Relief for Salary Arrears under Section 89(1) and Reconciliation of Form 26AS

Facts

The Assessee: An individual taxpayer who received salary arrears during the Financial Year 2019-20 (AY 2020-21).
Issue I: Section 89(1) Relief: The Assessee claimed tax relief under Section 89(1) to mitigate the higher tax bracket impact caused by receiving past years’ salary in the current year.
The Dispute: The Assessing Officer (AO) disallowed the relief because Form 10E (the mandatory electronic form for claiming Section 89 relief) was not filed before the due date of the return or within the stipulated timeframe.
Issue II: Income Discrepancy: The AO made an additional tax demand based on a discrepancy between the salary income reported by the Assessee in the return and the figures reflected in Form 26AS (Tax Credit Statement).
The Remand: The Assessee contended that the discrepancy could be explained through evidence, but the AO had made the addition without a detailed reconciliation.

Decision

The Tribunal ruled in favor of the Assessee on the technicality and remanded the factual dispute:

Relief under Section 89(1): The Tribunal held that relief under Section 89(1) is a substantive right provided by the Act to prevent hardship. It cannot be denied merely due to a technical breach, such as the delayed filing or non-filing of Form 10E by the original return due date. The AO was directed to allow the relief despite the procedural delay.
Reconciliation of Form 26AS: Regarding the salary discrepancy, the Tribunal noted that the AO must perform a factual verification. The matter was remanded to the AO with a direction to reconsider the addition by comparing the Assessee’s evidence against Form 26AS, after providing the Assessee a fair opportunity to be heard.

Key Takeaways

Procedure vs. Substance: Procedural requirements (like filing Form 10E) are secondary to substantive tax benefits. If a taxpayer is legally eligible for relief, a delay in filing the supporting electronic form should not result in a permanent loss of that benefit.
Correcting Form 26AS Mismatches: Form 26AS is often treated as the “final word” by the CPC/AO, but it is not infallible. Taxpayers have the right to challenge 26AS figures if they possess contrary evidence (e.g., salary slips, bank statements, or employer certificates).
Actionable Step: If Section 89 relief is denied in an intimation under Section 143(1) due to missing Form 10E, the taxpayer should file the form immediately and seek rectification or appeal, citing this precedent that technical delays are condonable.
Burden of Reconciliation: In remand proceedings for income discrepancies, the burden lies on the taxpayer to provide a “point-to-point” reconciliation between the books and the tax credit statement to successfully delete the addition.

IN THE ITAT GAUHATI BENCH

Abdus Sukur Ahmed

Income-tax Officer^*

Duvvuru RL Reddy, Vice President
and Rajesh Kumar, Accountant Member

IT Appeal No. 358 (GTY) of 2025
[Assessment year 2020-21]

MARCH 13, 2026

S.P. Bhati, AR for the Appellant. Dipak Singh, DR for the Respondent.

ORDER

1. This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.09.2025 for the AY 2020-21.

2. The first issue raised by the assessee is against the order of ld. CIT (A) upholding the order of ld. AO wherein the relief claimed u/s 89(1) of the Income-tax Act, 1961 (the Act) was denied by the ld. AO on the ground that the assessee has not filed the form 10E before filing the ITR in the impugned assessment year nor did file the form 10E online with regard to relief claimed u/s 89(1) of the Act and accordingly, denied the relief claimed by the assessee.

3. The second issue raised by the assessee is against the confirmation of addition of Rs.1,12,080/-, which was on account of discrepancy between the form 26AS and the salary disclosure by the assessee.

4. At the outset, we observe that there is no compliance before the ld. CIT (A) and therefore the CIT (A) decided the appeal ex-parte by upholding the order of the ld. AO. We also note that the ld. AO has disallowed the relief claimed by the assessee u/s 89(1) of the Act on the technical ground that form 10E was not filed before the due date of filing the return or e-filed within the stipulated date. In our opinion, the assessee is entitled to claim the relief u/s 89(1) of the Act, the calculation qua which has been extracted by the ld. AO in the assessment order by the ld. AO as well as in the appellate order by the ld. Commissioner of Income-tax (Appeals). In our opinion, the relief claimed by the assessee u/s 89(1) of the Act cannot be denied for the technical breach. Consequently, we set aside the order of ld. CIT (A) on this issue and direct the ld. AO to allow the relief as claimed by the assessee u/s 89(1) of the Act. The issue number 1 is allowed.

5. So far as the second issue of discrepancy of suppressed salary is concerned, we restore the same to the file of the ld. AO with a direction to decide the same after taking into account the evidences filed by the assessee as well as form 26AS, after affording reasonable opportunity of hearing the assessee.

6. In the result, the appeal of the assessee is partly allowed for statistical purposes.