2025 (5) TMI 1063 - AT - Income Tax

Filing Form 10-IE after due date cannot deny section 115BAC lower tax rate benefit

ITAT Amritsar allowed the assessee's appeal regarding denial of lower tax rate under section 115BAC. The CPC had rejected the benefit because Form 10-IE ... Denial of benefit of the lower tax rate u/s 115BAC - assessee has not filed Form 10-IE electronically before due date for filing return of income u/s 139(1) - directory v/s mandatory provision - HELD THAT:- ADIT (CPC) had failed to consider that the minor technical lapse cannot disentitle the assessee from substantial benefit. It is a matter of record that form 10IE was available with CPC at the time of processing return u/s 143(1). Further, filing of form 10IE is directory and not mandatory. In this regard your kind attention is drawn towards the following case of AKSHAY DEVENDRA BIRARI [2024 (6) TMI 272 - ITAT PUNE] where it was held that that the Form No. l0 IE was available with the CPC at the time of processing the return, and it was not a mandatory requirement but directory in nature. Therefore, the Tribunal directed the CPC to consider the Form No. l0 IE and allow the benefit of the New Tax Regime. We find that the Assessee could not file its return of income on or before the date of filing of return of income as required u/s 139 of the Act but filed its ITR within the extended period of time (extended by CBDT). But in this case, there was some technical glitch on the part of the CPC and Income Tax Portal of filing of return of income. Assessee has already brought on record different case laws in its favour passed by different authorities Assessee has filed its return during the extended period (as already extended for filing of the return by the CBDT vide its different Circulars mentioned above). A copy of form 10IE was also filed before the processing of the return - Assessee appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Tribunal in this appeal are:Whether the failure to file Form 10-IE before the due date of filing the income tax return under section 139(1) of the Income Tax Act, 1961, due to technical glitches, disentitles the assessee from opting for the concessional tax regime under section 115BACRs.Whether the requirement of filing Form 10-IE before the due date of filing return is mandatory or merely directory in natureRs.Whether the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] erred in denying the benefit of lower tax rate under section 115BAC on the ground of late filing of Form 10-IERs.Whether the revised return filed under section 139(5) along with belated Form 10-IE, but before processing of the original return, can be considered valid for opting the new tax regimeRs.Whether the denial of benefit under section 115BAC by the Centralized Processing Centre (CPC) at the stage of assessment under section 143(1) is beyond the scope of that sectionRs.Whether the assessee is entitled to claim deductions under Chapter VI-A if denied the benefit of lower tax rate under section 115BACRs.Whether the delay in filing the appeal before the Tribunal is liable to be condoned on grounds of sufficient cause and in the interest of substantial justiceRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Mandatory vs. Directory Nature of Filing Form 10-IE before Due Date of Return FilingRelevant Legal Framework and Precedents: Section 115BAC of the Income Tax Act provides an option for individual and Hindu Undivided Family taxpayers to opt for a concessional tax regime by filing Form 10-IE. The due date for filing this form is prescribed as the due date for filing the income tax return under section 139(1). The question is whether this requirement is mandatory or directory.Precedents cited include ITAT Pune in Akshay Devendra Birari vs. PCIT, CPC Bengaluru (2024), where the Tribunal held that the filing of Form 10-IE is directory and not mandatory, and as long as the form is available with the CPC at the time of processing, the benefit of the new tax regime should not be denied. The Hon'ble Delhi High Court in CIT vs. Web Commerce (India) Ltd. (2008) also held that filing of audit reports along with return is directory and can be filed during assessment or appellate proceedings.Court's Interpretation and Reasoning: The Tribunal noted that the assessee filed Form 10-IE belatedly by ten days due to technical glitches in the Income Tax Portal, which was acknowledged by the CBDT through multiple circulars extending the due dates. The Tribunal observed that the form was available with the CPC at the time of processing the return under section 143(1), indicating the assessee's intention to opt for the new tax regime.The Tribunal emphasized that the filing of Form 10-IE is a procedural requirement and not a substantive condition for exercising the option under section 115BAC. Therefore, the failure to file the form strictly before the due date should not result in denial of the benefit, especially when the delay was due to technical glitches beyond the assessee's control.Key Evidence and Findings: The CBDT circulars extending the due dates due to technical difficulties, the revised return filed on 25.03.2022 along with Form 10-IE before processing of the original return on 26.05.2022, and the availability of Form 10-IE with CPC at the time of processing were crucial evidences.Application of Law to Facts: The Tribunal applied the principle that procedural lapses caused by technical glitches should not prejudice the assessee's substantive rights. The availability of Form 10-IE with CPC and filing before processing the original return were treated as compliance with the requirement.Treatment of Competing Arguments: The Revenue argued that the form was not filed within the due date and hence the benefit under section 115BAC should be denied. The Tribunal rejected this on the ground that the requirement is directory and the