Issues: (i) Whether the delay in filing the appeal against the order rejecting the claim on merits ought to be condoned on parity with similarly placed BSNL employees; (ii) whether compensation received under the BSNL VRS Scheme, 2019 is eligible for full exemption as retrenchment compensation under section 10(10B); (iii) whether leave encashment received by BSNL VRS retirees is eligible for full exemption under section 10(10AA).

Issue (i): Whether the delay in filing the appeal against the order rejecting the claim on merits ought to be condoned on parity with similarly placed BSNL employees.

Analysis: The delay was examined in the context of repeated condonation in identical BSNL employee matters decided by appellate authorities and Coordinate Benches. The appellate authority's refusal to condone delay was found inconsistent with the parity already extended in substantially similar cases.

Conclusion: The delay was required to be condoned and the appeal was to be admitted.

Issue (ii): Whether compensation received under the BSNL VRS Scheme, 2019 is eligible for full exemption as retrenchment compensation under section 10(10B).

Analysis: The compensation arose from retrenchment under the BSNL VRS Scheme, 2019, which was treated as part of the restructuring and revival plan for BSNL. The issue had been consistently decided in favour of the assessee by Coordinate Benches, including on the objection that the recipient was not a workman.

Conclusion: Full exemption under section 10(10B) was allowable on the retrenchment compensation.

Issue (iii): Whether leave encashment received by BSNL VRS retirees is eligible for full exemption under section 10(10AA).

Analysis: The assessee's leave encashment claim was considered in the light of the view that BSNL VRS retirees are to be treated as Central Government employees for this purpose, and the enhanced exemption position was applied at the stage of appellate adjudication for the assessment year in question.

Conclusion: Full exemption on leave encashment was allowable under section 10(10AA).

Final Conclusion: The appeals succeeded in full, with relief granted on condonation of delay, retrenchment compensation, and leave encashment.

Ratio Decidendi: Where BSNL VRS separation is treated as retrenchment and the retirees are regarded as entitled to the corresponding fiscal benefits on parity with similarly placed cases, full exemption under section 10(10B) and the applicable leave encashment exemption under section 10(10AA) must be granted.

Issues: (i) Whether the delay in filing the appeal deserved to be condoned on the basis of the assessee's illness and related explanation; (ii) Whether the additions made towards cash deposits and the amount reflected in the revised VAT return could be sustained as unexplained income.

Issue (i): Whether the delay in filing the appeal deserved to be condoned on the basis of the assessee's illness and related explanation.

Analysis: The appeal was delayed by 261 days. The explanation accepted was that the assessee had changed counsel, the earlier counsel did not communicate the order, and medical records showed that the assessee was unwell during the relevant period. The Revenue did not dispute the material illness-based explanation in a manner sufficient to negate reasonable cause.

Conclusion: The delay was condoned.

Issue (ii): Whether the additions made towards cash deposits and the amount reflected in the revised VAT return could be sustained as unexplained income.

Analysis: The cash deposits were supported by books of account, audited accounts, comparative stock, purchase and sales figures, and the explanation that sales had increased during the festive and demonetisation period. The Revenue did not bring corroborative evidence of any undisclosed source of income or rebut the business explanation with independent enquiry. As regards the second addition, the amount of Rs. 2,32,186 was shown to have arisen from omission of certain sales invoices in the original VAT return and was later included in a revised return. The tribunal also noted that the dispute related to cash deposits, not a loan or cash credit transaction, and that invocation of Section 68 was misplaced on the facts.

Conclusion: The additions were deleted and the assessee succeeded on the merits.

Final Conclusion: The appeal was allowed after condoning delay, with both additions set aside on the ground that the cash receipts were sufficiently explained and the Revenue had not established unexplained income.

Ratio Decidendi: When an assessee substantiates cash deposits through audited books, supporting business records, and a plausible explanation of sales, and the Revenue fails to dislodge that explanation by independent enquiry or corroborative evidence, additions cannot be sustained merely on suspicion or by mechanically invoking an inapposite charging provision.

Issues: Whether the Commissioner of Income-tax (Exemptions) may impose contingent conditions on registration under section 12AB and approval under section 80G, making their tax benefits subject to the outcome of proposed higher-court litigation.

