Belated filing of Form 10E cannot deny substantial relief under Section 89 to an eligible employee.

By | May 27, 2026
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Belated filing of Form 10E cannot deny substantial relief under Section 89 to an eligible employee.

Issue

  • Whether the lower tax authorities were justified in denying statutory relief under Section 89 of the Income-tax Act, 1961 for arrears of salary solely due to the belated filing of Form 10E and the absence of a prior condonation of delay.

Facts

  • The assessee, an individual government employee, filed their return of income for the Assessment Year 2020-21 and claimed tax relief under Section 89 on account of salary arrears received.

  • The Central Processing Centre (CPC) processed the return under Section 143(1) and raised a tax demand by disallowing the claimed relief.

  • The assessee subsequently filed a rectification application under Section 154 to claim the Section 89 benefit.

  • The CPC rejected this rectification application, contending that the request involved a fresh or additional claim beyond the original return parameters and did not constitute a mistake apparent from the record.

  • On appeal, the Commissioner (Appeals) dismissed the case on dual grounds: an inordinate delay in filing the appeal itself, and on merits, affirming that the relief was invalid because Form 10E was filed late without a condonation order.

Decision

  • Procedural Delays Cannot Deny Substantial Relief: The Tribunal held that a procedural delay in filing Form 10E should not result in the outright denial of a substantial statutory benefit to an employee who is otherwise legally entitled to it.

  • Liberal Interpretation of Timelines: The time limit for filing Form 10E for claiming relief under Section 89 must be construed liberally rather than in a strict, hyper-technical manner.

  • Matter Remanded for Verification: The orders of the lower authorities were set aside, and the matter was remanded to the Assessing Officer/CPC to verify the details in Form 10E through due process and grant the eligible relief.

Key Takeaways

  • Substance Over Form: Procedural compliances and forms (like Form 10E) are directory, not mandatory, tools meant to facilitate tax relief. Administrative delays in uploading them cannot be used to strip away an assessee’s substantive legal rights.

  • Rectification vs. Fresh Claims: Legitimate claims made in the original return that are improperly handled or skipped during automated processing (such as a CPC processing under Section 143(1)) can be rightfully pursued via rectification or appeal tracks.

  • Remedial Mandate for Tax Officers: The decision reinforces that the ultimate goal of the tax department is to assess and collect the correct amount of tax due under the law, not to maximize revenue collections by capitalizing on a taxpayer’s technical or timing slips.

