Domestic company's 22% tax option u/s115BAA despite late Form 10-IC filing; denial set aside, reprocessing ordered.

Where a domestic company filed its return u/s 139(1) within time and computed tax at the concessional rate under s. 115BAA, the HC held that the substantive exercise of option was evident from the return and computation, and the assessee could not be denied the benefit merely due to delayed filing of Form 10-IC, particularly when the return utility did not provide a clear column to exercise the option as per the relevant CBDT circular. Consequently, the HC quashed the order u/s 119(3)(b) and the intimation u/s 143(1), and remanded the matter to the competent authority to condone the delay in Form 10-IC and enable reprocessing of the return by applying the 22% rate u/s 115BAA.

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Issues Involved:
1. Delay in filing Form 10-IC electronically.
2. Rejection of application under Section 119(2)(b) of the Income Tax Act.
3. Eligibility for reduced tax rate under Section 115BAA.
4. Procedural deficiencies in Form ITR-6.
5. Application of CBDT Circulars.

Issue-Wise Detailed Analysis:

1. Delay in Filing Form 10-IC Electronically:
The petitioner failed to file Form 10-IC electronically by the due date due to an oversight by the accountant. This form is necessary to avail the concessional tax rate of 22% under Section 115BAA of the Income Tax Act. The delay resulted in the return being processed under Section 143(1) without the benefit of the reduced tax rate, leading to an additional tax liability of Rs. 20,48,040.

2. Rejection of Application under Section 119(2)(b) of the Income Tax Act:
The petitioner applied for condonation of delay under Section 119(2)(b) of the Act, citing extreme financial hardship. The application was rejected by the respondent on the grounds that the CBDT Circular for condonation applied only to Assessment Year 2020-21, not 2021-22. Additionally, the rejection was premature as it was issued before the scheduled hearing date.

3. Eligibility for Reduced Tax Rate under Section 115BAA:
The petitioner had complied with all substantive provisions of Section 115BAA, including not claiming any deductions and computing tax at the reduced rate. However, due to a technical glitch, the petitioner could not file Form 10-IC electronically, which is a procedural requirement to avail the reduced tax rate.

4. Procedural Deficiencies in Form ITR-6:
The petitioner argued that Form ITR-6 did not provide a specific box for exercising the option under Section 115BAA, making it impossible to comply fully with the procedural requirements. This was corroborated by the court, which noted the absence of a box for the option in Column (e) of the form.

5. Application of CBDT Circulars:
The petitioner relied on CBDT Circular No. 6/2022, which condoned delays for Assessment Year 2020-21, and Circular No. 19/2023, which extended similar relief for Assessment Year 2021-22. Despite fulfilling the substantive conditions, the petitioner's application was rejected on technical grounds, which the court found unjustified.

Judgment:
The court quashed the impugned orders dated 13.10.2023 and 22.02.2024, and the intimation under Section 143(1) dated 13.11.2022. It remanded the matter back to the respondent to condone the delay in filing Form 10-IC and to re-process the return of income applying the provisions of Section 115BAA for the lower tax rate of 22%. The respondent was directed to complete this exercise within twelve weeks from the date of receipt of the court's order. The court emphasized that procedural technicalities should not impede substantive justice, especially when the petitioner had complied with all substantive provisions of the Act.

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