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Judgment
ORDER
PER RAMIT KOCHAR, AM:
This appeal is filed by the assessee against the appellate order passed by the learned Commissioner of Income Tax(Appeals) NFAC, Delhi [CIT(A), in short] dated 19.12.2025 passed u/s 250 of the Income-tax Act, 1961(hereinafter called “the Act”) (DIN & Order No. ITBA/NFAC/S/250/2025-26/1083896251(1)), which appeal in turn has arisen from the assessment order dated 02.02.2021 passed by the AO u/s 143(3) r.w.s. 143(3A) and 143(3B) of the 1961 Act.
Brief facts of the case are that the assessee’s case was selected by Revenue for framing complete scrutiny assessment due to issues concerning (a) salary income and (b) refund claim. The assessee has e-filed return of income on 28th August, 2018 , declaring total income of Rs. 16,78,980/-. Statutory Notices u/s 143(2) and 142(1) were issued by the AO to the assessee , during the course of assessment proceedings. The details are recorded in assessment order. The assessee participated in the assessment proceedings. The ld. Counsel for the assessee submitted before the Bench that the assessee has accepted the additions being made on account of salary income of Rs. 34,99,110/- and hence the same is not pressed. It was submitted that only surviving dispute between the rival parties is with respect to addition of Rs. 10,59,101/- on account of withdrawal from EPFO on which TDS of Rs.. 1,05,910/- was also deducted. We shall confine our discussion accordingly to the aforesaid issue. The assessee has claimed the same as an exempt income u/s 10(12) of the Act. The AO observed that as per Rule 8 of Part A of Fourth Schedule to the 1961 Act, the same is exempt only when the following conditions are fulfilled:
“1.If an employee has rendered continuous service with his employer for a period of five years or more or
2.If though the employee has not rendered such continuous service, the service has been terminated by reason of the employee’s ill-health, or by the contraction or discontinuance of the employer’s business or other cause beyond the control of the employee.
3.If, on the cessation of his employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to the employee is transferred to his individual account in any recognized provident fund maintained by such other employer.
4.If the entire balance standing to the credit of the employee is transferred to his account under a pension scheme referred to in Section 80CCD and notified by the Central Government.”
The assessee submitted that the said amount was received as refund of recognized provident fund which was deducted from his salary in earlier years , and is exempt u/s 10(12) of the 1961 Act. It was submitted that the assessee was working for last several years with various employers, and that there was no recent deductions/accruals to his RPF account , and hence the same was exempt u/s 10(12) of the 1961 Act. The ld. AO rejected the contentions of the assessee, and brought the same to tax as the assessee failed to prove that the assesse is in continuous service with the employer for a period of five years or more , or on cessation of the employment, the assessee obtains employment with any other employer , to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in RPF maintained by such other employer, or other stipulated conditions in the said Rule are met , and the AO brought the same to tax.
Aggrieved, the assessee filed first appeal with the ld. CIT(A) and the ld. CIT(A) issued as many as eight notices . The assessee either did not submitted any response to the said notices or sought adjournments. On one occasion i.e. on 12th January, 2022, the assessee submitted that the assessee is working in service for the last more than 20 years , and provident fund was deducted from his salary, and was deposited including employer contribution , which was withdrawn on superannuation. The ld. CIT(A) observed that no proof was submitted to that effect. On the last two occasion wrt notices issued by ld. CIT(A) vide notice(s) dated 17.06.2025 and 09.12.2025, the assessee did not submitted any response . The ld. CIT(A) dismissed the appeal of the assessee , and upheld the assessment order passed by the AO in the absence of evidence to contradict the findings recorded by the AO in the assessment order. Thus, the assessment order passed by the ld. AO with respect to above addition, was confirmed by the ld. CIT(A).
Aggrieved, the assessee has filed second appeal with the Tribunal, and the ld. counsel for the assessee submitted that the assessee has withdrawn provident fund on superannuation. It was submitted that the assessee was working with various employers , and provident fund was regularly deducted from his salary as well as Employers were making Contribution. It was submitted that the ld. CIT(A) dismissed the appeal of the assessee on the ground that there is no evidence of doing continuous employment for five years. The Ld. counsel for the assessee submitted that the assessee has been working for the last several years with different employers, and PF was regularly deducted from his salary. The assessee has filed paper book containing 60 pages. The details are furnished by the assessee, as under:-
The assessee has also filed form no. 26AS downloaded from IT portal for the assessment year(s) 2009-10 to 2018-19, to contend that the assessee worked with various employers. The assessee has filed EPF account passbook for financial year 2016-17, 2017-18 and 2018-19 . Prayer were made that the matter can be restored to the file of the AO, wherein the assessee will duly explain and provide sufficient evidences to substantiate his case that there was continuity in the employment or there was transfer of RPF from one employer to the other on leaving the organization. It was submitted that then AO can decide the issue on merits in accordance with law. The ld. Sr. DR relied upon the order of the authorities below. The ld. Sr. DR submitted that the assessee has raised altogether new ground before the Tribunal. With respect to this, the assessee has submitted that so far as salary income is concerned, the assessee has no grievance and the assessee has accepted the addition made by the Revenue . It was submitted that the same could not be declared in the income-tax return as the assessee was not provided with Form 16 by Lotus Greens Developers Pvt. Ltd. , as the assessee has to leave the said company due to some dispute with the employer.
We have considered rival submissions and perused the material on record. We have enumerated the brief facts and contentions of both the parties, and same are not repeated again. We have observed that the assessee has withdrawn Rs. 10,59,101/- from his recognized PF funds and TDS was deducted on said withdrawal. The assessee has claimed that the assessee is in continuous employment with different employers from April, 2005. It is contended that the assessee has duly complied with Rule 8 of Part A of the Fourth Schedule to the 1961 Act , and it is claimed that the said withdrawal is exempt from income-tax vide Section 10(12) of the 1961 Act. Both the authorities below rejected the contentions of the assessee , as the assessee could not submit evidence to substantiate its contentions. Now, before us claim is made that the said withdrawal from RPF was exempt from tax , and certain documents are filed by the assessee. However, this contention of the assessee required verification by the AO including , if required, calling information directly from PF authorities. Reference is drawn to CBDT circular number 14(XL-35) dated 11th April, 1955. The objective of assessment proceedings is to bring to tax correct income chargeable to tax. Thus, without commenting on merits of the issue arising in this appeal, we are inclined to set aside the matter back to the file of the AO for proper verification of the claim of the assessee. Needless to say that the ld. AO shall give proper and adequate opportunity of hearing to the assessee in accordance with the principles of natural justice and, evidence filed by the assessee shall be admitted by the ld. AO and then decided on merits in accordance with law. We reiterate that we have not commented on the merits of the issue in this appeal, and the AO shall decide the issue uninfluenced by any of the observations in this order. The appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.