2025 (1) TMI 1520 - AT - Income Tax

Assessee granted section 115BAA lower tax rate despite late Form 10IC filing due to technical system glitch

ITAT Mumbai allowed the appeal where the assessee was denied lower tax rate under section 115BAA for AY 2021-22 due to non-filing of Form 10IC by the due ... Denial of claim of the assessee to be taxed at the lower rate u/s 115BAA - Form 10IC, which was required to be also filed to opt for simplified tax regime which was not submitted by the assessee - HELD THAT:- Admittedly, the assessee intended to opt for beneficial regime u/s 115BAA as it clear from the return as well as the tax audit report. The only omission was not filing the requisite Form 10IC by due date. In this regard, genuine hardship was experienced by numerous assessees due to the fact that section 115BAA had come into effect from 01.04.20220 during the period of Covid Pandemic when it had become difficult to make statutory compliances for the assessees in general. In view of representation received in this regard, the CBDT belatedly issued a circular on 23.10.2023 condoning the delay in filing of Form 10IC on or before 31.01.2024 subject to few conditions. Since the circular was issued on 23.10.2023 and at the time of filing of return for AY 2022-23 in 2022, there was no such provision for filing belated Form-10IC for AY 2021-22, the assessee thought it prudent to file the requisite form for AY 2022-23 on 22.09.2022. Subsequently, in view of the circular, the assessee attempted to file Form 10IC for AY 2021-22 as well, but the system did not accept it for the reason that one Form 10IC had already been uploaded for AY 2022-23. We are of the considered view that the assessee deserves to get the benefit of lower tax rate prescribed by section 115BAA for AY 2021-22 as well, considering that the CBDT itself had relaxed the condition regarding filing of Form 10IC and provided a window for late submission of the same. The assessee having filed Form 10IC for AY 2022-23 on 22.09.2022 i.e. much before the issue of CBDT circular dated 23.10.2023, was not able to file another Form 10IC on the system. Simply because of the technical glitch in the system, the assessee cannot be denied the benefit of the circular when all other conditions are satisfied. Appeal of the assessee is allowed. The appeal in this case was filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi, dated 05.06.2024, for Assessment Year 2021-22. The core issues presented and considered in this case are as follows:Issues Presented and Considered:1. Whether the assessee's failure to file Form 10IC for AY 2021-22 should disqualify them from availing the lower tax rate under section 115BAA of the Income Tax Act, 1961.2. Whether the CBDT circular dated 23.10.2023, allowing condonation of delay in filing Form 10IC for AY 2021-22, should be applicable to the assessee.Issue-Wise Detailed Analysis:Issue 1: Failure to File Form 10IC for AY 2021-22- The assessee opted to pay taxes at a lower rate under section 115BAA but failed to file Form 10IC, required for opting for the simplified tax regime.- The CBDT circular dated 23.10.2023 allowed condonation of delay till 31.01.2024 for filing Form 10IC for AY 2021-22.- The Ld. CIT(A) dismissed the appeal due to the non-filing of Form 10IC for AY 2021-22.- The assessee argued that the failure to file Form 10IC was due to a technical glitch in the portal and that they had filed it for AY 2022-23 before the CBDT circular was issued.Issue 2: Applicability of CBDT Circular- The CBDT circular provided relief for late submission of Form 10IC for AY 2021-22 if certain conditions were met.- The assessee had filed Form 10IC for AY 2022-23 before the circular was issued but faced system issues when trying to file for AY 2021-22.- The Tribunal considered the genuine hardship faced by assessees during the Covid pandemic and the technical glitch in the portal that prevented the filing of Form 10IC for AY 2021-22.Significant Holdings:- The Tribunal held that the assessee should be allowed the benefit of the lower tax rate under section 115BAA for AY 2021-22 despite the technical glitch in the system.- The Form 10IC filed for AY 2022-23 was deemed to have been filed for AY 2021-22 in the peculiar circumstances of the case.- The appeal of the assessee was allowed, and the lower tax rate under section 115BAA was granted for AY 2021-22.In conclusion, the Tribunal found in favor of the assessee, considering the unique circumstances and the technical issues faced in filing Form 10IC for AY 2021-22. The CBDT circular providing relief for late submission was deemed applicable, and the assessee was granted the benefit of the lower tax rate under section 115BAA for the relevant assessment year.