2025 (10) TMI 1219

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.... and a retired employee of the Bank of Baroda, a public-sector undertaking received on retirement a sum of Rs. 11,91,369 towards leave encashment during the financial year 2019-20. In his original return filed on 28 August 2020, he declared total income of Rs. 22,99,750 and claimed exemption of Rs. 3,00,000 on the said amount under section 10(10AA)(ii). Soon thereafter, on 2 September 2020, the assessee filed a revised return declaring total income of Rs. 14,08,380 and claiming full exemption of the leave-encashment amount under section 10(10AA)(i). The Assessing Officer, while completing the assessment, held that as per the extant provisions the exemption was restricted to Rs. 3,00,000 and that employees of public-sector undertakings were ....

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....see submitted that the case is one of a bona fide interpretative claim and not of concealment or misreporting.  He pointed out that all primary facts were truly disclosed, the claim was made openly in the revised return, and the legal position had since been rendered fluid by subsequent governmental action raising the exemption threshold. Reliance was also placed on several coordinate-bench decisions which, in quantum appeals, have taken a liberal view in similar circumstances. 6. The learned Departmental Representative, on the other hand, defended the impugned order, submitting that the assessee's conduct fell within clauses (a) and (c) of section 270A(9) viz., misrepresentation or suppression of facts and claim of expenditure (or ....

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....tely confined it to situations involving deception or fabrication. Mere erroneous interpretation of law, or a claim founded on an arguable or debatable view, however untenable it may subsequently appear, does not partake the character of "misreporting." It falls, if at all, within the realm of under- reporting, and even then penalty may not ensue where the explanation is bona fide and all material facts have been disclosed. 10. When these principles are applied to the case before us, it becomes manifest that none of the clauses of section 270A(9) are attracted. The assessee disclosed the receipt of leave-encashment in full, both in the original and in the revised returns. There was no suppression, concealment, or falsification of any pri....