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Facts
The assessee e-filed its return of income opting for the tax regime u/s 115BAA. However, it failed to file Form 10-IC electronically on or before the due date. The CPC processed the return at a higher tax rate due to the non-filing of Form 10-IC, disallowing the benefit of the lower tax regime.
Held
The Tribunal held that while the non-filing of Form 10-IC is a procedural lapse, given the peculiar facts and circumstances, including the COVID-19 pandemic, and relying on various High Court decisions, the assessee should be given an opportunity to file the form.
Key Issues
Whether the assessee should be given an opportunity to file Form 10-IC to claim the benefit of Section 115BAA, despite missing the due date, considering it as a procedural requirement.
Sections Cited
143(1), 115BAA, 139(1), 21AE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 25.10.2024 of the Ld. Addl / JCIT(A)-11, Delhi relating to assessment year 2023- 24.
Facts of the case, in brief, are that the assessee e-filed its return of income on 27.10.2023. The CPC processed the return of income u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 21.05.2024 by disallowing an amount of Rs.17,83,804/- and raised a demand of Rs.74,29,200/-. The only grievance of the assessee before the Ld. Addl / JCIT(A) was charging of tax at higher rate whereas the same according to the assessee, should be at lower rates as per the provisions of the Act.
Before the Ld. Addl / JCIT(A) the assessee submitted that the assessee had opted for the tax regime u/s 115BAA of the Act as per return filed by it, therefore, it is incorrect on the part of the CPC to compute the tax rate at 30% on account of non filing of Form 10-IC which is only a procedural requirement. It was also submitted that the turnover of the assessee company for the assessment year 2020- 21 was below Rs.400 crores and therefore, the applicable tax rate is 25% as per the Finance Act, 2022.
However, the Ld. Addl / JCIT(A) was not satisfied and rejected the arguments advanced by the assessee by observing as under: “2…… The facts of the case in the light of the arguments made by the appellant are carefully considered. Section 115BAA of the Income Tax Act, 1961 was inserted by the Taxation Laws (Amendment) Act, 2019 w.e.f. 01-04-2020. As per the Section, the income tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020 shall, at the option of such person be computed at lower tax rate subject to satisfaction of conditions contained in sub-section(2) of the of the Section: (a)As per section (5) of section 115BAA of the Act Read with rule 21AE of the Income Tax Rules, 1962, the assessee company is required to submit Form 10-IC electronically on or before the due date of filing of return u/s 139(1) of the Act and such option once exercised shall apply to the subsequent assessment years. (b)Failure to furnish such option in the prescribed form on or before the due date specified u/s 139(1) of the Act results in denial of concessional rate of tax to such person.
However, an option of condonation of delay in filing Form 10-IC may be exercised, if a domestic Company e-filed Form 10-IC late by the Appropriate Authority of Income Tax keeping in view the genuine hardship.
3. In the case under consideration, the appellant has not filed Form 10-IC yet as per submission made by AR of the assessee company. Thus, it is evident that the assessee company has violated the provisions of Income Tax Act. It is mandatory for a domestic company to opt the option u/s 115BAA as per ITR Form 6, which is fulfilled by the assessee company. Secondly, the domestic company is required to submit Form 10-IC electronically on or before the due date of filing of return u/s 139(1) of the Act, which is not fulfilled by the assessee company. It is further seen and evident that the assessee company has not e-filed form 10-IC, but the same has not filed yet and the assessee company asked for charging the tax at concessional rates. The submissions in this regard is not acceptable. The assessee company completely ignored the rules of the Income Tax Act by way of not filing the Form 10-IC (not filed yet) and claiming the benefit of charging of tax at lower rates. An option of condonation of delay in filing the Form 10-IC is available, but the appellant failed to take benefit of condonation of delay. Board is also of view that Asstt. Year 2020-21 was the first year of filing of this form and the delay in filing Form 10-IC may be condoned by the Appropriate Authority after considering the valid reasons for late filing of the form. The appellant in its submission during the appellate proceedings stated that non submission of 10-IC is a procedural mistake on part of the company without any loss to revenue, which is not accepyable. The case laws relied upon by the appellant were mostly rendered when the electronic filing of ITR and audit reports were not in vague and hence, do not find application in the current scenario and context.
