Tribunal Orders Reassessment: AO Failed to Consider Form 10E & Provide 30-Day Response for Tax Relief Claim Review.

The Tribunal partially allowed the assessee's appeal for statistical purposes, emphasizing the necessity of providing a reasonable opportunity to be heard in set-aside assessment proceedings. The case was remanded for fresh adjudication by the AO, as the department failed to consider Form 10E and other relevant documents before rejecting the tax relief claim under section 89(1). The Tribunal noted non-compliance with procedural requirements, including the failure to provide the assessee a 30-day response period as mandated by the first proviso to section 143(1)(a). The order was pronounced on 19/11/2024, directing a reassessment based on material and explanations provided by the assessee.

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Issues:
1. Rejection of tax relief claim u/s 89(1) by CPC and subsequent filing of application u/s 154
2. Non-compliance by the assessee with notice issues and late filing of Form 10E
3. Consideration of material aspects before rejecting the claim u/s 89(1)
4. Failure to consider Form 10E and relevant documents by the department in passing the rectification order u/s 154
5. Necessity of providing a reasonable opportunity of being heard to the assessee in set-aside assessment proceedings

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) by the assessee for the Assessment Year 2021-22. The assessee, a retired salaried employee, claimed tax relief u/s 89(1) for arrears of salary but the claim was rejected by the Central Processing Centre (CPC) when the return was processed u/s 143(1). The assessee then filed an application u/s 154 on 05.11.2022. The Ld. CIT(A) noted non-compliance by the assessee with notices and late filing of Form 10E. The impugned order was a rectification order u/s 154, decided against the assessee and confirmed by the Ld. CIT(A.

The Tribunal observed that the department did not afford the assessee the opportunity to respond within 30 days before rejecting the claim u/s 89(1) as required by the first proviso to section 143(1)(a). The application for rectification was filed on 05.11.2022, and the relevant documents were available with the department on 04.11.2022, but were not considered while passing the order u/s 154. Both parties agreed that the matter needed to be set aside for fresh adjudication by the Ld. AO based on the material furnished by the assessee and explanations provided.

The Tribunal highlighted the importance of providing a reasonable opportunity of being heard to the assessee in the set-aside assessment proceedings as per the law. The provisions of the first and second provisos to section 143(1)(a) were referenced. Ultimately, the appeal of the assessee was partly allowed for statistical purposes based on the observations made during the proceedings. The order was pronounced in the open court on 19/11/2024.

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