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Facts
The assessee opted for the new tax regime under Section 115BAC by filing Form 10-IE on 10.01.2022 for AY 2021-22. However, due to portal issues, the return for AY 2021-22 was filed under the old regime. Subsequently, the return for AY 2022-23 was filed under the new regime, but the authorities disallowed it, stating that the initial option could not be withdrawn.
Held
The Tribunal held that the requirement of filing Form 10-IE is directory, not mandatory, and that technical glitches in the portal should not deprive the assessee of the benefit of the new tax regime. The delay in filing Form 10-IC, as per Rule 21AE, can be condoned under certain conditions.
Key Issues
Whether the assessee can be denied the benefit of the new tax regime due to technical issues with the portal in filing Form 10-IE, and if the filing of Form 10-IE is a mandatory or directory requirement.
Sections Cited
115BAC, 250, 139(1), 115BBA, 119(2)(b), 21AE, 115BBE, 11(2)
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI OMKARESHWAR CHIDARA
Present for: Assessee by : Ms. Kshipra Singhvi, CA a/w Ms. Nehni Singhvi, CA. Revenue by : Shri Praveen Shrivastava, Sr. A.R. Date of Hearing : 27-01-2025 Date of Pronouncement : 27-01-2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: These appeals have been preferred by the Assessee against the orders even dated 05.06.2024, impugned herein, passed by the Ld. Addl/Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2022-23 & 2023-24.
The issues involved in both the appeals are identical and therefore for the sake of brevity the same were heard together and are being disposed of by this composite order and considering as a lead case and result of the same shall apply mutatis mutandis to both the appeals under consideration. of India from F.Y. 2020-21 (A.Y. 2021-22) onwards, introduced new tax regime/incentive scheme/provisions, wherein concessional tax rates were introduced with substantial reduction in deduction and exemption. Therefore, the Assessee by filing Form No.10IE on 10.01.2022 for claiming the benefit from F.Y. 2020-21 (A.Y. 2021-22) onwards, opted for the benefit of new tax regime u/s 115BAC of the Act. However, the CPC processed the return filed for the AY 2021- 22 by the Assessee under old regime.
The Assessee thereafter filed his return for the AY 2022-23 under new tax regime, but the same was disallowed by the authorities below on the ground that according to the mandate of Form No.10IE option of new tax regime once exercised by an Assessee in a previous year, cannot be withdrawn in that previous year. Further, as per the proviso of the scheme, if the option is withdrawn from any subsequent year, then the Assessee would become ineligible for exercising the option for new tax regime in future. On the aforesaid reasons, the authorities below specifically the Ld. Addl./Joint Commissioner vide impugned order dated 05-06-2024 u/s 250 of the Act, did not allow/consider the return filed by the Assessee for the A.Y. 2022- 23 under the new tax regime and consequently denied the benefit of new tax regime, which resulted into demand of Rs.90,160/- for the A.Y. 2022-23.
The Assessee being aggrieved is in appeal before us. Ms. Kshipra Singhvi, Ld. Counsel of the Assessee at the outset submitted that new tax regime is benevolent provision and once opted by filling Form 10IE, cannot be denied until and unless option exercised is withdrawn. In this case it is a fact that till date, the Assessee never withdrawn its option exercised for new tax regime which was exercised by filling Form no.10IE on 10-01-2022 for the AY 2021-22 and therefore the decisions of the Authorities below in treating the return filed by the Assessee under old tax regime, are liable to be set aside. Ms. Kshipra Singhvi, Ld. Counsel, in support of aforesaid contentions, also relied on various judgments.
On the contrary, the Ld. D.R. Shri Praveen Shrivastava {Sr. A.R.} by drawing out attention to the relevant provisions of the law as applicable to the instant case has submitted that it is the mandate of the provisions of section 115BAC of the Act that if the option for new tax regime has been withdrawn for any subsequent year, then the Assessee would become in-eligible for new tax regime in future. The Assessee itself has committed a default by not filing its return of income for the A.Y. 2021-22 within the due date prescribed as extended up to 31.12.2021 and filed its return of income for the AY 2021-22 under old tax regime, which amounts to withdrawal of option exercised for the new tax regime and therefore subsequently the Assessee cannot be allowed to reap the benefits of new tax regime. Therefore, the system correctly did not allow the benefit of new tax regime. Thus, this appeal under consideration is liable to be dismissed. The DR though refuted the claim of the Assessee, however assisted this Court by demonstrating the provisions of the Act as applicable to the issue involved, in its right perspective.
We have heard the parties and perused the material available on record. At the outset, we observe that it is not in controversy that the Assessee had opted for the benefits of the new tax regime for the A.Y. 2021-22 by filing prescribed Form no.10IE on 10.01.2022. Subsequently, the Assessee though filed its return of income on 31.01.2022 belatedly under the old tax regime, mainly on the reason that portal system of Income Tax Department did not allow for choosing the new tax regime after the extended due date on 31.12.2021. Therefore, in the constrained circumstances and having no option left, the Assessee was constrained to file its return of income for the A.Y. 2021-22 under the old regime. However, it is a fact that said return was subsequently processed and accepted by the Revenue Department. Admittedly it is a fact that as on the date of processing/finalization of the return filed by the Assessee for the A.Y. 2022-23, the option exercised for new tax regime for the AY 2021-22 was in existence and/or has not been withdrawn by the Assessee. Even otherwise, the return filed by the Assessee for the A.Y. 2021-22 was neither rejected nor declared invalid by the CPC and in fact the same was processed and accepted as observed above by us.
