The Income Tax Appellate Tribunal (ITAT), Delhi Bench, as recently, in an appeal filed before it, held that income tax exception shall be available to the Defence Forces Personnel who have been invalidated from service on account of bodily disability while in service.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it by an assessee as against the Order of the CIT(A), National Faceless Appeal Centre [NFAC], Delhi, dated 21.06.2022 relating to the A.Y. 2017-18.
The assesses being a retired employee of Indian Air Force had declared income from salary, income from house property and income from other sources during the financial year relevant to the assessment year under consideration.
Being chosen for scrutiny under CASS and accordingly, notices under section 143(2) and thereafter under 142(1) being issued, during the course of assessment proceedings it was noted by the A.O that the assessee has claimed ‘Disability Pension’ amounting to Rs.8,43,226/- as exempt income in his revised ITR.
An information under section 133(6) of the Act being called by the A.O. from the Directorate of Air Veterans, Air Force Head Quarters showing the assessee to have taken pre-mature retirement at his own request and not invalided from service on account of bodily disability attributable to or aggravated by such service, , the A.O was of the opinion that the disability pension amounting to Rs.8,43,226/ shall not be exempted from Income Tax , based on which he added back the said amount to the taxable income of the assessee for the impugned A.Y. 2017-18 , determining the total income of the assessee at Rs.45,72,036/- as against the returned income by the assessee at Rs.37,28,810/and passed the assessment order under section 143(3) of the I.T. Act, 1961 vide order dated 19.11.2019 , initiating penalty proceedings under section 270A of the I.T. Act, 1961 separately.
Aggrieved by the order of the A.O, the assessee though carried the matter in appeal before the Ld. CIT(A), NFAC, Delhi and filed written submissions, the CIT(A) vide order dated 21.06.2022 confirmed the addition made by the A.O. on similar lines, leaving the assesse with the only option to file an appeal before the Tribunal.
Hearing the submissions of both the sides and perusing the materials available on record, Chandra Mohan Garg, the Judicial member of the Tribunal observed:
“I find in the instant case that at the time of disbursement of amount, no TDS has been deducted in the case of assessee and from careful perusal of the order of the Hon’ble Supreme Court dated 30.08.2019, it is noticed that the Hon’ble Supreme Court directed the respondents to maintain status quo in the matter.”
“The Circular issued by the CBDT as well as in the Circular of Principal Controller of Defence Accounts (Pensions) clearly states that tax exemption shall be available to the Defence Forces Personnel who have been invalidated from service on account of bodily disability while in service.”, he added.
Thus, finally allowing the assessee’s appeal, he concluded:
“And since the Ld. D.R. has failed to furnish any contrary material or decision of any higher Judicial Forum to the notice of Bench, I allow the claim of assessee and direct the A.O. to delete the addition.”
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