IN THE ITAT INDORE BENCH
Chandrashekhar Jangde
v.
Income-tax Officer*
Paresh M. Joshi, Judicial Member
and B.M. Biyani, Accountant Member
IT Appeal No. 20 (Ind) of 2026
[Assessment year 2020-21]
MAY  8, 2026
Soumya Bumb, CA for the Appellant. Ashish Porwal, Sr.DR for the Respondent.
ORDER
Paresh M. Joshi, Judicial Member.- This is an Appeal filed by the Assessee under section 253 of the income tax Act 1961,[herein after referred to as the Act for the sake of brevity] before this tribunal as & by way of a second Appeal. The Assessee is aggrieved by the order bearingNumber:-ITBA/APL/S/250/2025-26/1082391381(1) dated 07. 1 1.2025 passed by the Ld. CIT(A) u/s 250 of the Act, which is herein after referred to as the “Impugned order”. The Relevant Assessment year is 2020-2 1 and the corresponding previous year period is from 01.04.2019 to 31.03.2020.
2. Factual Matrix
2.1 That as and by an intimation order passed u/s 143(1) of the act dated 24.10.2020 bearing DIN:-CPC/2021/A1/125321675 a demand of Rs. 2,20,190/- was created/made on the assessee. The total income as per ROI was at Rs. 14,14,720/-. Prepaid taxes were at Rs. 23,600/-. Hench tax payable was worked out at Rs. 2,20,190/- Hence demand for remainder tax at Rs. 2,20,190/-. Thereafter the assessee submitted a rectification application before CPC seeking granting of relief u/s 89 of the act which was rejected vide rectification order dated 29.06.2024 by giving following reasons which is reproduced by us as below:-
“Under Section 154 of Income Tax Act 1961, an application for rectification can be filed only to correct mistakes apparent from records. In the rectification request filed, fresh/additional/reduction claim beyond what was claimed in the return is being claimed. Since fresh claim/additional claim is not considered mistake apparent from records, your rectification request cannot be entertained.”
“The aforesaid order u/s 154 is here in after referred to as the “Impugned rectification Order”. Section 89 gives the relief to assessee when the salary etc. is paid in arrears or in advance & falls under chapter VIII-Relief for income tax. Relevant rule is 21A/21AA & submission of form 10E for relief u/s 89.
2.2 That the assessee being aggrieved by the aforesaid “Impugned rectification Order” prefers the first appeal u/s 246A of the act before the Ld. CIT(A) who by the “Impugned Order” has dismissed the first appeal of the assessee on the grounds & reasons stated therein. The core grounds & the reasons for the dismissal of the first appeal were as under:-
“5.1.16 Though the decision of the Hon’ble Apex Court in the above-mentioned cases do not pertain to Income Tax Appeal matter, nonetheless, the ratio decidendi of the above-mentioned case is squarely applicable in the Appellant’s case. In the instant case, giving a benefit of doubt to the Appellant would be unjust towards all the other taxpayers who have duly adhered to the timeline envisaged in the Act. In view of the facts mentioned above, and relying on the decision of Hon’ble Supreme Court in the case of Late. Pathapati Subba Reddy (supra) and Basawaraj (supra) the instant appeal is dismissed on account of inordinate delay in filing of the appeal without having any sufficiency of cause and for malafide intent of the Appellant.
Notwithstanding the above, the issue under consideration is rejected on merits based on the discussion held in the ensuing paras.
5.2 Ground No 1 to 3: Non-Grant of Relief u/s 89 of Act due to late filing of Form 10E:
5.2.1 From the facts on record, it is observed that the Appellant during the year under consideration has filed the return of income on 19/12/2020 declaring income of Rs. 14,14,720/-. The Appellant has filed Form 10E belatedly on 06/09/2023. The Appellant is an individual and a salaried employee under the State Government, holding a valid Permanent Account Number (PAN: AKQPJ7888R). Further, the Appellant has contended that he is eligible for relief u/s 89(1) of the Income Tax Act, 1961 and that the Assessing Officer has disallowed the deduction claimed u/s 89(1) solely on the ground of delay in filing Form 10E, without appreciating that the delay was due to technical issues of the Income Tax portal and that the said Form was filed before completion of assessment thereby raising a demand of Rs. 2,20,193/-. The Appellant during the course of Appellate proceedings has relied upon various case laws as under:
Savitri Foundation v/s Income Tax Officer-26(1)(7), New Delhi M/s Satish Cold Storage v. Dy. C.I. T.
CIT v. Gujarat Oil & Allied Industries 201 ITR 325
Navbharat Charitable Trust v. Income-tax Officer [2 023] (Surat-Trib.)
Sarvodaya Charitable Trust v. Income Tax Officer. (Exemption)  (Gujarat)
Saraswati Bal Kalyan Nyas v. ITO (Exemption) ITA No.296/Ind/2018
5.2.2 At the outset it is stated that the Case laws relied upon by the Appellant do not squarely cover the facts in instant appeal. In the case of Savitri Foundation v. ITO (supra) the Mumbai ITAT, following the decision of Mumbai High Court in CIT v. Mumbai Metropolitan Regional Iron & Steel Market Committee has observed that, non-filing of Audit Report in Form 10B along with Return of Income is merely a procedural defect which is rectifiable. If the Audit Report was available with the assessee at the time of filing of Return of Income and was not filed due to bonafide reasons the benefit of exemption under Section 11 of IT Act cannot be denied if otherwise assessee is eligible to claim the same.
5.2.3 In the case of M/s Satish Cold Storage the issue was whether a tax deduction under Section 801B of the Income Tax Act could be allowed if the required audit report (Form 10CCB) was filed after the original tax return. The Hon’ble ITAT, in its decision, ruled in favour of the assessee holding that the Assessing Officer erred in not considering the audit report that was submitted subsequently. The Tribunal relied on Central Board of Direct Taxes (CBDT) Circular No. 689 dated August 24, 1994, which explicitly permits rectification under Sec tion 154 in cases where a required audit report or other evidence is not filed with the original return but is furnished later.
