Chandra Prakash Vashistha vs. ITO
(ITA No. 1139/JPR/2025)ITAT Jaipur

Restored the ₹25 Lakh exemption retrospectively for a retiree from an earlier financial year. It ruled that CBDT Notification No. 31/2023 is beneficial legislation meant to erase historical anomalies.

Dear Client,

Yes, the bank can proceed under SARFAESI and your loan‑agreements against the mortgaged/linked security and, depending on what you signed (personal guarantee, composite‑loan terms), potentially against some jointly owned properties, but not everything you own, and distinct, un‑mortgaged personal assets are harder for them to attach without clear covenants or due‑process attachment‑orders; the distinction between jointly owned and individually owned assets matters mainly in how easily the bank can encumber them, because jointly held properties are more exposed where both spouses are borrowers.

Even though the plot is not yet registered in your name and the sale deed is pending, the bank can still treat the loan as an NPA and proceed under SARFAESI against your borrower‑obligation and the underlying property‑interest, but you can argue in negotiations, RERA/consumer‑forum, and in court that the default is linked to the builder’s NCLT/SARFAESI issues and the unresolved project, not just your conduct. You can also take steps to correct the CIBIL impact: raise a dispute with CIBIL and the bank, provide NCLT/NCLAT and SARFAESI/project‑status documents, and, if the bank refuses to correct the record, consider approaching the RBI‑Ombudsman, consumer‑forum, or even a High‑Court writ petition for relief against wrongful adverse‑CIBIL‑reporting; at the same time, propose a written conditional‑settlement to the bank (willingness to pay once registration is sorted) so you can later show you acted in good faith while protecting your credit‑standing.

I hope this helps and if you have any further issues do not hesitate to contact us.

Yes you can claim the same in appeal

You can claim the higher ₹25 Lakh exemption limit in your appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].

The courts have repeatedly held that beneficial provisions intended to correct historical inflation gaps should be applied retrospectively to pending matters of previous assessment years.

In a landmark case closely mirroring your timelines (ITAT Jaipur, Appeal No. 1139/JPR/2025), an SBI employee who retired and received ₹13 Lakhs in leave encashment was initially restricted to a ₹3 Lakh exemption by the department for AY 2021-22 (the exact same Assessment Year as yours). The ITAT overturned the department's rigid stance and granted the full exemption under the revised ₹25 Lakh limit, ruling that the benefit applies retrospectively.

Given that your rectification application was already disposed of without addressing the core exemption issue, filing a formal appeal before the CIT(A) is your correct next legal step to claim your rightful tax refund.

Prem Brothers Infrastructure LLP vs. NFAC (Delhi High Court) / Brajesh Kumar Singh Case (ITAT Delhi, 2026).

The Ruling: The courts held that in the absence of a specific whisper as to which precise limb of Section 270A(9) is satisfied, a mere reference to the word "misreporting" to deny immunity makes the order manifestly arbitrary and bad in law.

Where an income is assessed at a loss or the tax quantum payable is Nil, the condition under Section 270AA(1)(a) to pay tax and interest becomes impossible to perform (lex non cogit ad impossibilia). The ITAT across benches holds that immunity cannot be denied for a failure to pay what was never due.

Key Case: Nirman Overseas Pvt. Ltd. vs. NFAC (Delhi High Court).

The Ruling: If the assessee has demonstrated clear intent by accepting the assessment and satisfying the substantive conditions (not filing an appeal, clearing undisputed amounts if any), the statutory machinery cannot prejudice the taxpayer due to hyper-technical timelines or portal glitches.

File a Formal Reply to the Penalty SCN: Do not wait. Explicitly state that you have accepted the quantum, filed no appeal, and that the case is a pure case of differences in interpretation (under-reporting at best), not deliberate suppression or misreporting under Section 270A(9).

Concurrently file a physical/e-filing letter to your Jurisdictional Assessing Officer stating that the demand is being rectified/addressed, and request them to exercise their inherent powers to adjust the basic exemption limit before finalizing any penal conclusions.