4. Keeping in view the above facts, I am of the opinion that the appellant domestic company has violated the provisions as per section (5) of section 115BAA of the Act Read with rule 21AE of the Income Tax Rules, 1962, by which the assessee company is required to submit Form 10-IC electronically on or before the due date of filing of return u/s 139(1) of the Act. Therefore, in the facts and circumstances of the case and in law, the Ld. Asst. Director of Income Tax, CPC was correct in undertaking the adjustment, when processing of the return of income, selection of the cases for further scrutiny, claim of the refunds of the assessee or all determined based on the return filed by the appellant company and when the provisions of the law and the relevant rules strictly provides that all necessary documents must be filed upto the due date for furnishing the Return of Income under sub-section (1) of Section 139, subsequent filing of any document cannot be considered for processing of the return. But in this case Form 10-IC has not been filed yet. Hence, the corresponding charging of tax at normal rates is upheld and the grounds of appeal
raised by the appellant are hereby dismissed
5. In the result, the appeal of appellant is treated as dismissed.”
5. Aggrieved with such order of the Ld. Addl / JCIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:
1. On the facts and circumstances of the case and in law the CIT(A), NFAC erred confirming the action of the Director of Income Tax, CPC, Bangalore (hereinafter referred to as the ADIT) of determining tax liability at the rate of 30% as against the claim of the appellant that it be taxed either: a. As per the tax regime u/s 115BAA as per the return filed by it OR b. As per the Tax Regime as per the Finance Act, 2022 applicable to companies having turnover for AY 2020-21 below Rs.400 crores i.e. @ 25%
9. Excluding SC and Cess). The appellant prays that the ADIT be directed to determine the tax liability applying the correct tax rate. The appellant craves leave to add, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.
The Ld. Counsel for the assessee referring to the decision of the Hon’ble Calcutta High Court in the case of Pr.CIT vs. Fastner Commodeal (P.) Ltd. (2025) 172 taxmann.com 573 (Cal) submitted that the Hon’ble High Court in the said decision has held that where assessee-company opted for taxation under section 115BAA but failed to file Forms 10-IC along with return within extended period, consequently Assessing Officer rejected assessee's claim, since delay in filing Form 10-IC was due to certain difficulties faced by assessee in uploading form in Income tax portal during Covid, matter was to be restored to Assessing Officer to permit assessee to file Form 10-IC.
Referring to the decision of the Hon’ble Gujarat High Court in the case of V M Procon Pvt. Ltd. vs. Asst. Director of Income Tax & Anr. (2024) 168 taxmann.com 517 (Guj), he submitted that the Hon’ble High Court has elaborately discussed the issue and remanded the matter to the file of the Assessing Officer with a direction to pass appropriate order condoning the delay in filing Form 10-IC by the assessee for exercising the option of lower rate of tax u/s 115BAA of the Act as per the return of income filed by the assessee in form of return of income.
Referring to the decision of the Hon’ble Delhi High Court in the case of A.C. Surgipharma (P.) Ltd. vs. DCIT (2023) 157 taxmann.com 360 (Del), he submitted that the Hon’ble High Court in the said decision has held that where assessee was not taxed at rate of 22 per cent as provided under section 115BAA on account of fact that it failed to file Form 10-IC, since assessee had filed a fresh Form 10-IC electronically, delay in filing Form 10-IC was to be condoned and a direction was to be issued to CBDT to process assessee's request contained in Form 10-IC.
Referring to the decision of the Hon’ble Madras High Court in the case of MRF Ltd. vs. CBDT (2025) 172 taxmann.com 776 (Mad) he submitted that the Hon’ble High Court in the said decision has held that where assessee opted for taxation under section 115BAA and failed to file Form No. 10-IC within extended time, consequently, assessee sought condonation of delay in filing Form 10-IC, since rejection of assessee's application would cause genuine hardship, portal was to be kept open to enable assessee to upload Form No. 10-IC.
10. He accordingly submitted that he has no objection if the matter is restored to the file of the Assessing Officer with a direction to compute the tax at lower rate as per the provisions of the Act. In his alternate contention, he submitted that since the turnover of the assessee is less than Rs.400 crores the applicable tax rate is 25% as per the Finance Act, 2022.
11. The Ld. DR on the other hand while supporting the order of the Ld. Addl / JCIT(A) submitted that he has no objection if the matter is restored to the file of the Assessing Officer with a direction to decide the issue afresh in light of various decisions.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. Addl / JCIT(A) and the paper book filed on behalf of the assessee. We have also considered various decisions cited before us. It is an admitted fact that due to non furnishing of Form 10-IC, the CPC processed the return on 21.05.2024 by computing the tax at normal rate as against the lower rate computed by the assessee as per the provisions of section 115BAA of the Act. We find the Ld. Addl / JCIT(A) dismissed the appeal filed by the assessee, the reasons of which have already been reproduced in the preceding paragraphs.
