2025 (9) TMI 649 - AT - Income Tax

Revised return filed after original due date cannot opt for new tax regime under s.115BAC and ss.139(1),139(5)

Shri Yogesh Mathur Versus The Income Tax Officer, Ward-1 (1), Bhilai (C.G.)

ITAT RAIPUR - AT dismissed the appeal, holding that the revised return under s.139(5) filed after the due date for the original return under s.139(1) ... Revised return u/s.139 (5) filed after due date for filing return u/s. 139(1) opting for New Tax Regime u/s 115BAC - HELD THAT:- It is an admitted fact that the assessee had furnished revised return u/s.139 (5) dated 05.08.2022 after due date for filing return u/s.139(1) opting for New Tax Regime. That since the due date for exercising the option in the case of the assessee was 31.07.2022, and since revised return was filed on 05.08.2022, the option for New Tax Regime as exercised by the assessee was not accounted for by the AO/CPC. That going as per the provisions of the Act, specifically Section 115BAC and sub-section (5) of the Act, the action of the AO/CPC stands correct. Assessee though principally admitted these facts, however, relied on a decision of Akshay Devendra Birari [2024 (6) TMI 272 - ITAT PUNE] Since the mandate of the legal provision has not been complied with by the assessee and for the fact that in case of the fiscal statutes, the provision has to be interpreted in its strictest form, therefore, the case law relied on by the Ld. Counsel shall not come to the rescue of the assessee. The said decision cannot override the provisions of the Act. That it has been spelled out through various decisions of the Hon’ble Apex Court that there cannot be any liberal interpretation in respect of fiscal statutes and the provisions of the Act has to be strictly complied with. Appeal of the assessee is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessee can validly opt for the New Tax Regime under section 115BAC by filing a revised return under section 139(5) after the due date prescribed under section 139(1). 2. Whether nothing contained in section 115BAC applies where the option is not exercised in the prescribed manner on or before the due date under section 139(1), and the legal consequence of exercising the option after that due date. 3. Whether a coordinate-bench decision permitting post-due-date exercise of option (via revised return) can be applied where the statutory mandate appears to require exercise on or before the section 139(1) due date, and the role of strict interpretation in fiscal statutes. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of option for New Tax Regime by filing revised return after due date Legal framework: Section 115BAC prescribes the New Tax Regime and sub-section (5) requires that the option be exercised 'in the prescribed manner' by the person 'on or before the due date specified under sub-section (1) of section 139' for persons having income from business or profession, and 'alongwith the return of income to be furnished under sub-section (1) of section 139' for others. Section 139(1) fixes the due date for filing returns and thereby the deadline for exercising the option. Interpretation and reasoning: The Court examined the temporal nexus between exercise of option and the statutory due date. The factual matrix showed the option was first made in a revised return filed under section 139(5) dated after the section 139(1) due date. The Tribunal held that where the legislature conditions the applicability of section 115BAC upon option being exercised on or before the section 139(1) due date, a post-due exercise via revised return does not meet that statutory requirement. The obligation to 'exercise' the option is not satisfied merely by a later revision; the statutory language ties exercise to the original return timeline. Precedent treatment: The assessee relied on a coordinate-bench decision that was submitted to support post-due-date exercise by revised return. The Tribunal distinguished that decision on the ground that it could not override the clear statutory mandate. No overruling of higher authority was made. Ratio vs. Obiter: Ratio - A revised return filed after the due date under section 139(1) cannot validly constitute exercise of the option under section 115BAC(5) where the statutory text requires exercise on or before that due date. Obiter - Observations on practical difficulties or fairness of the outcome were not undertaken; emphasis remained on statutory compliance. Conclusion: The option to be governed by section 115BAC was ineffective because it was exercised only in a revised return filed after the section 139(1) due date; therefore section 115BAC did not apply and tax computation under the old regime was correct. Issue 2 - Effect of section 115BAC(5) mandate and consequences of non-compliance with the due date Legal framework: Section 115BAC(5) is mandatory in phrasing ('Nothing contained in this section shall apply unless option is exercised...'), creating a condition precedent to the applicability of the New Tax Regime. The proviso deals with withdrawal and subsequent eligibility, but does not create an exception for late exercise. Interpretation and reasoning: The Tribunal treated sub-section (5) as a clear statutory bar to the applicability of section 115BAC when the option is not timely exercised. The statutory provision was read strictly as creating a temporal requirement; absence of timely exercise means the person remains governed by the default (old) regime for that assessment year. The assessment officer's application of the old regime in such circumstances was found to be in accordance with law. Precedent treatment: The Tribunal noted higher court authority endorsing strict construction of fiscal statutes and relied on that principle to sustain the mandatory effect of section 115BAC(5). A coordinate-bench decision offering contrary relief was not followed because it conflicted with the statutory mandate. Ratio vs. Obiter: Ratio - The mandatory wording of section 115BAC(5) precludes application of the New Tax Regime where the option was not exercised by the section 139(1) due date; non-compliance results in assessment under the old regime. Obiter - No alternative remedial reading (e.g., allowing post-due change by revised return) was adopted. Conclusion: Non-compliance with the due date for exercising the option under section 115BAC(5) results in non-applicability of the New Tax Regime for the assessment year in question; the assessing authority's refusal to recognize the belated option was lawful. Issue 3 - Precedent reliance and interpretation principles for fiscal statutes Legal framework: Principles of statutory interpretation require fidelity to the language of the statute; fiscal statutes are to be construed strictly. Lower court or coordinate-bench decisions do not override clear statutory provisions. Interpretation and reasoning: The Tribunal acknowledged the assessee's reliance on a coordinate-bench decision but rejected its applicability because it would be contrary to the clear mandate of section 115BAC(5). The Tribunal emphasized that in fiscal matters legislative prescriptions about timing and manner of exercising options must be strictly adhered to; equitable or pragmatic arguments cannot supplant express statutory requirements. Precedent treatment: The Tribunal did not overrule the coordinate-bench decision but declined to follow it, treating that decision as distinguishable or inapplicable where statutory text compels a contrary result. The Tribunal cited the settled principle that fiscal provisions are strictly interpreted and that conflicting decisions cannot override statutory language. Ratio vs. Obiter: Ratio - Coordinate-bench decisions cannot be used to circumvent an unambiguous statutory requirement; strict interpretation governs in fiscal statutes. Obiter - The Tribunal did not engage in broader commentary on the correctness of the coordinate-bench reasoning beyond its inconsistency with the statute. Conclusion: Reliance on a coordinate-bench decision cannot rescue a taxpayer who failed to comply with the statutory timeline; the Court upheld the primacy of statutory text and strict interpretation in fiscal law. Cross-reference See Issue 1 and Issue 2 for interrelated conclusions: the invalidity of a belated option (Issue 1) flows from the mandatory wording of section 115BAC(5) and the principle of strict interpretation in fiscal statutes (Issue 3).