5.2.4 In the case of CIT v. Gujarat Oil & Allied Industries (supra) the Hon’b le Gujarat High Court dealt with the interpretation of procedural requirements in tax statutes, specifically Section 80J(6A) of the Income-tax Act, 1961. The central principle established in this case is that the requirement to furnish an audit report along with the income tax return is a procedural provision and is directory in nature, not mandatory.
5.2.5 In the case of Navbharat Charitable Trust v. ITO (supra) ITAT Surat held that exemption under section 11/12, cannot be denied due to belated filing of audit report in Form No. 10B. Similar view was taken in the case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) (Gujarat), wherein the Hon’ble Gujarat High Court held that a charitable trust should not be denied income tax exemption merely due to a delay in furnishing the audit report in Form 10B. In Saraswati Bal Kalyan Nyas v. ITO (Exemption) (supra), ITAT Indore also held that exemption under section 11/12 cannot be denied to the assessee for mere delay in filing of audit-report.
5.2.6 Thus, none of the cases above deal with the issue of denial of relief under section 89. Moreover, in all the above mentioned cases, the prescribed form was filed before the filing of the return of income or processing of the return of income. However, in the instant case, the Appellant filed his return of income on 19/12/2020 but Form 10E was filed only on 06/ 09/2023 which is almost after 3 years of filing of the return of income. Though the Appellant has claimed that the delay was on account of technical glitch, however, no documentary proof with respect to the same has been finished by the Appellant to substantiate his claim.
Moreover, it appears rather too far-fetched that the Appellant could not upload Form 10E within a reasonable period of time after filing of the return of income. Firstly, no technical glitch has been reported by other assesses that prevented them from uploading the Forms on the e-filing portal during the year under consideration. Secondly, in case there was any technical issue with the e-filing portal which genuinely prevented the Appellant from uploading Form 10E, the same certainly would not have persisted for 3 long years. It thus, transpires that the Appellant has uploaded Form 10E only after rejection of the rectification application by the AO. It was thereafter that the Appellant filed another rectification application before CPC seeking relief under section 89 of the Act which was rightly rejected by the CPC as the prescribed Form 10E was filed with a delay of almost 3 years.
The correct course of action for the Appellant in the instant case would have been to file for condonation of delay in filing of Form 10E before the Jurisdictional Pr/ Commissioner of Income tax and after being granted the same, to upload the Form 10E. The Appellant on the other hand resorted to devious means as has been elaborately discussed in the preceding paras.
5.2.7 For claiming any relief under the Act, the prescribed method must be followed. In case of seeking relief under section 89 of the Act, the method prescribed is to file Form 10E before filing of return of income. In case there is any delay in filing of Form 10E, the condonation of the same should be sought from the Jurisdictional Pr/ Commissioner of Income tax and after being accorded the same, upload Form 10E. If the details in Form 10E are in order, then the relief would be granted to the assessee. It has been held by the Hon’ble Supreme Court that exemption provisions in tax statutes should be interpreted strictly. A five-member Constitution Bench of the Supreme Court (SC) in Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company & Ors. Civil Appeal No. 3327 of 2007 has ruled on the interpretation of exemption notifications under taxation statutes. The SC held that an exemption notification should be interpreted strictly and the burden of proving applicability would be on the taxpayer to show that his/ her case comes within the parameters of the exemption notification. The SC further held that when there is ambiguity in the exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the taxpayer and it must be interpreted in favour of the Revenue. In this decision, the SC overruled its earlier three-member Bench decision in the case of Sun Export Corporation, Bombay v. Collector of Customs, Bombay, (1997) 6 SSC 564, in so far as that decision pertained to interpretation of an exemption notification. Similarly, The Constitution Bench of the Hon’ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company  (SC) held that an exemption clause should primarily be interpreted in a strict manner. In case of any ambiguity, while interpreting the exemption clause, the benefit of the doubt should go in favour of the revenue.
5.2.8 Further, the Hon’ble Supreme Court (“SC”) in the case of Principal Commissioner of Income Tax-III, Bangalore and another v. M/s Wipro Limited Civil Appeal No. 1449 of 2022 (arising out of SLP(Civil) No. 7620/2021) has held that the requirement of filing a declaration within a timeline is “mandatory ” in nature as per the language of the provision. It reiterated the age-old principle that a taxing statute should be read as it is and held that the exemption /deduction provisions should be “strictly ” and “literally ” complied with and, therefore, a strict interpretation should be adopted. The Hon’ble SC also rejected the legal argument that a purely procedural requirement should not be construed as being mandatory in nature and categorically stated that an exemption provision should be given a strict interpretation. It may be noted that in Commissioner of Income Tax -III v. Calcutta Knitwears, Ludhiana (2014) 6 SCC 444, the Hon’ble SC had held that the foremost principle of interpretation is the rule of strict interpretation.
