HC allows condonation of delay for filing Form 10-IC under Section 115BAA for AY 2021-22 as per CBDT Circular

The HC allowed the petition seeking condonation of delay in filing Form 10-IC for AY 2021-22, exercised under section 115BAA for reduced tax rates. The court noted CBDT's Circular No. 6/2022 relaxed the filing deadline due to technical issues, permitting late submission until 30.06.2022. The respondent was directed to permit the petitioner to file a fresh Form 10-IC and consider condoning the delay by treating the late filing as timely for AY 2021. The petition was allowed, enabling the petitioner to obtain Form 10-IC and thereafter apply afresh for condonation of delay under section 119(2)(b).

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ISSUES:

Whether delay in filing Form 10-IC for exercising option under Section 115BAA of the Income Tax Act, 1961 can be condoned under Section 119(2)(b) of the Act.Whether Form 10-IC filed for Assessment Year 2021-2022 can be treated as filed for Assessment Year 2020-2021 to enable the assessee to avail concessional tax rate under Section 115BAA.Whether the Circular No. 6/2022 issued by the CBDT exercising power under Section 119(2)(b) can be relied upon to condone delay in filing Form 10-IC beyond the prescribed due date.Whether the decision of the Supreme Court in Principal Commissioner of Income Tax versus Wipro Limited, regarding mandatory filing of option under Section 10B(8) of the Act, applies pari materia to the filing of Form 10-IC under Section 115BAA(5) of the Act.What is the scope of power under Section 119(2)(b) of the Act in condoning delay and providing relief in cases of genuine hardship.

RULINGS / HOLDINGS:

The Court held that the delay in filing Form 10-IC can be condoned under Section 119(2)(b) of the Act where genuine hardship is established and the conditions laid down in Circular No. 6/2022 are satisfied, emphasizing that the power under Section 119(2)(b) is meant for redressal of grievances and hardships.The Court directed that Form 10-IC filed for Assessment Year 2021-2022 may be treated as if filed for Assessment Year 2020-2021 to enable the petitioner to avail the benefit of reduced tax rate under Section 115BAA, subject to fresh application and consideration within twelve weeks.The Court recognized Circular No. 6/2022 as a valid exercise of power under Section 119(2)(b) to condone delay in filing Form 10-IC till 30.06.2022 or three months from the end of the month of issuance of the circular, whichever is later, for Assessment Year 2020-2021.The Court distinguished the Supreme Court's decision in Wipro Limited, holding that the strict mandatory filing requirement under Section 10B(8) does not apply pari materia to Section 115BAA(5), noting that Section 115BAA grants relief to domestic companies to pay tax at a reduced rate upon exercising option in prescribed manner.The Court emphasized that the power under Section 119(2)(b) should be exercised liberally and equitably to avoid hypertechnical denials of relief, citing precedent that "the phrase 'genuine hardship' should have been construed liberally."

RATIONALE:

The Court applied the statutory framework of Section 115BAA of the Income Tax Act, 1961, which mandates that the option for concessional tax rate must be exercised in the prescribed manner by filing Form 10-IC on or before the due date specified under Section 139(1).The Court considered Rule 21AE of the Income Tax Rules prescribing the manner of filing Form 10-IC and acknowledged the CBDT's Circular No. 6/2022 as a valid exercise of power under Section 119(2)(b) to condone delay due to genuine hardship.The Court analyzed the Supreme Court's ruling in Wipro Limited concerning the mandatory nature of filing option under Section 10B(8) and distinguished its applicability, noting the difference in the nature of the provisions and reliefs under Sections 10B and 115BAA.The Court relied on precedent from the Madras High Court and Gujarat High Court emphasizing a liberal and equitable approach in construing "genuine hardship" and the exercise of power under Section 119(2)(b), rejecting hypertechnical and pedantic approaches.The Court recognized that the petitioner's failure was due to bona fide human error by the Chartered Accountant and that the petitioner had otherwise complied with filing the return on time and opting for the concessional tax rate, justifying relief.The Court ordered that the petitioner be permitted to file a fresh Form 10-IC and make a fresh application for condonation of delay, directing the authority to consider the same within twelve weeks, thus molding the relief consistent with the statutory scheme and CBDT circular.

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