2025 (9) TMI 831 - AT - Income Tax

Taxpayer granted s.89 relief despite belated e-filing of Form 10E; matter remitted for recalculation and verification

ITAT allowed the assessee's appeal, holding that belated filing of Form No. 10E is a procedural requirement and relief under s. 89 should not be denied ... Denying the relief claimed u/s 89 - delay in filing Form 10E by the appellant - Procedural requirement or mandatory - Appellant contend that Income Tax Act, 1961 does not specify any strict time limit for filing Form 10E thereby action of IT authorities of denying the relief is arbitrary in nature and hence uncalled for - HELD THAT:- The assessee is required to furnish Form No. 10E under rule 21AA of the Income Tax rules, 1962. However Form No. 10E was filed belatedly on 14.03.2023 but before that CPC passed the order u/s 143(1)(a) on 07.02.2023. In the case of Yashwant Singh Pawar [2023 (12) TMI 1465 - ITAT INDORE] while dealing with the similar issue and on observing that Form No. 10E has been filed after processing the return but before filing the appeal before Ld. CIT(A), has decided in favour of assessee as decided whenever this issue has cropped before the courts that the filing of any prescribed form is a procedural requirement or mandatory, the courts are liberal and judicious in holding requirement as procedural and thereby directing the revenue to allow substantive benefit to assessee even if the form is filed belatedly. We find that the assessee is a senior citizen and retired Govt, employee, hence there is no mala fide intention or attempted negligence on the part of assessee in not filing form in time. Therefore, taking a judicious note, we are inclined to hold that the assessee should be given the benefit of relief as per Form No. 10E subsequently filed. Thus, remit back this issue of relief u/s 89 to the file of JAO who shall carry out the necessary verification as per the directions given above after duly considering Form No.10E E-filed by the assessee - Appeal of the assessee is allowed for statistical purposes. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether relief under section 89 of the Income-tax Act can be denied solely because Form No. 10E was not filed before intimation under section 143(1) was issued. 2. Whether Rule 21AA (requirement to furnish Form No. 10E) creates a mandatory time-bound condition that, if not complied with before processing under section 143(1), disentitles the assessee to relief under section 89. 3. Whether belated filing of Form No. 10E (filed after section 143(1) intimation but before first appeal) can be accepted and the section 89 relief allowed after verification, absent mala fides or prejudice to revenue. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Whether relief under section 89 can be denied solely for non-filing of Form No. 10E before section 143(1) intimation Legal framework: Section 89 provides relief for salary arrears/advances; Rule 21AA prescribes Form No. 10E for claiming relief under section 89. Section 143(1) authorises intimation on computation/processing of return. Precedent Treatment: The Tribunal relied on a coordinate Bench decision which held that courts/tribunals have treated prescribed forms as procedural and allowed substantive relief when the form was filed belatedly but before first appeal, particularly where no mala fides existed. Interpretation and reasoning: The Court examined whether denial of section 89 relief was based solely on temporal non-filing of Form 10E. Noting that the assessee had filed Form 10E before the first appeal and that the belated filing was not wilful, the Tribunal treated the requirement of Form 10E as procedural evidence to substantiate claim rather than a condition precedent extinguishing substantive entitlement. The Tribunal observed the absence of statutory language in section 89 mandating strict time limits for Form 10E and emphasized that Rule 21AA uses 'may furnish' language (argued by assessee), supporting a non-mandatory procedural interpretation. Ratio vs. Obiter: Ratio - Denial of section 89 relief solely on account of Form 10E not being filed before section 143(1) intimation is not appropriate where Form 10E is filed subsequently before the first appeal and there is no mala fide or prejudice to revenue. Obiter - Observations on policy of liberal judicial approach to procedural forms in exemption/relief contexts. Conclusion: Relief under section 89 should not be denied solely because Form 10E was not filed before processing under section 143(1) where the form is subsequently furnished and the claim can be verified. Issue 2 - Whether Rule 21AA creates a mandatory, time-bound condition for entitlement to section 89 relief Legal framework: Rule 21AA prescribes the manner and particulars (Form 10E) for claiming relief under section 89; statutory text and rule language determine whether compliance is mandatory in a time-bound sense. Precedent Treatment: The Tribunal applied the coordinate Bench decision which construed the rule and prescribed form requirement as procedural, not jurisdictional, in similar circumstances. Interpretation and reasoning: The Tribunal noted that Rule 21AA does not expressly provide for disallowance of relief in case of delayed filing of Form 10E and that the rule's phraseology (as argued by the assessee) does not employ peremptory language making filing an absolute condition precedent. The Tribunal treated Form 10E as a supporting document enabling verification of entitlement rather than as a rigid time-bar that extinguishes the substantive relief if not filed before processing. Ratio vs. Obiter: Ratio - Rule 21AA's requirement to furnish Form 10E is a procedural compliance for substantiation and verification and does not automatically operate as a time-bar to relief where the form is filed belatedly without prejudice to revenue. Obiter - Discussion about the choice of words 'may furnish' versus 'shall furnish' (as advanced by assessee) and general judicial liberalism towards procedural lapses. Conclusion: Rule 21AA does not, by itself, operate to disallow section 89 relief solely because Form 10E was filed after section 143(1) processing, provided the form is subsequently filed and verification is possible. Issue 3 - Whether belated filing of Form No. 10E before first appeal should be accepted and relief remitted for verification Legal framework: The tax administration must verify eligibility for relief under section 89; procedural rules permit verification and opportunity of hearing during assessment or appellate proceedings. Precedent Treatment: The Tribunal followed a coordinate Bench decision which accepted belated Form 10E filed after processing but before appeal and remitted the matter to AO for verification and grant of relief. Interpretation and reasoning: The Tribunal found the facts analogous: Form 10E was filed after the section 143(1) intimation but before filing appeal; the assessee was a senior retired government employee; there was no mala fide delay; and no prejudice to revenue was shown. On this basis, the Tribunal exercised equitable and procedural flexibility, remitting the matter to the Jurisdictional Assessing Officer for verification of the Form 10E particulars and allowance of the eligible relief, with directions to afford proper opportunity of hearing and to guard against unnecessary adjournments. Ratio vs. Obiter: Ratio - Where Form 10E is filed belatedly but before appeal, and delay is not deliberate or prejudicial to revenue, the appellate authority/Tribunal may direct acceptance of the form and remand to the AO for verification and grant of section 89 relief. Obiter - Comments about taxpayer conduct (senior citizen/retired) and judicial disposition to be liberal in procedural matters. Conclusion: Belated filing of Form 10E before first appeal is acceptable; the matter should be remitted to the AO for verification and grant of relief under section 89 after giving the assessee proper opportunity of hearing. Cross-References and Practical Directions The Tribunal relied on and followed the reasoning of a coordinate Bench decision treating Form 10E as procedural; it remitted the issue for verification rather than deciding entitlement on merits. The AO is directed to verify the e-filed Form 10E, allow eligible relief under section 89 if substantiated, and grant hearing opportunities; the assessee is cautioned against unnecessary adjournments.