Analysis: Section 12AB does not confer an express power to impose independent conditions while granting registration. Rule 17A and Form No. 10AC cannot enlarge the substantive statutory power. Cancellation or withdrawal is governed separately by sections 12AB(4) and 12AB(5), which provide statutory safeguards for specified violations or non-genuine activities. The jurisdictional High Court decision concerning irrevocability of charitable trusts remained binding, and a proposed challenge before the Supreme Court could not justify keeping the benefits of already granted registration and approval in a contingent state.

Conclusion: The conditional stipulations attached to the registration under section 12AB and approval under section 80G were beyond jurisdiction and were directed to be deleted/vacated, in favour of the assessee.

Issues: Whether penalty under section 270A of the Income-tax Act, 1961 could be sustained on the footing that the assessee had misreported income by claiming deduction under section 80GGC, when the quantum addition was not appealed and the deduction was disallowed in reassessment.

Analysis: The penalty under section 270A was examined in the context of the distinction between under-reporting and misreporting of income. The deduction claimed under section 80GGC had been transparently disclosed in the return, and the disallowance arose from the Assessing Officer's view that the donation was not genuine or otherwise eligible. Mere non-challenge to the quantum addition was held not to amount to an admission of concealment or false particulars. In the absence of material showing suppression of facts, false evidence, fabricated documents, or deliberate misrepresentation, the enhanced penalty for misreporting could not be justified.

Conclusion: Penalty for misreporting under section 270A was not sustainable, and the penalty of Rs. 93,600 was deleted in favour of the assessee.

Issues: Whether the special leave petition raised questions on the nature of Dividend Distribution Tax, its interaction with the India-UK Double Taxation Avoidance Agreement, and the effect of a subsequent reference by a coordinate Bench on similar issues.

Analysis: The Court noticed that substantial questions concerning tax under Section 115-O of the Income-tax Act, 1961, and the treaty treatment of Dividend Distribution Tax were already under consideration in connected proceedings before a High Court larger Bench. In view of the ramifications of the issues and the need to hear parties further, the Court allowed the intervention applications, directed circulation of the order to all High Courts, permitted further intervention applications by a specified date, and indicated that High Courts may consider staying similar proceedings in the meantime.

Outcome: No final adjudication was rendered on the merits of the tax questions. The matter was directed to be listed for further hearing, and interim administrative directions were issued.

Issues: (i) Whether the reopening of assessments for the relevant assessment years was valid; (ii) Whether the amount received under Clause 7 of the agreement was liable to be taxed in the hands of the assessee as a business receipt.

Issue (i): Whether the reopening of assessments for the relevant assessment years was valid.

Analysis: Reopening under Sections 147 and 148 of the Income-tax Act, 1961 requires reason to believe that income chargeable to tax has escaped assessment, supported by tangible material and backed by recorded reasons. Mere change of opinion is impermissible, but where fresh information emerges showing that the true nature of the receipt was not earlier examined, reassessment is justified. The prior scrutiny assessments did not record any formed opinion on the fundamental character of the receipt from the association, and the survey materials and statement disclosed a basis to believe that the receipt was not profit but revenue.

Conclusion: The reopening for both assessment years was valid and was not vitiated by mere change of opinion.

Issue (ii): Whether the amount received under Clause 7 of the agreement was liable to be taxed in the hands of the assessee as a business receipt.

Analysis: Clause 7 provided for immediate entitlement to 35% of the gross sale proceeds, while expenses were to be met from the remaining 65%. On a plain reading, the arrangement did not make the assessee's entitlement dependent on profits. The receipt was therefore a diversion of income at source by overriding title, but in substance it remained a gross revenue receipt and not a share of profit. Since the amount was insulated from project expenses, it lacked the character of profit and was taxable in the assessee's hands as business income.

Conclusion: The amount was taxable in the hands of the assessee as a business receipt and not exempt as a share of profit.

Final Conclusion: The reopening challenges fail, and the disputed receipt is held taxable in the assessee's hands as revenue arising from the arrangement, with the Revenue succeeding overall.

