Can a mistaken omission in a tax return be corrected to claim an exemption the assessee was always entitled to? The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has answered in affirmation and allowed exemption under Section 10(10B) for compensation received under BSNL VRS-2019 Scheme. The Tribunal relied on Jayeshkumar Tulsidas Sutaria v. ITO, which had allowed the same exemption for an identically placed BSNL employee, while finding no change in the factual matrix or legal proposition.
The Tribunal referred to CBDT Circular No. 14 of 1955, which directs officers not to take advantage of an assessee’s ignorance of their rights and to assist in securing reliefs and refunds. The Assessing Officer must recompute taxable income after allowing the exemption and grant refunds due, if any, according to law. The assessees must furnish compensation details and revised income computations claiming the additional exemption.
Briefly, three assessees filed appeals concerning compensation received under the Bharat Sanchar Nigam Limited Voluntary Retirement Scheme, 2019 (BSNL VRS-2019). In the lead case, Raysinh Atabhai Vala had not claimed exemption under Section 10(10B) of the Income Tax Act, while filing his return because he mistakenly believed the compensation was taxable.
Following a rectification order under Section 154, he raised the exemption claim before the Commissioner of Income Tax (Appeals), relying on an earlier Tribunal decision concerning the same scheme. The Commissioner rejected the claim, reasoning that voluntary retirement was different from retrenchment and that the Tribunal decisions relied upon had misinterpreted the statute.
The Division Bench comprising Rahul Chaudhary (Judicial Member) and Gangadhar Panda (Accountant Member) noted that its coordinate Bench had already allowed exemption under Section 10(10B) for an identically placed BSNL employee in Jayeshkumar Tulsidas Sutaria v. ITO [ITA Nos. 2387 & 2388/AHD/2025], and that this ruling had been followed in other cases.
The Tribunal also referred to the Supreme Court’s decision in Collector, Land Acquisition, Anantnag v. Katiji [(1987) 167 ITR 471 (SC)] on natural justice and condonation of delay, and CBDT Circular No. 14 of 1955, which directs tax officers not to take advantage of taxpayers’ ignorance of their rights and to assist them in obtaining reliefs and refunds.
Following the earlier Tribunal rulings, and finding no material difference in the facts or legal position, the ITAT held that the compensation received under BSNL VRS-2019 in these appeals was exempt under Section 10(10B). It accepted the lead assessee’s exemption claim for Rs. 3.16 lakhs and applied the same findings to the connected appeals.
