2026 (3) TMI 1015 - AT - Income Tax

Concessional Tax Regime available where Form No.10IC, though belated, was on record before corrected return processing.

Assessee who filed Form No.10IC belatedly but before filing a rectified return and whose Form No.10IC was on record during processing may be permitted to ... Denial of benefit in simplified tax scheme u/sec. 115BAA - procedural lapse in filing Form No.10IC - assessee had not initially claimed the benefit of the simplified tax regime under section 115BAA of the Act in the original return of income - assessee filed Form No.10IC belatedly but before rectifying a defective return (filed in response to notice under section 139(9)) Whether the claim of benefit under section 115BAA made through the revised return was legally admissible? - HELD THAT: - The Tribunal found that the assessee filed Form No.10IC prior to processing of the return and rectified the defect in the return after a defect notice; the Form No.10IC was on record when the return was processed. The Tribunal accepted that the assessee's intention to opt for section 115BAA was clearly demonstrated and that the procedural lapse in not exercising the option in the original return was minimal and explained. Tribunal relied on Coordinate Bench precedents that procedural requirements should not defeat substantive benefits where statutory conditions are otherwise met, and distinguished the decision relied upon by the revenue on its facts (where the assessee had expressly indicated non option). On this basis the Tribunal held that the filing of Form No.10IC and the rectified return sufficed to demonstrate the option for the concessional regime and directed verification of Form No.10IC by the Assessing Officer. [Paras 10, 11] Filing of Form No.10IC and the rectified/defect corrected return demonstrated the assessee's option under section 115BAA; the impugned order was set aside and the AO directed to verify Form No.10IC and, if in order, allow the concessional regime. Final Conclusion: The Tribunal allowed the appeal, holding that the assessee's filing of Form No.10IC and the subsequent rectified return sufficiently established the option for taxation under section 115BAA for AY 2024-25; the Assessing Officer was directed to verify the Form No.10IC and grant the benefit if found in order. Issues: Whether an assessee who filed Form No.10IC belatedly but before rectifying a defective return (filed in response to notice under section 139(9)) and whose Form No.10IC was on record at the time of processing, can validly avail the concessional tax regime under section 115BAA of the Income-tax Act, 1961.Analysis: The Court examined the sequence of events: original return filed without opting for section 115BAA; defect notice under section 139(9); filing of Form No.10IC prior to filing the corrected return; the corrected return accepted during processing under section 143(1); and the minimal, explained delay in filing Form No.10IC. The Court considered Coordinate Bench decisions which hold that a revised or rectified return substitutes the original return and that procedural non-compliance should not defeat substantive benefits where statutory conditions are otherwise satisfied and the taxpayer's intention is clear. The Court distinguished the contrary authority relied upon by the revenue on the facts, noting that in that case the taxpayer had expressly indicated non-option for the concessional regime. The Court found that Form No.10IC was on record during processing and that the assessee's intention to opt for section 115BAA was demonstrated and supported by contemporaneous materials and explanation for the short delay.Conclusion: The claim for benefit under section 115BAA is admissible on the facts; the impugned order is set aside and the Assessing Officer is directed to verify Form No.10IC and, if in order, allow the concessional tax regime to the assessee. The decision is in favour of the assessee.