5.2.9 Therefore, the Appellate authority does not find any discrepancy in the Rectification Order and no adverse interference is drawn. The Appeal filed on all the grounds are dismissed on merits as well. The Appellant may however seek necessary condonation from the concerned Jurisdictional Pr. Commissioner of Income tax who has the authority to condone the late filing of Form 10E.
5.3. Ground No. 4: General:
The appeal filed on Ground No 4 is general in nature does not require specific adjudication.
6. In the result, the appeal is Dismissed on grounds of the appeal being inadmissible and also on merits”
2.3 That the assessee being aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal & has raised the following grounds of appeal in the form number 36 against the “Impugned Order” which are as under:-
“1.On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the CPC Bangalore by not granting the relief claimed by the Appellant 1 under Section 154 r.w.s. 143(1) of the Income Tax Act, 1961. The Appellant prays that the impugned order of the CIT(A) being unjustified, unwarranted and uncalled for be directed to be quashed.
2.On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the CPC by not granting the relief claimed by the Appellant under Section 89 of 2 the Income Tax Act, 1961. The Appellant prays that the relief under Section 89 of the Act be directed to be allowed and the impugned order of the CIT(A) being unjustified, unwarranted and uncalled for be directed to be quashed.
3.On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Centralised Processing Centre (CPC) in not granting the benefit of deduction under section 89(1) of the Income-tax Act, 1961, by refusing to accept Form No. 10E filed online, solely on the ground of delay, without appreciating the detailed explanations and submissions placed on record by the appellant.
4. The Appellant prays to add, alter OR amend any OR all of the grounds at the time of hearing. “
3. Record of Hearing
3.1 The hearing in the matter took place before this Tribunal on 04.05.2026 when the Ld. AR for & on behalf of the Assessee appeared before us & interalia contended that the “Impugned Order” is bad in law, illegal & not Proper. It therefore deserves to be set aside. The Ld. AR has placed on the record of this Tribunal paper book containing pages 1 to 30 it was then contended that core issue in the instant appeal is of a relief under section 89 of the act. The CPC had denied it. However the requisite form No. 10E was filed on 06.09.2023 which are at pages 6 to 9 of the PB. Rectification request u/s 154 was rejected on 29.06.2024. [Reasons stated by us as above]. Our attention was invited to the internal page 29 of the impugned order & so also internal page 26 of the “Impugned Order”. It was also submitted that ultimately form 10E for relief u/s 89 was filed on 06.09.2023 as due to covid-19 earlier it could not be filed while filing ROI on 19.12.2020. The original intimation order u/s 143(1) was dated 24.12.2020. It was finally submitted that due benefit be extended now. Per contra Ld. DR for & on behalf of the assessee submitted that the revenue leaves the issue to this Tribunal wisdom to take an appropriate call with regard to relief u/s 89. In the rejoinder the Ld. AR submitted that the section 154 application was filed in time. It was submitted that assessee is a government employee. The bench raised a query basis page 2 of PB (intimation order u/s 143(1)internal page 2) as why the amount is Rs. 2,20,193/- as relief u/s 89 whereas as per the page 8 [form 10E] amount u/s 89 is show as Rs. 2,10,939/-. Please explain the difference to which the Ld. AR replied that the same would be explained to the Ld. AO if the matter is remanded. Hearing was over & concluded.
4. Observations Findings & conclusions
4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case & the rival submission canvassed before us.
4.2 We have carefully perused the records of the case and have heard the submissions.
4.3 We basis records of the case & after hearing & further upon examining the rival contentions of the Ld. AR and the Ld. DR canvassed before us, are of the considered opinion that “Impugned Order” is not proper. In the ultimate analysis we observe and notice that the form no. 10E is filed on 06.09.2023 & that after examining & verifying the same it’s relief should be given to the assessee as he is entitled to claim the relief. But mere claim is not granting a relief unless & until the Ld. AO/CPC examines & verity the same[Form 10E]. Accordingly we hold that filing of form NO. 10E belatedly [due to covid-19 & other factors] should not result in the denial of substantial relief/benefit to the assessee if the assessee is entitled to same basis law. The time limit of filling the form 10E for claiming a relief u/s 89 should in the given facts and the circumstances should be construed liberally & not strictly. The rules are laid down to be followed but collection of taxes should be basis substantive provision of law if the assessee otherwise is entitled to it basis law. Accordingly further we set aside the “Impugned Order” & remand the case back to the file of the Ld. AO/CPC to grant the relief/benefit to the assessee basis form no. 10E filed on 06.09.2023 after the same is duly verified by due process of law.
4.4 In the final analysis, we set aside the “Impugned Order” & remand the case back to the file of the Ld. AO/CPC on denovo basis who shall give the relief/benefit of the Form 10E after verifying the same.
5. Order
5.1 In result the Impugned order is set aside as & by way of remand back to the file of the Ld. AO/CPC with the directions as aforesaid.
5.2 . Appeal of the assessee is allowed for statistical purpose.