Ratio Decidendi: A reassessment is valid where fresh tangible material reveals that an earlier assessment never examined the true nature of a receipt, and a contractual entitlement to a fixed share of gross receipts, unrelated to project expenses, constitutes taxable revenue rather than a profit share.

Issues: (i) Whether the reassessment notices would be liable to be quashed if the matters pertained to Assessment Year 2015-16. (ii) Whether the impugned judgments should be set aside and the matters remitted to the jurisdictional High Courts for redetermination, with the High Courts first deciding the applicable assessment year.

Issue (i): Whether the reassessment notices would be liable to be quashed if the matters pertained to Assessment Year 2015-16.

Analysis: The Revenue fairly conceded that, in cases pertaining to Assessment Year 2015-16, the notices issued or proposed to be issued for reassessment would be barred by time in view of the earlier view already taken by the Court. The concession recorded in the earlier order was reiterated, and it was accepted that if the cases were found to relate to that assessment year, no further adjudicatory exercise would be required on the merits of the notices.

Conclusion: If the matters pertain to Assessment Year 2015-16, the reassessment notices are liable to be treated as time-barred.

Issue (ii): Whether the impugned judgments should be set aside and the matters remitted to the jurisdictional High Courts for redetermination, with the High Courts first deciding the applicable assessment year.

Analysis: The appeals were segregated from an earlier batch on the premise that they may pertain to Assessment Year 2015-16. The Court directed that the jurisdictional High Courts must first determine the applicable assessment year. If it is found to be 2015-16, the notices are to be declared time-barred. If not, all contentions available to the assessees shall be considered in terms of the earlier order governing the connected batch.

Conclusion: The impugned judgments were set aside and the matters were remitted to the jurisdictional High Courts for fresh determination in accordance with the stated directions.

Final Conclusion: The appeals were disposed of by reopening the matter before the High Courts, with the threshold question of the relevant assessment year to be decided first and the consequence of limitation to follow if Assessment Year 2015-16 is found applicable.

Issues: (i) Whether the delay in filing the first appeal deserved condonation. (ii) Whether the amount received under the BSNL Voluntary Retirement Scheme, 2019 was retrenchment compensation exempt under section 10(10B) of the Income-tax Act, 1961 and not taxable as a capital receipt.

Issue (i): Whether the delay in filing the first appeal deserved condonation.

Analysis: The appeals were filed with delay on the basis of professional advice taken at the time of filing the returns. The explanation was found sufficient, and substantial justice was preferred over procedural lapse. The delay was therefore condoned and the matters were taken up for merits.

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

Issue (ii): Whether the amount received under the BSNL Voluntary Retirement Scheme, 2019 was retrenchment compensation exempt under section 10(10B) of the Income-tax Act, 1961 and not taxable as a capital receipt.

Analysis: The Tribunal followed earlier coordinate bench decisions on identical BSNL VRS facts and held that the compensation paid under the revival-linked scheme was in substance retrenchment compensation. It accepted that the payment fell within section 10(10B), not section 10(10C), and treated the receipt as a capital receipt exempt from tax. The assessee was directed to file revised computation before the jurisdictional Assessing Officer for grant of consequential refund after verification.

Conclusion: The amount received under the BSNL Voluntary Retirement Scheme, 2019 was held exempt under section 10(10B) and the issue was decided in favour of the assessee.

Final Conclusion: The appeals were allowed after condoning the delay, and the compensation received under the BSNL voluntary retirement scheme was held not taxable as income.

Ratio Decidendi: Compensation paid under a BSNL revival-linked voluntary retirement scheme was treated as retrenchment compensation under section 10(10B) where the substance of the payment showed termination-linked compensation rather than taxable retirement benefits.

Issues: Whether the conflict between earlier decisions on the character of dividend distribution tax and the applicability of treaty protection warranted reference to a Larger Bench.

Analysis: The appeals raised the question whether dividend distribution tax under section 115-O was to be treated as tax on the company's profits or as tax on dividend income of the shareholder for the purpose of the India-UK treaty. The order examined the prior line of authority, noted the contrary view taken in a later Division Bench decision, and recorded that the earlier Division Bench decision, as affirmed by the Supreme Court, and another Division Bench decision supported the view that the levy was on the company's profits and not on the shareholder's dividend income. In view of the apparent inconsistency between the co-ordinate Bench decisions, the issue was treated as requiring consideration by a Larger Bench.