We find the Hon’ble Calcutta High Court in the case of Pr.CIT vs. Fastner Commodeal (P.) Ltd. (supra) while deciding an identical issue has observed as under:
“4. The short issue which falls for consideration in this appeal is whether the assessee should be given an opportunity to file Form 10IC before the Assessing Officer in order to claim the benefit under Section 115BAA of the Act. It is an admitted fact that the assessee did not file the Form 10IC along with the return within the extended period, as extended by the Circular issued by the Central Board of Direct Tax dated 17th March, 2022. The question would be whether filing of such form would be mandatory or directory.
Learned Tribunal considered the peculiar facts and circumstances of the case and noted the conduct of the assessee and granted leave to the assessee permitting them to file the form and restoring the matter back to the Assessing Officer to consider the report in Form 10IC and allow the relief to the assessee if the assessee fulfils all other requisite conditions as per law. In the Circular issued by the CBDT vide its order Circular No.6 of 2022, dated 17 th March, 2022, the CBDT condoned the delay in filing Form 10IC relevant to the assessment year 2020-21 on fulfillment of certain conditions which are as hereunder :-
1. 1. The return of income for AY 2020-21 has been filed on or before the due date specified under section 139(1) of the Act.
2. The assessee company has opted for taxation u/s 115BAA of the Act in (e) of "Filing Status" in "Part A-GEN" of the Form of Return of Income ITR-6 and 3. Form 10-IC is filed electronically on or before June 30, 2022 or 3 months from the end of the month in which this Circular is issued, whichever is later.
6. The Circular does not specifically state as to whether all three conditions have to be cumulatively complied with or the condition of the assessee can be condoned with regard to partial compliance or part compliance of the conditions in the Circular.
7. Be that as it may, it is not in dispute that the assessee has filed the return of income for the assessment year 2020-21 on or before the due dates specified under Section 139(1) of the Act. Equally, it is not in dispute that the assessee company has opted for taxation under Section 115BAA of the Act. This option was available to the assessee by opting the option given in filing status in Part A- GE of the form by return of income in ITR6. This conduct of the assessee will undoubtedly go to show that the assessee intended to opt to pay tax under the simplified tax regime as also accepted in the Circular issued by the Central Board. Furthermore, during the relevant period there was Covid pandemic which also led to certain other difficulties for the assessee to upload the form along with the return within the extended time thereof. That apart, the assessee has specifically stated that they had certain difficulties in uploading the form in the Income tax portal. One more aspect which the assessee pointed out is that in case of a HUF opting under the new taxation scheme under Section 115BAC, the portal requires management number of 10IE while filing the income tax return as this being a mandatory column and the assessee continue process of filing ITR without filling the same and if there was non-compliance in filing Form 10IE, the assessee would be aware of that and will submit the same but such facilities is not provided when returns are filed by companies.
8. The peculiar facts and circumstances would show that the error was an inadvertent procedural error and the conduct of the assessee will clearly show that they had opted for taxation under Section 115BAA of the Act.
9. Thus, taking note of the facts and circumstances of the case on hand, which we consider to be very peculiar, we are not inclined to interfere with the order passed by the learned Tribunal.
Accordingly, the appeal is disposed of and the matter stands restored back to the file of the Assessing Officer to permit the assessee to file the report in Form 10IC and the Assessing Officer shall consider as to what relief the assessee would be entitled to subject to the conditions that the assessee fulfils all other requisite conditions as per law.
In the result, the appeal stands disposed of with the above direction. The substantial questions of law are left open.”
We find the various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that the assessee should be given an opportunity to upload Form 10-IC and the Revenue has to condone such delay and allow the assessee to opt for taxation u/s 115BAA of the Act.
Respectfully following the decision of the Hon’ble Calcutta High Court in the case of Pr.CIT vs. Fastner Commodeal (P.) Ltd. (supra), we restore the issue to the file of the Assessing Officer with a direction to permit the assessee to file the report in Form 10-IC and consider as to what relief the assessee would be entitled to subject to the condition that the assessee fulfills all other requisite conditions as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 16th April, 2025.