2025 (4) TMI 268 - AT - Income Tax

Denial of Benefit of lower tax as per section 115BAC due to the fact that form 10IE was not filed before the due date of filing of return u/s 139(1) i.e. 31.12.2021 - HELD THAT - 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. We find that the 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 10 IE was also filed before the processing of the return. Therefore we find that the Assessee has fulfilled its duty as required under the law. Accordingly the findings given by the Addl. CIT(A) on different issue raised by the Assessee cannot be sustained. Thus Assessee s appeal filed before us on all the issues is allowed.

Summary

The core legal questions considered in this case revolve around the applicability and procedural requirements for opting into the new tax regime under section 115BAC of the Income Tax Act, 1961. The primary issues include whether the failure to file Form 10-IE before the due date of filing the original return under section 139(1) results in denial of the benefit of the lower tax rates under section 115BAC; whether the requirement to file Form 10-IE is mandatory or directory; the legal effect of technical glitches that prevented timely filing of Form 10-IE; the scope of adjustment under section 143(1) of the Act concerning such procedural lapses; and whether the assessee is entitled to claim deductions under Chapter VI-A if the benefit under section 115BAC is denied.

The Tribunal also considered the legality of rejecting the refund claim filed along with the revised return, which opted for the new tax regime and included the belated Form 10-IE, and whether such rejection was valid under the provisions of the Income Tax Act.

Regarding the first issue, the relevant legal framework includes section 115BAC, which prescribes the new tax regime and requires taxpayers to file Form 10-IE to opt for it. Section 139(1) mandates the due date for filing the original return, and section 139(5) allows filing of revised returns within specified timelines. Section 143(1) deals with summary assessment and adjustments for arithmetical errors or incorrect claims.

The Tribunal analyzed the statutory provisions and precedents, particularly emphasizing that the filing of Form 10-IE is a procedural requirement to exercise the option under section 115BAC but not a substantive condition that invalidates the option if delayed. The Tribunal relied on precedents from ITAT Pune and ITAT Amritsar, which held that the requirement to file Form 10-IE is directory and not mandatory, and that as long as the form is available with the assessing authority at the time of assessment, the benefit of the new tax regime cannot be denied on technical grounds.

Key evidence included the assessee's original return filed on 31.12.2021, the revised return filed on 25.03.2022 along with Form 10-IE, and the relevant CBDT circulars extending the due dates due to technical glitches in the Income Tax Portal. The CBDT acknowledged multiple extensions of the filing deadlines owing to technical difficulties, which the assessee could not control. The Tribunal noted that the revised return and Form 10-IE were filed before the processing of the original return and before any defect was pointed out by the department.

The Court interpreted the statutory provisions in light of the principle that procedural requirements which do not go to the root of the matter should be treated as directory, not mandatory. It held that the denial of the benefit of the new tax regime merely because Form 10-IE was filed ten days late due to technical glitches was unjustified. The Tribunal applied the law to the facts by recognizing the genuine difficulty faced by the assessee and the extensions granted by the CBDT, concluding that the assessee had complied substantively with the law.

Competing arguments from the Revenue centered on the strict interpretation of the due date under section 139(1) and the mandatory nature of filing Form 10-IE before that date to avail the benefit under section 115BAC. The Revenue also contended that the rejection of refund under section 143(1) was valid as the revised return and Form 10-IE were filed beyond the due date.

The Tribunal rejected these arguments, relying on judicial precedents and the principle of substantial compliance. It held that the denial of benefit under section 115BAC by CPC under section 143(1) was beyond the scope of summary assessment powers, which are limited to arithmetical errors and similar adjustments. The Tribunal further noted that the assessee's intention to opt for the new tax regime was clear and evidenced by the filing of Form 10-IE, albeit belatedly, and the revised return.

On the issue of entitlement to deductions under Chapter VI-A if the benefit under section 115BAC was denied, the Tribunal noted the assessee's submission but did not find it necessary to adjudicate separately as the primary issue of entitlement to the new tax regime benefit was decided in favor of the assessee.

The Tribunal also condoned the delay in filing the appeal, considering the reasons stated and the absence of objection from the Revenue.

Significant holdings of the Tribunal include the following verbatim excerpt capturing the core legal reasoning: "The submission of Form No. 10IE 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."

Another key principle established is that "denial of benefit under section 115BAC by CPC under section 143(1) is beyond the inherent scope in section 143(1), which covers only arithmetical errors, incorrect claims, disallowance of loss, disallowance of expenditure, disallowance of deduction or addition of income appearing in form 26AS or form 16A."

Finally, the Tribunal concluded that the assessee had fulfilled the statutory requirements substantively and that the technical glitch causing delay in filing Form 10-IE should not prejudice the assessee's right to opt for the new tax regime. Accordingly, the appeal was allowed, setting aside the orders denying the benefit of section 115BAC and rejecting the refund claim.