Conclusion: The matter was referred to the Chief Justice for constitution of a Larger Bench to answer the formulated questions on the correctness of the later view and whether it was per incuriam.

Final Conclusion: No final adjudication on the tax liability or refund claim was rendered, as the order only directed reference of the controversy to a Larger Bench.

Ratio Decidendi: Where co-ordinate Bench decisions on a recurring tax question appear irreconcilable, the proper course is to refer the issue to a Larger Bench for authoritative determination.

Issues: Whether compensation received under BSNL Voluntary Retirement Scheme, 2019 was eligible for exemption and the consequential refund was admissible.

Analysis: The appeal involved no change in the factual matrix or legal position from the Tribunal's earlier decision on the same scheme. The compensation under the voluntary retirement scheme was treated as falling within the exemption provision relied upon by the assessee, and the claim for refund flowed from the income being non-taxable.

Conclusion: The claim for exemption was accepted and the consequential refund was held admissible.

Final Conclusion: The assessee succeeded on the substantive tax claim, and the appeal was allowed.

Ratio Decidendi: Compensation received under BSNL Voluntary Retirement Scheme, 2019, where the governing conditions are satisfied, is exempt and cannot be brought to tax, with consequential entitlement to refund of tax deducted at source.

Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 for the relevant assessment year was barred by limitation and liable to be quashed, and whether the consequent reassessment could survive.

Analysis: The additional ground challenging jurisdiction was admitted as it raised a pure question of law capable of being decided on the existing record. The Tribunal held that, for an assessment year beginning on or before 01.04.2021, the validity of a notice under section 148 has to be tested with reference to the limitation that had already expired under the unamended regime. It found that the show-cause notice under section 148A(b) was issued within time, but the notice under section 148 was issued after the expiry of the relevant six-year period. Following the binding jurisdictional precedent, the Tribunal rejected the Revenue's reliance on the amended limitation structure to save the notice.

Conclusion: The notice under section 148 was barred by limitation and was quashed. The reassessment order consequently could not survive.

Final Conclusion: The assessee succeeded on the jurisdictional challenge, and the remaining grounds became infructuous once the reopening was held invalid.

Ratio Decidendi: For an assessment year covered by the old limitation regime, a reassessment notice under section 148 cannot be sustained if, on the date of issuance, the six-year period had already expired; the amended regime does not revive a time-barred notice.

Issues: Whether the High Court judgments quashing reassessment notices on the ground that the jurisdictional Assessing Officer lacked competence should be set aside and the matters remitted for fresh consideration in view of the subsequent amendments to the reassessment scheme.

Analysis: The statutory reassessment framework under the Income-tax Act, 1961 had been amended by the Finance Act, 2021, and the Central Board of Direct Taxes had introduced the e-Assessment of Income Escaping Assessment Scheme, 2022 under section 151A. The dispute concerned whether notices under sections 148 and orders under section 148A(d) could be issued by the jurisdictional Assessing Officer or only through the faceless mechanism. During the pendency of the appeals, Parliament introduced clarificatory amendments, including section 147A, with retrospective effect from 01.04.2021. In view of these amendments, the Court declined to decide the merits of the competing submissions and left the validity, scope, effect, retrospectivity and applicability of the amended provisions open for adjudication by the jurisdictional High Courts.

Conclusion: The impugned High Court judgments were set aside on the limited ground of the subsequent legislative amendments and the matters were remitted to the High Courts for fresh consideration.

Issues: Whether the notice for reopening of assessment under section 148 of the Income-tax Act, 1961 was sustainable when the seized material did not establish a live link with the petitioner and the information was vague and non-specific.

Analysis: The reopening was founded on a loose paper recovered in search proceedings and a statement recorded from a broker. The entry relied upon mentioned a survey number, a rate and a third party name, but did not refer to the petitioner or establish any direct connection with the petitioner's earlier sale of the land. The land had already been sold in 2018 and later converted into non-agricultural use by the purchasers, while the loose paper was dated much later. At the stage of issuing notice, the material must at least prima facie connect the assessee with escapement of income; a vague or retrospective linkage based only on a survey number and an unconnected name is insufficient.