7.1 The Tribunal at Amritsar Bench in the case of Harbans Singh vs. AO, CPC, Bangalore in decided on 24.07.2024, also dealt with identical issue and held “that requirement of filing Form No.10IE is directory in nature and not mandatory and it is sufficient compliance, if the said Form is filed before the AO at the time of assessment”, by analyzing the provisions of law and the relevant judgments available up to the date of decision i.e. upto 24.07.2024 including in the case of PCIT vs. KGY Glass Industries P Ltd., (2023) 156 taxmann.com18 (Gujarat) by the Hon’ble Gujarat High Court wherein it was held “where Form 10-1C was required to be filed by the domestic company within time allowed u/s 139(1) of the Act, opting to be taxed as per provisions of section 115BBA, was not practically possible due to technical glitches in the portal, then in absence of any fault on the part of the assessee , the Assessee cannot be deprived of benefit under section 115BBA of the Act.” For ready reference and brevity, the concluding part of the judgment of the Hon’ble co-ordinate Bench of the Tribunal is reproduced herein below:
“10.2 We find that an identical issue has been decided by the coordinate bench of the ITAT , Pune in the case of Akshay Devendra Birari vs DCIT , CPC, Bangalore, in PUN/ 2024 dated 05/06/2024, where the Hon’ble Bench has held on the facts case that filing of Form 10-IE is not a mandatory requirement but only directory in nature and CPC ought to have considered the same allowing the benefit of new tax regime. 10.3 We would also like to consider the decision of the Bangalore Bench of the tribunal in the case of Hertz Software India Private limited vs ACIT Cir - 3, Bangalore, Bang/ 2021, dated 07/03/2022 , which relates to the matter of delayed filing of Form 67 , under Rule 128, in the matter of claim of FTC. On the facts of the case, it was held that one of the requirements of Rule 128 for claiming FTC is that form 67 is to be submitted by assessee before due date prescribed u/s 139(1) of the Act, but this requirement cannot be treated as mandatory, rather it is directory in nature, because Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form 67. Similar view has been taken in the case of Ms. Brinda Kumar Krishna (2022 (2) TMI 752- ITAT Bangalore, for the purpose of Form 67 rwr 128 relating to FTC. 10.4 We also consider the decision of the ITAT , Ahmedabad Bench, in the case of ITO ( E ) vs Ramji Mandir Religious and Charitable Trust, (2024)158 taxman .com 114 ( Ahmedabad ), where in the matter of filing of Form 10/10B which is required to be furnished before due date u/s 139(1) of the Act, the tribunal held the same to be merely directory in nature and opined that the same cannot be so fatal so as to deny exemption u/s 11(2) specially when the said Form - 10/10B was available before the AO when intimation was passed by CPC, u/s 143(1).
10.5 Regarding the issue of technical glitch raised by the assessee , that Form 10- IE could not be uploaded in the portal within the time allowed u/s 139(1), due to technical incompatibility in the portal we refer to a judgment of the Hon’ble Gujrat High court in the matter of section 115BBA of the Act , in the case of PCIT vs KGY Glass Industries P Ltd, ( 2023) 156 taxmann.com18 (Gujrat), where Form 10-1C was required to be filed by the domestic company within time allowed u/s 139(1) of the Act, opting to be taxed as per provisions of section 115BBA , was not practically possible due to technical glitches in the portal, the Hon’ble court held that in absence of any fault on the part of the assessee , the assessee cannot be deprived of benefit under section 115BBA of the Act . 10.6 As such considering all aspects of the matter, and noting the legal conclusions derived at by various courts and tribunals, on the facts of respective cases, cited above, we are in agreement with the decision of the coordinate bench of the Pune tribunal in the case of Akshay Devendra Birani (supra), and we hold that requirement of filing form 10- IE is directory in nature and not mandatory and it is sufficient compliance if the said form is before the AO at the time of assessment. As such we direct the CPC to take into consideration the form 10-IE filed by the assessee and pass appropriate orders.
In the result, the appeal of the assessee bearing is allowed for statistical purposes.”
7.4 We further observe that recently the co-ordinate Bench of the Tribunal in the case of Pran panda vs. ITO Ward, 2(1)
& 1510/Kol/2024 decided on 04.01.2024 has also dealt with the identical issue, “where the Assessee failed to file form 10IE within the prescribed due date but otherwise the Assessee complied with the other conditions u/s 115BBE of the Act then the Assessee would be entitled to get the benefit of such tax regime”.