delay was due to technical glitches acknowledged by CBDT.Conclusion: The Tribunal held that the requirement of filing Form 10-IE before the due date is directory and the assessee is entitled to the benefit of the new tax regime under section 115BAC despite the delay caused by technical glitches.Issue 2: Validity of Revised Return Filed under Section 139(5) with Belated Form 10-IERelevant Legal Framework and Precedents: Section 139(5) permits filing of a revised return to correct errors or omissions in the original return before the end of the assessment year or completion of assessment. The revised return replaces the original return.Court's Interpretation and Reasoning: The Tribunal observed that the assessee filed a revised return on 25.03.2022 opting for the new tax regime under section 115BAC along with Form 10-IE before the original return was processed on 26.05.2022. This was a valid exercise of the right to revise the return and should be accepted.Key Evidence and Findings: The revised return and Form 10-IE filed on 25.03.2022, prior to processing of the original return, were key evidences.Application of Law to Facts: Since the revised return was filed within the permissible time and before assessment completion, it was valid. The CPC ought to have considered the revised return and granted the benefit accordingly.Treatment of Competing Arguments: Revenue contended that since Form 10-IE was not filed before the due date of original return, the option under section 115BAC was invalid. The Tribunal rejected this, emphasizing the validity of revised return and the directory nature of Form 10-IE filing.Conclusion: The revised return filed under section 139(5) along with Form 10-IE before processing of the original return is valid and should be accepted for opting the new tax regime.Issue 3: Scope of Section 143(1) and Denial of Benefit under Section 115BAC at Processing StageRelevant Legal Framework: Section 143(1) permits summary assessment for arithmetical errors, incorrect claims, disallowance of loss, expenditure, or deduction, or addition of income appearing in specified forms. The question is whether denial of benefit under section 115BAC for failure to file Form 10-IE on time can be done under section 143(1).Court's Interpretation and Reasoning: The Tribunal held that denial of benefit under section 115BAC by CPC at the processing stage under section 143(1) is beyond the inherent scope of the section. Section 143(1) is limited to rectifying arithmetical or clerical errors and certain specified adjustments, not to deny substantive options exercised by the assessee.Conclusion: The CPC erred in denying the benefit under section 115BAC at the stage of processing under section 143(1).Issue 4: Entitlement to Deductions under Chapter VI-A if Benefit under Section 115BAC is DeniedRelevant Legal Framework: The old tax regime allows deductions under Chapter VI-A, which are not available under the new tax regime under section 115BAC.Court's Interpretation and Reasoning: The Tribunal noted that if the benefit of the lower tax rate under section 115BAC is denied, the assessee is entitled to claim deductions under Chapter VI-A as per the old regime. However, since the Tribunal allowed the option under section 115BAC, this issue became academic.Conclusion: The assessee is entitled to deductions under Chapter VI-A if the new tax regime option is disallowed, but in this case, the new regime option is upheld.Issue 5: Condonation of Delay in Filing Appeal before the TribunalRelevant Legal Framework and Precedents: The appeal was filed 10 days beyond the prescribed period. The Tribunal considered principles laid down by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji and other judgments emphasizing that delay caused by counsel's inadvertence or technical reasons can be condoned if there is sufficient cause and no mala fide intention.Precedents cited include Midas Polymer Compounds Pvt. Ltd. vs. ACIT (delay of 2819 days condoned), Senior Bhosale Estate (HUF) v. ACIT, and other High Court decisions where delay was condoned on grounds of bona fide reasons and absence of negligence.Court's Interpretation and Reasoning: The Tribunal found that the delay was due to the previous counsel's failure to hand over documents and was not deliberate or negligent on the part of the assessee. The delay was only 10 days and the assessee acted bona fide in filing the appeal. The Revenue had no objection to condonation of delay.Conclusion: The Tribunal condoned the delay in filing the appeal in the interest of substantial justice and remitted the matter for adjudication on merits.3. SIGNIFICANT HOLDINGSThe Tribunal held:'The submission of Form No. 10-IE is directory in nature and not a mandatory requirement. The non-mandatory nature implies that as long as the form is available and the intention to opt for the New Tax Regime is clear, the benefit should not be denied on technical grounds.''The denial of benefit under section 115BAC by CPC at the stage of processing under section 143(1) is beyond the inherent scope of that section and is not sustainable.''The revised return filed under section 139(5) along with Form 10-IE before processing of the original return is valid and must be considered for allowing the option under section 115BAC.''Delay in filing appeal caused due to counsel's inadvertence and bona fide reasons is sufficient cause for condonation of delay in the interest of substantial justice.''Technical glitches in the Income Tax Portal acknowledged by CBDT circulars extending due dates constitute sufficient cause for delay in filing Form 10-IE and should not prejudice the assessee's right to opt for the concessional tax regime.'Accordingly, the Tribunal allowed the appeal of the assessee on all grounds and set aside the order of the CIT(A), directing the AO to grant the benefit of the new tax regime under section 115BAC.