Section 115BBE Not Applicable on Additions Under Salary Head | ITAT

Case Details: Biju Pappachan vs. Income-tax Officer - [2026] 183 taxmann.com 485 (Bangalore-Trib.)

Judiciary and Counsel Details

• Keshav Dubey, Judicial Member & Waseem Ahmed, Accountant Member
• Ms Akshatha Prasad, A.R. for the Appellant.
• Ganesh R Ghale, D.R. for the Respondent.

Facts of the Case

Assessee, a retired defence personnel, received pension and post-retirement benefits. The case was reopened on the ground that the assessee had not filed his return. In response to the notice, the assessee filed his return declaring a deduction under section 10(10) on account of death cum retirement gratuity and under section 10(10A) on account of the commuted value of pension.

The Assessing Officer (AO) treated the deductions as unexplained and added the same under the head ‘Salary’. AO also invoked the provisions of section 115BBE by stating that it applied to the aforesaid additions. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the AO was unjustified in disallowing the exemptions claimed by the assessee and adding them to his salary, especially when it was, in fact, completely exempt from income tax. AO affirmed that, in the absence of necessary documentary evidence, the deduction claimed by the assessee on account of death cum retirement gratuity and commuted value of pension remains unexplained. However, the AO received the salary certificate (Form 16) from the Air Force.

It is surprising to note that on the one hand, the AO himself disallowed the deduction and added the same under head salary, and on the other hand, invoked the provision of section 115BBE, which is completely unacceptable. Section 115BBE can only be invoked in the case of income tax referred to in sections 68 to 69D and not in the case of additions under the head ‘Salary’.

List of Cases Referred to

• Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) (para 6.1)
• People Education & Economic Development Society v. ITO [2006] 100 ITD 87 (Chennai) (TM) (para 6.3)
• CIT v. K.S.P. Shanmugavel Nadar [1987] 30 Taxman 133/153 ITR 596 (Madras) (para 6.4).