Ex-gratia compensation received under the BSNL VRS-2019 scheme, being approved by the Union Cabinet and funded by government budgetary support, is treated as retrenchment compensation eligible for exemption under Section 10(10B) of the Income Tax Act, 1961.

आदेश/ O R D E R

PER GEORGE GEORGE K, VICE PRESIDENT:

These appeals filed by the assessee are directed against two orders of the Add/JCIT(A)-12, Mumbai, both dated 07.03.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2020-21 & 2021-12.

At the very outset, we notice that the First Appellate Authority (FAA) had dismissed the appeals of the assessee in limine without adjudicating the issues on merits. The FAA held that there was a delay of 1592 days / 1455 days in filing the appeals before him and that no reasonable cause had been shown for condoning the same. The Ld.AR for the assessee submitted that the assessee is a senior citizen and a retrenched employee of BSNL. It was submitted that the delay in filing the appeals occurred due to lack of awareness regarding the correct legal position concerning exemption available u/s.10(10B) and 10(10AA) of the Act. The assessee became aware of the availability of exemption u/s.10(10B) of the Act only after the order passed by the Chandigarh Bench of the Tribunal in BSNL VRS cases. However, the FAA was not convinced with the explanation offered by the assessee and observed that even if the contention of the assessee is accepted, there was still a further delay of about 250 days from the date of the said order of the Tribunal. Accordingly, the FAA dismissed the appeals in limine without adjudicating the issues on merits, holding that the assessee had failed to establish sufficient and reasonable cause for condoning the delay in filing the appeals.

4. Aggrieved by the orders of the FAA, the assessee has filed the present appeals before the Tribunal. The Ld.AR submitted that the delay in filing the appeals before the FAA was neither willful nor deliberate, but was on account of ignorance regarding the availability of exemption u/s.10(10B) of the Act and lack of proper legal knowledge. It was further submitted that only after the order passed by the Tribunal in BSNL VRS cases came to the knowledge of the assessee, he became aware of the correct legal position and thereafter immediately took steps to file the appeals before the FAA. The Ld.AR further submitted that the FAA had observed that there was a further lapse of about 250 days even after the pronouncement of the Tribunal order in BSNL VRS cases. In this regard, it was explained that the assessee became aware of the said decision only when it was subsequently circulated and shared in the employees’ WhatsApp group. Therefore, it was contended that the delay occurred due to bona fide reasons and not on account of any deliberate inaction or negligence. Accordingly, the Ld.AR prayed that the delay in filing the appeals before the FAA may be condoned and the matters may be restored for adjudication on merits.

5. The Ld.DR supported the orders of the FAA.

6. We have heard the rival submissions and perused the material available on record. The FAA had dismissed the appeals in limine without adjudicating the issues on merits by refusing to condone the delay of 1592 days / 1455 days in filing the appeals before him. We find merit in the explanation offered by the assessee for the belated filing of the appeals. The assessee is a senior citizen and a retrenched employee of BSNL, who was not aware of the correct legal position regarding availability of exemption u/s.10(10B) of the Act in respect of VRS compensation received. The Ld.AR submitted that the assessee became aware of the legal remedy only after the orders passed by the Tribunal in BSNL VRS case