Conclusion: The notice under section 148 could not be sustained and was quashed; the reopening was held invalid and the petition succeeded in favour of the assessee.

Issues: Whether the notice and assessment framed under section 153C of the Income-tax Act, 1961 were valid when the satisfaction note was recorded after 01.04.2021 and the seized material was not shown to have been received earlier by the Assessing Officer.

Analysis: The appeals arose from search-based assessments of a non-searched person. The decisive question was the applicability of the amended section 153C, especially the provision inserted by the Finance Act, 2021, which bars application of that section in relation to searches initiated on or after 01.04.2021. The date on which seized material was received by the Assessing Officer was not available from the record. In that situation, the date of recording of satisfaction, 28.09.2021, was treated as the relevant date. Since that date fell after the statutory cut-off, the notice issued under section 153C and the consequent assessment were held to be without jurisdiction. The addition on merits was not separately sustained once the jurisdictional defect was found.

Conclusion: The assumption of jurisdiction under section 153C was invalid and the assessments were quashed.

Final Conclusion: All six appeals succeeded because the assessments made on non-searched person basis under section 153C were found unsustainable in law.

Ratio Decidendi: Where, after the Finance Act, 2021 amendment, the satisfaction for initiating action under section 153C is recorded after 01.04.2021 and the record does not establish an earlier receipt of seized material by the Assessing Officer, jurisdiction under section 153C cannot be validly assumed.

Issues: (i) Whether the reassessment notice for AY 2013-14 was valid when the reasons recorded did not show income escaping assessment in the nature of an asset; (ii) Whether the reassessment notice for AY 2015-16 was barred by limitation; (iii) Whether the special audit direction for AY 2013-14 could survive after the reassessment notice for that year was set aside; (iv) Whether the special audit direction for AY 2015-16 was justified under the statutory preconditions.

Issue (i): Whether the reassessment notice for AY 2013-14 was valid when the reasons recorded did not show income escaping assessment in the nature of an asset.

Analysis: The reasons recorded for AY 2013-14 referred to the allowability and genuineness of the provision for customer claims, but did not record any material showing escapement of income represented as an asset. The Court held that reassessment beyond three years required the jurisdictional condition under the fourth proviso to Section 153A to be satisfied, namely that escaped income must be in the form of an asset. Since the recorded reasons did not identify any receivable or other asset for AY 2013-14, and the Revenue could not rely on reasons recorded for a different year to cure that defect, the notice lacked jurisdiction.

Conclusion: The reassessment notice for AY 2013-14 was invalid and was quashed in favour of the assessee.

Issue (ii): Whether the reassessment notice for AY 2015-16 was barred by limitation.

Analysis: The reasons recorded for AY 2015-16 stated that the provision for warranty expenses gave rise to a corresponding receivable from the Associated Enterprise, and that such receivable constituted an asset. The Court held that receivables arising from a contractual right to reimbursement are assets for the purpose of the limitation condition. On that footing, the notice fell within the permissible extended period and satisfied the statutory threshold for reopening.

Conclusion: The reassessment notice for AY 2015-16 was within limitation and was upheld against the assessee.

Issue (iii): Whether the special audit direction for AY 2013-14 could survive after the reassessment notice for that year was set aside.

Analysis: The special audit direction for AY 2013-14 was issued in aid of the reassessment proceedings for that year. Once the reassessment notice itself was held to be without jurisdiction, the consequential special audit direction for the same year could not stand independently.

Conclusion: The special audit direction for AY 2013-14 was set aside in favour of the assessee.

Issue (iv): Whether the special audit direction for AY 2015-16 was justified under the statutory preconditions.

Analysis: The Court held that Section 142(2A) applies to reassessment proceedings as well, and that the statutory triggers include volume of accounts, doubts about correctness, multiplicity of transactions, specialised nature of business activity, and the interests of revenue. On the facts, the ERP data, discrepancies, duplication and missing entries, inability to produce proper books in the manner required, and the revenue's doubts about the correctness of the accounts furnished sufficient basis for directing special audit.

