Delayed Form 10IE filing and s.115BAC new tax regime choice for AY 2022-23/2023-24 upheld, concessional rates allowed.

The dominant issue was whether an assessee could be denied concessional taxation under s. 115BAC for AY 2022-23/2023-24 due to delayed filing of Form 10IE. The Tribunal held that the option for the new regime had been validly exercised and never withdrawn, and s. 115BAC permitted exercise of the option up to AY 2023-24; further, once exercised, a fresh Form 10IE was not required for AY 2023-24. Treating the assessee's bona fide lapse as fatal was inconsistent with the statutory scheme and purpose of the new regime. Consequently, the AO was directed to compute tax under s. 115BAC, and the appeal was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, for the assessment year in question, the assessee was entitled to be taxed under the new tax regime under section 115BAC when the return expressly opted for that regime, but the processing was done under the old regime (including computation under section 115JC) on the ground that Form 10IE for an earlier year was filed one day late.

(ii) Whether denial of taxation under section 115BAC for the relevant year was justified where the option had been exercised once, was not withdrawn, and no fresh Form 10IE could be filed for the relevant year.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i) & (ii): Entitlement to taxation under section 115BAC despite earlier one-day delay in Form 10IE, and correctness of processing under the old regime

Legal framework (as discussed by the Court): The Court considered section 115BAC(5), which provides that the concessional/new regime applies only if the option is exercised in the prescribed manner; and that once exercised it applies to subsequent assessment years. The Court also noted the insertion of the second proviso (by Finance Act, 2023) to the effect that the sub-section would not apply for any previous year relevant to the assessment year beginning on or after 1 April 2024, and treated the year in appeal (AY 2023-24) as within the period when the option could be exercised and applied.

Interpretation and reasoning: The Court found as a material fact that the assessee had exercised the option for the new regime by filing Form 10IE on 08/11/2022 and had not withdrawn that option. The denial of the new regime was only because the Form 10IE for the earlier year was considered delayed by one day. The Court treated it as significant that for AY 2023-24 the assessee disclosed in the return that Form 10IE was already filed and on record, provided its acknowledgement details, and specifically indicated that the option had not been withdrawn. The Court further reasoned that the assessee could not file a fresh Form 10IE for AY 2023-24 because the option was to be exercised only once, and therefore the authorities' approach effectively made the benefit unavailable despite the assessee's continuing and unrevoked choice and despite the availability of section 115BAC for AY 2023-24.

Conclusions: The Court held that the lower authorities were not justified in denying the benefit of taxation under section 115BAC for AY 2023-24 and in processing the return under the old regime. It directed the assessing authority to compute and levy tax for the relevant year as per section 115BAC, and allowed the appeal.

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