Retirement benefit arrears claim under section 89A denied; remand to AO for reconsideration and revised return opportunity

Matter concerns claim for exemption of arrears of retirement benefit and entitlement to file a revised return in respect of income earned from foreign services. Principal legal points: denial of opportunity to file a revised return and absence of hearing engages procedural fairness, warranting reconsideration; entitlement to exemption for arrears under the relevant tax provision requires fresh adjudication on merits. Consequence: remand to assessing officer for de novo adjudication to determine eligibility for exemption and whether a revised return may be accepted, with the appeal allowed for statistical purposes.

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Issues: (i) Whether the matter should be remanded to the Assessing Officer for de novo adjudication to permit the assessee to file a revised return and to consider grant of exemption of arrears of salary under Section 89/89A of the Income-tax Act, 1961.

Analysis: The appeal concerns denial of opportunity to submit a revised return and to seek relief under Sections 89/89A in respect of retirement/arrears of salary. The record shows that no adjudication on the merits was made because the assessee was not afforded the opportunity to file a revised return or to be heard before the question of relief under Section 89A was decided. In view of the procedural deficiency, the appropriate course is to remit the matter to the Assessing Officer for fresh consideration in accordance with principles of natural justice, allowing the assessee to file a revised return and to present submissions on eligibility for exemption under Section 89A.

Conclusion: The appeal is allowed for statistical purposes and the matter is remanded to the Assessing Officer for de novo adjudication, with directions to afford the assessee an opportunity to file a revised return and to be heard on the claim under Sections 89/89A of the Income-tax Act, 1961.

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