7.5 We further observe that the CBDT vide Circular no 19/2023 dated 23.10.2023 considering the identical issue and genuine hardships, issued the following directions:
Sub: Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10-IC for Assessment Year 2021-22 – Reg. In exercise of the powers conferred under section 119(2)(b) of the Income-tax Act, 1961 ('the Act'), the Central Board of Direct Taxes ('CBDT') by Circular No. 612022 of even number dated 17.03.2022 condoned the delay in filing of Form No. 10-IC as per Rule 21AE of the Income-tax Rules, 1962 ('the Rules') for the previous year relevant to A.Y. 2020-21 in cases where the conditions stipulated in the said Circular are satisfied.
2. Representations have been received by CBDT stating that Form No. 10-IC could not be filed for A.Y. 2021-22 within the due date or extended due date, as the case may be. It has been requested that the delay in filing of Form No. 10-IC for A.Y. 2021-22 may be condoned.
On consideration of the matter, with a view to avoid genuine hardship to the domestic companies in exercising the option u/s 115BAA of the Act, CBDT in exercise of the powers conferred under section 119(2)(b) of the Act, hereby directs that: -
The delay in filing of Form No. 10-IC as per Rule 21AE of the Rules for previous year relevant to A.Y. 2021-22 is condoned in cases where the following conditions are satisfied:
"i) The return of income for relevant assessment year has been filed on or before the due date specified under section 139(1) of the Act; ii) The assessee company has opted for taxation u/s 115BAA of the Act in item (e) of "Filing Status" in "Part A-GEN" of the Form of Return of Income ITR-6; and iii) Form No. 10IC is filed electronically on or before 31.01.2024 or 3 months from the end of the month in which this Circular is issued, whichever is later."
7.6 Recently the jurisdictional co-ordinate Bench of the Tribunal in in the case of M/s. Swingtel Communications Pvt. Ltd. vs. ITO, Ward 4(3)(1), Mumbai dated 06.01.2025 also dealt with the almost identical issue, wherein due to some technical glitches in the ITBA portal, the Assessee was unable to file/upload Form No.10IC for the A.Y. 2022-23 as the portal system did not accept the same for the reason that Form 10IC has already been uploaded for the A.Y. 2022-23 and therefore the Hon’ble Bench allowed the claim of the Assessee by taking refuge of the CBDT circular (supra) and observing and holding as under:
“12. In view of the above facts, we are of the considered view that the assessee deserves to get the benefit of lower tax rate prescribed by section 115BAA for AY 2021-22 as well, considering that the CBDT itself had relaxed the condition regarding filing of Form 10IC and provided a window for late submission of the same. The assessee having filed Form 10IC for AY 2022-23 on 22.09.2022 i.e. much before the issue of CBDT circular dated 23.10.2023, was not able to file another Form 10IC on the system. Simply because of the technical glitch in the system, the assessee cannot be denied the benefit of the circular when all other conditions are satisfied. We, therefore, direct that the Form 10IC filed on 22.09.2022 (albeit for AY 2022-23) should be deemed to have been filed for AY 2021-22 in the peculiar facts and circumstances of the case and benefit of section 115BAA should be allowed for & from AY 2021-22 to the assessee.”
7.7 On the aforesaid facts, circumstances, analyzations and the judgments referred to above, we are of the considered view that until and unless the option exercised for the new tax regime by filling Form-10IE has been rendered invalid due to violation of the conditions contained in the relevant provisions thereto, the benefits of new tax regime would be available or applicable in the subsequent assessment years but subject to fulfilling of prescribed conditions for the regime and the Assessee cannot be treated as in-eligible for the benefits of new tax regime, which is certainly a benevolent provision for the benefit and welfare of the Assessees. Further requirement of filing form 10-IE is directory in nature and not mandatory and it is sufficient compliance if the said Form is filed/available before the AO at the time of assessment. Further if the assessee has opted for taxation u/s 115BAA of the Act and filed Form No. 10IC or 10IE electronically on or before 31.01.2024 or 3 months from the end of the month in which the CBDT Circular (supra) is issued and whichever is later, then the delay in filing of Form No. 10-IC as per Rule 21AE of the Rules for previous year relevant to A.Y. 2021-22 is liable to be condoned.
7.8 Undoubtedly the benevolent provisions cannot be read or interpreted in the restrictive manner or in isolation to the propose or object of introducing the provisions and the Courts are supposed to interpret the benevolent provisions of the law in such a way that real effects of the same would come.
7.9 Coming to the instant case, we observe that till the date of processing the return filed by the Assessee for the A.Y. 2022-23, Form No.10IE for exercising the option for availing the benefits of new tax regime filed on 10-01-2022 for the AY 2021-22 was neither withdrawn nor rejected or made invalid but the same was still available or effective before the AO during the assessment proceedings or passing the Assessment order and therefore in our considered view, the return filed by the Assessee should have been considered, under the new tax regime/provisions. Thus, the Assessee is entitled for the benefit of new tax regime and consequently the addition is deleted. Resultantly, the appeal i.e. filed by the Assessee is allowed.
7.10 We truly appreciate and endorse the candid approach and submissions of the Ld. D.R. Shri Himanshu Joshi, who provided able assistance to the Court for coming to the right conclusion of these cases.
In the result, in view of our judgment in both the appeals filed by the Assessee are allowed in the same terms.
Order pronounced in the open court on 27.01.2025.