Income Tax Appellate Tribunal - Mumbai
Ramesh Kusale,Pune vs Ward 42(3)(2), Mumbai on 13 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
BEFORE SHRI VIKRAM SINGH YADAV, JM
AND
MS. KAVITHA RAJAGOPAL, AM
ITA No.7399/Mum/2025
(Assessment Year: 2018-19)
Mr. Ramesh Kusale, Ward 42(3)(2)
C/o Anup Shaha, G-43, Kautilya Bhavan,
Priyadarshini, Near Bharat Jyoti Bus Vs. Mumbai - 400051
Stop,
Bibwewadi, Pune - 411 037
PAN: ACIPK0171A
(Appellant) : (Respondent)
Assessee by : Shri Anup Shaha, A.R.
(Virtually Present)
Respondent by : Shri Annavaram Kosuri, Sr. AR
Date of Hearing : 22.01.2026
Date of Pronouncement : 13.04.2026
ORDER
Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the Learned Commissioner of Income Tax (Appeals) ['Ld. CIT(A)' for short], National Faceless Appeal Centre ('NFAC' for short) passed u/s. 250 of the Income Tax Act, 1961 ('the Act'), pertaining to the Assessment Year ('A.Y.' for short) 2018-19.
2. It is observed that the present appeal has been filed belatedly with a delay of 440 days, for which the assessee has filed an application for condoning the delay along with an affidavit. Upon perusal of the same, we deem it fit to hold that the assessee had "sufficient I T A No .7 3 9 9 / M u m/2 0 2 5 Mr. Ramesh Kusale cause" for the delay in filing the appeal beyond the period of limitation. Delay is hereby condoned.
3. The assessee has challenged this appeal on the following grounds of appeal:
"1. On facts and circumstances of the case, it be held that the Ld. CIT has erred in not allowing the deduction under section 80C and exemption section 10 claimed by the appellant during the appellate proceedings. Such claim be allowed and the appellant be granted just and proper relief.
2. On facts and circumstances of the case, it be held that the Ld. CIT has erred in disallowing the deduction under section 80C and exemption under section 10 by stating that the return is not filed within due date as per section 139(1) without verifying the claim and relevant documents submitted with him. The appellant prays that such claim be allowed and the appellant be granted just and proper relief.
3. The appellant craves to add, alter, amend, modify or delete any one or all of the above grounds."
4. Brief facts of the case are that the assessee is an individual and was a central government employee in Rashtriya Chemicals and Fertilizers Limited for over 25 years. The assessee had not filed his return of income for the year under consideration neither u/s 139(1) nor u/s 139(4) of the Act as belated returns. The assessee's case was reopened vide notice u/s 148 of the Act dated 21.04.2022 for the reason that the assessee has earned salary income of Rs.32,13,951/-, for which his employer had filed TDS return in form 24Q reflecting the said salary payment, for which reason income chargeable to tax has escaped assessment as per the provisions of section 147 of the Act. The assessee was non-compliant before the Learned Assessing Officer ("Ld. AO" for short) in spite of several opportunities and the Ld. AO proceeded to pass the assessment u/s 147 r.w.s. 144 of the Act being best judgment assessment vide order dated 29.02.2024 determining total income at Rs.32,13,950/- after making an addition on income from salary as being undisclosed. 2
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5. Aggrieved, the assessee was in appeal before the first appellate authority, who vide order dated 17.06.2024 had partly allowed the appeal filed by the assessee by deleting the addition made on account of professional tax, gratuity and leave encashment as being non- taxable and upholding the addition/disallowance on the exemptions claimed by the assessee u/s 10 and 80C of the Act on the ground that the assessee has failed to file his returns u/s 139(1) of the Act. The Ld. CIT(A) also gave direction to the Ld. AO to verify and give credit of TDS of Rs.3,36,327/- as reflecting in form 26AS.
6. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us challenging the same.
7. We have heard the rival submissions and perused the materials available on record. It is observed that the Ld. AO has made an addition of the entire salary income of Rs.32,13,950/- received by the assessee for the reason that the assessee has failed to file his return of income u/s 139(1)/139(4) of the Act. The Ld. CIT(A), on the other hand, restricted the disallowance to the exemption claimed u/s 10 and 80C of the Act.
8. On the above factual matrix of the case, it is evident that the assesse, being a salaried individual whose employer, has duly deducted TDS and had issued Form-16 which segregates taxable, salary income, exempt allowances u/s 10 of the Act and eligible investments made u/s 80C of the Act. The Ld. AO brought the entire gross salary to tax solely on the ground that the assessee had not filed his return of income, thereby denying the statutory exemptions/deductions.
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9. On the other hand, the Ld. CIT(A), though, has rightly deleted the entire gross salary addition but had restricted the disallowance to the claim made u/s 10 & 80C of the Act only on the ground of non-filing of return. The income from salaries has to be computed in accordance with section 15 to section 17 r.w.s. 10 of the Act where the exemptions/deductions are integral part of the computation of salary which are substantive and not a discretionary concession which is dependent on filing of the return of income. It is pertinent to point out that when the lower authorities reassess to tax the salary income they are also duty bound to apply the correct machinery provisions considering the statutory exemptions/deductions. The provisions of section 10 of the Act provide for exemptions such as HRA, LTA etc. and section 80C relates to deductions in respect of certain payments/savings i.e. savings'-linked deductions which are not akin to profit-linked incentives provided in section 80-IA/80-IB/80P etc., where there is no explicit condition that the claim u/s 80C stands fortified, if no return has been filed. Further, the legislature in its wisdom has expressly provided that certain deductions shall not be allowed unless the assessee furnishes the return of income on or before the due date specified under the Act such as in provisions of section 80-AC, 80A(5) etc. which are worded so. In the absence of an express "statutory bar" the assessee cannot be denied such exemptions/deductions merely for default or for non-filing of return of income, which according to us, in the present facts are mere procedural defects. Also when the Ld. CIT(A) has duly considered the assessee's claim towards leave encashment, gratuity, professional tax etc. he ought to have also taken into consideration the statutory exemption and deduction claimed u/s 10 and 80C of the Act respectively and not have merely rejected the 4 I T A No .7 3 9 9 / M u m/2 0 2 5 Mr. Ramesh Kusale same for non-filing of return of income, where he cannot partially accept the claim and deny the remaining claim solely on procedural lapses. We are also conscious of the fact that the controversy with regard to the filing of return within the specified time was with regard to the claim of profit/business linked incentives which has been held to be mandatory conditions by various decisions of the Hon'ble Apex Court and the Hon'ble High Courts and does not fall within the ambit of section 80C which is on the basis of savings/investment linked deductions. It is also pertinent to point out that the amendment to section 80AC by Finance Act, 2018 provides that the benefit of deduction under any provision of chapter VIA under the heading "C-Deductions in respect of certain incomes"
shall not be allowed unless the return of income is filed within the due date, does not impact deductions claimed u/s 80C, D etc. which clearly falls under heading "B - deductions in respect of certain payments". Thus, on this observation, we deem it fit to direct the Ld. AO to allow the claim of the assessee u/s 10 & 80C of the Act after duly verifying the same. The grounds of appeal raised by the assesse are hereby allowed on the above terms.
10. In the result, the appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 13.04.2026
Sd/- Sd/-
(VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated: 13.04.2026
* Kishore, Sr. P.S.
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Mr. Ramesh Kusale
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent
3. CIT- concerned
4. DR, ITAT, Mumbai
5. Guard File
BY ORDER,
(Dy./Asstt.Registrar)
ITAT, Mumbai
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