Conclusion: The special audit direction for AY 2015-16 was upheld against the assessee.

Final Conclusion: The challenge succeeded only in part: the reassessment and special audit for AY 2013-14 were quashed, while the reassessment and special audit for AY 2015-16 were sustained.

Ratio Decidendi: For reassessment beyond three years in search cases, the recorded reasons must themselves show that the escaped income is represented in the nature of an asset for the relevant year, and a later year's reasoning cannot cure the absence of such jurisdictional material; however, receivables arising from an enforceable right to reimbursement may constitute an asset, and special audit may validly be ordered in reassessment proceedings where the statutory conditions of complexity, volume, or doubtful correctness of accounts are objectively met.

Issues: Whether the amount received by BSNL employees under the BSNL Voluntary Retirement Scheme, 2019 is taxable only as voluntary retirement compensation or is to be treated as retrenchment compensation as a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961, and whether the delay in approaching the first appellate authority should be condoned.

Analysis: The appeals arose from intimation orders under section 143(1) of the Income-tax Act, 1961 and orders passed under section 250 of the Income-tax Act, 1961. The Tribunal noted that the assessees had received compensation under the BSNL VRS, 2019 pursuant to the revival package for BSNL and that similar claims had already been accepted in earlier coordinate bench decisions. The Tribunal also found that the delay before the first appellate authority was supported by sufficient cause and that substantial justice should prevail over technical delay. On merits, the Tribunal followed the consistent view that the compensation paid under the scheme was in the nature of retrenchment compensation, not merely voluntary retirement compensation, and that it retained the character of a capital receipt exempt from tax under section 10(10B) of the Income-tax Act, 1961.

Conclusion: The delay was condoned, and the compensation received under the BSNL Voluntary Retirement Scheme, 2019 was held to be exempt under section 10(10B) of the Income-tax Act, 1961. The assessee was granted relief with consequential verification of revised computation and refund, if any, by the jurisdictional Assessing Officer.

Final Conclusion: The appeals succeeded, with the compensation treated as exempt retrenchment compensation and the appellate relief extended in favour of the assessees.

Ratio Decidendi: Compensation paid under the BSNL Voluntary Retirement Scheme, 2019 was held to partake the character of retrenchment compensation as a capital receipt and was exempt under section 10(10B) of the Income-tax Act, 1961; procedural delay could be condoned where sufficient cause was shown and substantial justice required adjudication on merits.

Issues: Whether the assessee could be treated as an assessee in default under section 201(1) of the Income-tax Act, 1961, and charged interest under section 201(1A), for non-deduction of tax at source on leave fare concession payments during the period when binding interim directions of the Madras High Court restrained deduction.

Analysis: The issue on the merits of exemption under section 10(5) was already concluded against the assessee, but the dispute before the Tribunal was confined to the effect of the interim judicial orders in force during the relevant period. The Tribunal noted that the assessee was bound by the interim directions of the Madras High Court, which clarified that the payments would not amount to income so as to enable deduction at source and that the employees would be liable if the writ petition failed. It held that the obligation under section 192 could not be viewed in isolation and had to yield to the binding court order. Following the Kerala High Court and a coordinate bench decision, the Tribunal held that failure to deduct tax in compliance with a subsisting judicial restraint could not be treated as a default under section 201(1).

Conclusion: The assessee could not be treated as an assessee in default for the impugned period, and the interest under section 201(1A) also did not survive.

Ratio Decidendi: Where a payer is restrained by binding judicial directions from deducting tax at source, non-deduction during the period of such restraint does not attract section 201(1) or section 201(1A) of the Income-tax Act, 1961.

Issues: Whether the amount received by BSNL employees under the BSNL Voluntary Retirement Scheme, 2019 is retrenchment compensation in the nature of a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961, and not merely a sum exempt up to the limit under section 10(10C) of that Act.

