BSNL VRS compensation and delay condonation supported exemption under section 10(10B) and deletion of tax additions.

Belated appeals were condoned where the assessee, a retired BSNL employee, showed sufficient and reasonable cause for the 1592-day and 1455-day delays, and refusal to condone was treated as defeating substantial justice. Ex-gratia compensation received under the BSNL VRS-2019 scheme was treated as retrenchment compensation rather than a mere voluntary retirement benefit, because the scheme was Government-approved and budget-funded; it was therefore held eligible for exemption under section 10(10B). The corresponding tax additions were directed to be deleted, with consequential relief in respect of leave encashment under section 10(10AA) if otherwise admissible.

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Issues: Whether the delay of 1592 days and 1455 days in filing the appeals before the first appellate authority deserved to be condoned; and whether ex-gratia compensation received under the BSNL VRS-2019 scheme was eligible for exemption under section 10(10B) of the Income-tax Act, 1961.

Issue (i): Whether the delay of 1592 days and 1455 days in filing the appeals before the first appellate authority deserved to be condoned.

Analysis: The explanation offered for the delay was that the assessee was a senior citizen and retrenched BSNL employee who became aware of the legal remedy only later, after judicial decisions on BSNL VRS compensation were circulated among employees. The explanation was found to constitute sufficient and reasonable cause, and refusal to condone the delay was held to impede substantial justice.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): Whether ex-gratia compensation received under the BSNL VRS-2019 scheme was eligible for exemption under section 10(10B) of the Income-tax Act, 1961.

Analysis: The scheme was noted to have been approved under the Government revival package and funded through budgetary support, and the compensation was treated as partaking the character of retrenchment compensation rather than a mere voluntary retirement benefit. The Tribunal also relied on consistent coordinate bench and appellate authority views accepting the same exemption for BSNL VRS-2019 receipts.

Conclusion: The ex-gratia compensation was held to be exempt under section 10(10B), and the corresponding additions were directed to be deleted. Consequential relief in respect of leave encashment under section 10(10AA) was also directed, if otherwise eligible.

Final Conclusion: The appeals succeeded, the delay stood condoned, and the impugned tax additions on BSNL VRS compensation were deleted with consequential relief as admissible.

Ratio Decidendi: Where a BSNL VRS-2019 compensation scheme is shown to be Government-approved and funded, and the assessee establishes sufficient cause for belated appellate filing, the delay may be condoned to advance substantial justice and the compensation may be treated as retrenchment compensation eligible for exemption under section 10(10B).

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