ITAT Chennai treats BSNL VRS-2019 payout as Section 10(10B) retrenchment compensation and condones prolonged appeal delay

Background of the dispute

The Income Tax Appellate Tribunal, Chennai Bench, dealt with two connected appeals filed by Shri Sekar Gnanaprakasam Vs DCIT (ITAT Chennai) relating to Assessment Year 2020-21 and Assessment Year 2021-22. Both appeals arose from orders passed by the Addl./JCIT(A)-12, Mumbai under Section 250 of the Income Tax Act 1961.

The First Appellate Authority had dismissed the assessee’s appeals at the threshold without entering into the merits. The core reasons were:

  • A delay of 1592 days in one appeal and 1455 days in the other in filing before the Commissioner (Appeals); and
  • A finding that the assessee had not established “sufficient cause” for such belated filing.

The assessee, a senior citizen and retrenched BSNL employee, challenged both (a) the refusal to condone the delay, and (b) the denial of exemption on ex-gratia received under BSNL VRS-2019 which, according to him, qualified as retrenchment compensation exempt under Section 10(10B) along with related relief under Section 10(10AA).

Delay in filing appeal: facts and explanation

Orders of the First Appellate Authority

The Commissioner (Appeals) rejected the appeals in limine on the ground that:

  • There was a delay of 1592 days in one case and 1455 days in the other;
  • The assessee’s plea that he became aware of the exemption only later was not accepted as “reasonable cause”; and
  • Even assuming he came to know of a favourable Tribunal decision in BSNL VRS matters, there was still a further gap of around 250 days before appeals were filed.

On this basis, the First Appellate Authority declined to condone the delay and did not examine the substantive question of exemption under Section 10(10B) and Section 10(10AA).

Assessee’s case before ITAT on limitation

Counsel for the assessee contended before the Tribunal that:

  • The assessee is a senior citizen and a retrenched BSNL employee, unfamiliar with technical income-tax provisions;
  • At the time of filing the original returns, he was not aware that compensation under BSNL VRS-2019 could be considered retrenchment compensation exempt under Section 10(10B);
  • He initially claimed exemption only under Section 10(10C) up to Rs.