Rectification application u/s 154 for claim of leave salary encashment exemption u/s 10(10AA) dismissed as barred by limitation
In a recent judgment, ITAT has dismissed a plea for claim for leave salary encashment exemption u/s 10(10AA) as the rectification application u/s 154 was made nearly after eight years.
ABCAUS Case Law Citation:
ABCAUS 3860 (2024) (02) ITAT
In the instant case, the assessee had challenged the order passed by the CIT (A), National Faceless Appeal Centre FOR rejection of application u/s 154 of the Income Tax Act, 1961 (the Act) for claim of leave salary encashment exemption u/s 10(10AA) of the Act.
The assessee filed his return of income without claiming any exemption u/s 10(10AA) of the Act. The return was processed u/s 143(1).
Subsequently, the assessee filed a rectification application u/s 154 of the Act claiming exemption u/s 10(10AA) of the Act on account of leave encashment. This application was dismissed by the Assessing Officer (AO) who was of the opinion that a fresh claim can only be made through a revised return of income.
The assessee challenged the order of the AO before the CIT(A) and contended that pursuant to the decision of the Co-ordinate Bench it became aware of the eligibility of exemption in respect to leave salary encashment u/s 10(10AA) of the Act and hence moved a rectification application to rectify the mistake apparent from record.
The contention of the assessee did not find any favour with the CIT(A) who was of the belief that the claim can only be made through a revised return of income. The CIT(A) further observed that the assessee had moved the rectification application after nearly eight years after the intimation u/s 143(1) was passed which was beyond the period of limitation as provided in section 154 of the Act.
The Tribunal observed that the assessee did not make any claim in his return of income was undisputed. It was true that after the judgment of the Tribunal the assessee became aware of the eligibility of the deduction available u/s 10(10AA) of the Act that was four years later and the rectification application was moved after further four years later.
The Tribunal opined that considering from all possible angles the application of the assessee was barred by limitation u/s 154 of the Act. Most importantly on the date of the processing of the return, there was no mistake apparent from record which could be rectified u/s 154 of the Act.
With respect to the decisions relied upon by the assessee, the Tribunal observed that it was on a different set of facts mostly on the eligibility of the claim of deduction u/s 10(10AA) of the Act but the case of the assessee was the claim u/s 154 of the Act which was barred by limitation.
Accordingly, the ITAT declined to interfere with the finding of the CIT(A) and the appeal of the assessee was dismissed.
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