2025 (5) TMI 1482 - AT - Income Tax

Relief claimed 89(1) - claim denied by the CPC on the ground that the requisite Form 10E was not e-filed by the assessee - Addl./JCIT(A) Mysore confirmed the order of the AO denying the relief claimed - HELD THAT - Looking into the facts of this case Assessee deserves one more opportunity to present his case and therefore restore this file to the Office of the AO with the direction to consider the manually filled Form 10E as Form 10E filed electronically and grant appropriate relief under section 89(1) of the Act after giving an opportunity to the assessee. Also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so failing which the Assessing Officer would be at complete liberty to pass the order in accordance with law based on the material available on record even if it is ex-parte qua the assessee. Appeal of the assessee stands allowed for statistical purposes.

Summary

The core legal questions considered in this appeal revolve around the entitlement to relief under section 89(1) of the Income Tax Act, 1961, specifically:

1. Whether the relief claimed under section 89(1) of the Act can be denied solely on the ground that Form 10E was not electronically uploaded on the e-filing portal, despite the relief being duly claimed in the original return and supported by Form No. 16 issued by the employer.

2. Whether a procedural lapse, such as failure to electronically file Form 10E, can justify denial of a substantive statutory relief under section 89(1), considering the principles of procedural law aimed at facilitating substantive justice.

3. The scope and discretion of the appellate authority and the Tribunal in allowing an opportunity to the assessee to rectify procedural deficiencies and claim relief appropriately.

Issue 1: Denial of Relief under Section 89(1) Due to Non-Electronic Filing of Form 10E

The legal framework under section 89(1) provides relief to taxpayers from tax on salary income that is received in arrears or in advance, by allowing recalculation of tax to mitigate hardship due to such receipt. The procedure mandates submission of Form 10E as a prerequisite for claiming the relief.

Precedents establish that Form 10E is essential for the assessing officer to verify the claim, but the manner of submission-electronic or manual-is not explicitly prescribed as mandatory for denial of relief if the claim is otherwise substantiated.

The Tribunal noted that the assessee had claimed relief in the original return filed on 23.07.2014 and that the employer had accounted for the relief in Form No. 16. The assessee also submitted a manually filled Form 10E to the employer as per prescribed guidelines. The denial of relief by the Centralized Processing Centre (CPC) and confirmation by the Addl./JCIT(A) was solely on the ground that Form 10E was not electronically uploaded on the e-filing portal.

The Tribunal's reasoning emphasized that the failure to electronically upload Form 10E was a procedural lapse and should not be a ground to deny a legitimate statutory relief. The Tribunal held that the relief under section 89(1) is a substantive right and procedural formalities should not override this right.

Issue 2: Procedural Law and Substantive Justice

The Tribunal considered the principle that procedural law is intended to facilitate, not obstruct, substantive justice. It highlighted that denial of relief on mere technical grounds would be contrary to the legislative intent behind section 89(1).

The Tribunal observed that the procedural lapse of non-uploading Form 10E electronically was immaterial when the relief was otherwise duly claimed and supported by documentary evidence including Form No. 16 and manually submitted Form 10E.

Issue 3: Discretion to Grant Opportunity for Compliance

Although the appeal was heard ex-parte due to non-appearance of the assessee, the Tribunal exercised its discretion to restore the matter to the Assessing Officer with directions to consider the manually filed Form 10E as equivalent to electronically filed Form 10E.

The Tribunal directed the Assessing Officer to grant the appropriate relief under section 89(1) after giving the assessee an opportunity to present his case. It cautioned the assessee to comply fully with directions during the set-aside proceedings, warning that failure to do so could result in an ex-parte order.

This approach underscores the Tribunal's commitment to ensuring that procedural lapses do not result in denial of substantive rights, while also upholding the procedural safeguards of natural justice by providing an opportunity to the assessee.

Significant holdings include the following verbatim excerpt capturing the Tribunal's legal reasoning:

"I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, I restore this file to the Office of the Assessing Officer with the direction to consider the manually filled Form 10E as Form 10E filed electronically and grant appropriate relief under section 89(1) of the Act after giving an opportunity to the assessee."

Core principles established are:

- Relief under section 89(1) is a substantive right and cannot be denied on mere procedural grounds such as non-electronic filing of Form 10E.

- Procedural requirements are meant to facilitate substantive justice and should not be used to frustrate legitimate claims.

- The appellate authority and Tribunal have the discretion to grant opportunities to rectify procedural deficiencies to ensure that substantive rights are protected.

Final determinations on each issue are:

- The denial of relief under section 89(1) solely due to non-uploading of Form 10E electronically was erroneous.

- The procedural lapse was a technicality and did not justify rejection of the relief claim.

- The matter is remanded to the Assessing Officer for consideration of the manually filed Form 10E and grant of relief after affording the assessee an opportunity of hearing.

- The appeal is allowed for statistical purposes, reflecting the Tribunal's decision to set aside the impugned order and restore the case for fresh consideration.