Analysis: The Tribunal noted that the scheme was introduced as part of the revival package of BSNL and MTNL with the object of reducing workforce. It followed earlier coordinate bench decisions holding that payments made under the BSNL VRS 2019 were not ordinary voluntary retirement receipts but compensation linked to forced retirement and retrenchment. The Tribunal also relied on the settled view that appellate authorities can entertain a new legal claim to determine the correct tax liability, and on the consistent line of authority treating such compensation as exempt under section 10(10B). On that basis, it distinguished the case from exemption available under section 10(10C), which is subject to a monetary ceiling.

Conclusion: The amount received under the BSNL Voluntary Retirement Scheme, 2019 was held to be retrenchment compensation and a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961. The restriction to section 10(10C) did not apply, and the assessee's claim succeeded.

Issues: (i) Whether the compensation received under the BSNL Voluntary Retirement Scheme, 2019 is retrenchment compensation and a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961 rather than a payment covered by section 10(10C); (ii) whether the appellate authority could entertain the assessee's new claim for exemption under section 10(10B) though it was not made in the original return or revised return.

Issue (i): Whether the compensation received under the BSNL Voluntary Retirement Scheme, 2019 is retrenchment compensation and a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961 rather than a payment covered by section 10(10C).

Analysis: The payment arose from the BSNL revival-linked forced retirement scheme and was treated as compensation paid on termination of services in substance, not as ordinary voluntary retirement ex-gratia. The scheme and the surrounding circumstances showed workforce reduction for revival of BSNL, and the Tribunal followed the consistent view of coordinate benches and the Madras High Court that such payments are retrenchment compensation. It held that section 10(10B) applies to the amount received and that the exemption is not confined to the limited ceiling under section 10(10C).

Conclusion: The compensation was held to be retrenchment compensation and a capital receipt exempt under section 10(10B), in favour of the assessee.

Issue (ii): Whether the appellate authority could entertain the assessee's new claim for exemption under section 10(10B) though it was not made in the original return or revised return.

Analysis: The Tribunal applied the settled principle that appellate authorities have jurisdiction to admit a new claim or additional ground when it is necessary to determine the correct tax liability. It relied on the rule that tax authorities must assess the legitimate tax due and may grant relief even where the claim was not made before the Assessing Officer, provided the issue is otherwise allowable on merits.

Conclusion: The new claim was held to be entertainable at the appellate stage, in favour of the assessee.

Final Conclusion: The disallowances were set aside and the common issue was decided in favour of the assessee, resulting in allowance of the appeals.

Ratio Decidendi: Compensation paid under a BSNL-linked workforce reduction scheme, though described as voluntary retirement ex-gratia, can constitute retrenchment compensation taxable, if at all, only within section 10(10B), and an otherwise lawful exemption claim may be entertained at the appellate stage even if not raised in the original return.

Issues: Whether the amount of Rs. 16,53,076 received by the assessee under the BSNL Voluntary Retirement Scheme-2019, granted as retrenchment compensation under a Government-approved scheme, is exempt from income tax under Section 10(10B) of the Income-tax Act, 1961.

Analysis: The assessee received compensation under a Government-approved VRS implemented for BSNL employees. The legal framework for exemption of retrenchment/voluntary retirement compensation under a government-approved scheme is Section 10(10B) of the Income-tax Act, 1961. A coordinate bench of the Tribunal had considered identical facts and law in ITA Nos. 2387 & 2388/Ahd/2025 for AYs 2020-21 & 2021-22 and allowed relief by holding such compensation exempt under Section 10(10B). The present matter involves the same legal proposition and substantially similar factual matrix; consequently the prior coordinate-bench ruling applies mutatis mutandis. The question of delay and condonation under Section 249(3) was considered in the coordinate-bench decision and did not preclude adjudication on merits; accordingly the exemption claim merits allowance on the merits.

Conclusion: The amount of Rs. 16,53,076 received under the BSNL VRS-2019 is exempt from income tax under Section 10(10B) of the Income-tax Act, 1961. The appeals are allowed in favour of the assessee.

Ratio Decidendi: Retrenchment compensation paid under a Government-approved voluntary retirement/retrenchment scheme falls within the exemption provided by Section 10(10B) of the Income-tax Act, 1961 and is not includible in the recipient's taxable income.