Facts of the Case

The assessee, Shamalbhai Lallubhai Prajapati, filed his return of income for Assessment Year 2023-24. The assessee received arrears of retirement benefits amounting to ₹9,47,028 arising from services rendered in the United States. While processing the return under Section 143(1), the CPC did not grant relief under Sections 89/89A of the Income-tax Act in respect of the said retirement benefits. The assessee contended that intimation and related communications were received on his son’s email ID and that he was not granted an opportunity to file a revised return before the statutory cut-off date of 31.12.2023.

Aggrieved, the assessee filed an appeal before the CIT(A), NFAC. The CIT(A) dismissed the appeal on technical grounds without deciding the issue on merits and without granting opportunity to the assessee to submit a revised return or to be heard. The assessee therefore preferred an appeal before the Tribunal. There was a delay in filing the appeal, which was condoned by the Tribunal.

Issues Involved

Whether relief under Sections 89/89A in respect of foreign retirement benefits can be denied merely on the technical ground of non-filing of a revised return, whether the CIT(A) erred in dismissing the appeal without adjudicating the issue on merits, and whether the matter required restoration to the Assessing Officer for fresh adjudication after granting proper opportunity.

Petitioner’s Arguments

The assessee submitted that the CPC denied relief under Sections 89/89A without granting him an opportunity to revise the return. It was argued that the CIT(A) dismissed the appeal mechanically without providing any hearing or considering the merits of the claim. The assessee requested that the matter be restored to the Assessing Officer so that he could properly represent his case and establish eligibility for exemption of arrears of retirement benefits under Section 89A.

Respondent’s Arguments

No appearance was made on behalf of the Revenue before the Tribunal.

Court Order / Findings

The ITAT Ahmedabad observed that the CIT(A) dismissed the appeal without granting opportunity to the assessee to submit a revised return or to explain his claim for relief under Sections 89/89A. The Tribunal noted that the assessee had received arrears of retirement benefits from services rendered abroad and that the claim required examination on merits. The Tribunal held that denial of relief on purely technical grounds without granting opportunity violates principles of natural justice. Accordingly, the Tribunal set aside the order of the CIT(A) and remanded the matter to the file of the Assessing Officer for de novo adjudication. The Assessing Officer was directed to examine the assessee’s eligibility for relief under Section 89A and also to consider whether the assessee could be permitted to revise the return to that extent, after granting adequate opportunity of being heard.

Important Clarification

The Tribunal clarified that substantive relief under Sections 89/89A relating to arrears of salary or foreign retirement benefits should not be denied merely due to procedural or technical lapses. Authorities are duty-bound to examine such claims on merits after affording proper opportunity to the assessee in accordance with principles of natural justice.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The order of the CIT(A), NFAC was set aside and the matter was restored to the file of the Assessing Officer for fresh adjudication on merits in accordance with law after providing adequate opportunity of being heard to the assessee.

Link to download order 
https://www.mytaxexpert.co.in/uploads/1769151022_SHAMALBHAILALLUBHAIPRAJAPATIGANDHINAGARVS.THEITOWARD1.pdf
 

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