 1: Delay of 298 Days in Filing Appeal Before CIT(A)/NFAC

Circumstances Leading to Delay

The assessee filed an affidavit explaining in detail the reasons for the delay. Key points from the affidavit, as noted and accepted by the Tribunal, were:

  • The assessee retired from the Indian Air Force in 2018 and permanently shifted from his earlier residence in Bangalore to his native place in Kerala.
  • All departmental notices in the reassessment proceedings were issued to his old Bangalore address, which he had vacated. Those notices were returned undelivered, and the assessee remained unaware of the reassessment proceedings and the eventual reassessment order.
  • The assessee had limited comfort with online tax systems and digital compliances, and relied entirely on a local tax consultant for handling return filing and related matters.
  • The consultant, however, did not properly monitor the reassessment proceedings, did not inform the assessee about the adverse order, and gave him the impression that after filing the return in response to the notice under Section 148 and paying due tax, no further action was pending.
  • The assessee only came to know about the reassessment order and consequential demand when communication finally reached his Kerala address. Promptly thereafter, he approached another consultant and initiated the appeal before NFAC, though by then the limitation period had expired.

The assessee asserted that:

  • The delay was unintentional,
  • There was no mala fide or deliberate attempt to delay litigation, and
  • The cause for delay stemmed from factors beyond his control, such as relocation, lack of digital proficiency, and the consultant’s lapse.

Stand of the Revenue

The ld. D.R. opposed condonation of delay, pointing out that:

  • The assessee did not appear before the AO in assessment proceedings; and
  • He also did not appear before the ld. CIT(A)/NFAC before the appeal was dismissed as time-barred,

and argued that this conduct reflected negligence or lack of diligence on the part of the assessee.

Tribunal’s Analysis on Condonation of Delay

The Tribunal evaluated the affidavit, surrounding circumstances, and applicable legal precedents.