New Delhi, Nov. 7 -- A retired employee from Bharuch has won a legal battle against the Income Tax Department over the processing of his leave encashment tax exemption claim. The Income Tax Appellate Tribunal (ITAT), Surat Bench, on October 28, 2026, set aside a rectification order through which the department had added Rs.5.02 lakh to his taxable income without providing him an opportunity to explain his position.

The ruling highlights the importance of following due process before the tax authorities modify an already processed income tax return (ITR), particularly when such changes increase an individual's tax liability or reduce a refund.

The case concerns Patel, a resident of Bharuch, who received Rs.8.02 lakh as leave encashment u...