AKSHAY NITIN MALU,SANGLI vs. INCOME TAX OFFICER, SANGLI

The Ld. Counsel for the assessee at the outset submitted that the assessee had originally decided to opt for the new regime of taxation u/s 115BAC of the Act and accordingly had filed the Form No.10-IE. However, on realizing that the old regime of taxation is beneficial to the assessee, the assessee filed his return of income on 20.07.2022 declaring total income of Rs.24,01,740/-. He submitted that at the time of processing of the return, the assessee had already filed the return as per old regime of taxation and therefore, the CPC was not justified in not considering the return of income since the assessee had not fulfilled all the conditions laid down in section 115BAC of the Act. He submitted that the Ld. Addl./JCIT(A) without appreciating the provisions properly has upheld the action of the CPC which is not correct. He drew the attention of the Bench to the provisions of sub-section (5) of section 115BAC, which read as under: “115BAC(1)…. (5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person,— (i) having income from business or profession, on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, and such option once exercised shall apply to subsequent assessment years; (ii) having income other than the income referred to in clause (i), along with the return of income to be furnished under sub-section (1) of section 139 for a previous year relevant to the assessment year: Provided that the option under clause (i), once exercised for any previous year can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section, except where such person ceases to have any income from business or profession in which case, option under clause (ii) shall be available.

He submitted that when the assessee has not fulfilled all the conditions laid down in the said provision and has not filed the return of income under the new regime of taxation but has opted to file the return exercising its option for the old regime of taxation, the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC.

The Ld. DR on the other hand while supporting the order of the Ld. Addl./JCIT(A) submitted that section 115BAC of the Act does not provide for withdrawal of the exercised option for the same year, it provides for withdrawal of the option only for the year subsequent to the year of exercising of the option, therefore, the grounds raised by the assessee should be dismissed.

We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. Addl./JCIT(A). It is an admitted fact that the assessee had decided to opt for the new regime of taxation u/s 115BAC of the Act as applicable for assessment year 2022-23 and accordingly had filed Form No.10-IE on 18.07.2022 as per requirement u/s 115BAC(5)(i) of the Act. However, we find the assessee filed his return of income on 20.07.2022 under the old regime of taxation declaring total income of Rs.24,01,740/-. We find the CPC vide order dated 07.08.2023 processed the return of income and determined the total income at Rs.64,41,940/- as per the new regime of taxation on the ground that the assessee had exercised the option by filing the requisite Form No.10-IE. It is the submission of the Ld. Counsel for the assessee that although the assessee had filed the Form No.10-IE on 18.07.2022, however, the assessee exercised the option under the old regime of taxation and filed the return of income on 20.07.2022 which is much before processing of the return by the CPC i.e. 07.08.2023. It is also his submission that since the assessee has not fulfilled all the conditions as mentioned in section 115BAC, therefore, the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC in treating the return filed by the assessee as under the new regime of taxation.

We find some force in the above arguments of the Ld. Counsel for the assessee. It is an admitted fact that although the assessee had originally exercised the option for taxation u/s 115BAC by filing the Form No.10-IE on 18.07.2022, however, the assessee has filed the return of income on 20.07.2022 declaring total income at Rs.24,01,740/- under the old regime of taxation. It is also an admitted fact that the return was processed on 07.08.2023 which is much after the date of filing of the return. It is not a case that the assessee has filed Form 10-IE and also filed the return under the new tax regime and thereafter filed a revised return withdrawing the option which according to us is not permissible in the said previous year and the assessee can change the option only in the next year. However, in the instant case, the assessee after filing the Form 10-IE has opted for the old regime of taxation in the return filed. Therefore, we are of the opinion that the assessee cannot be forced to adopt for the new regime. We, therefore, find merit in the arguments of the Ld. Counsel for the assessee that the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC in processing the return of income determining the total income at Rs.64,41,940/- under the new regime of taxation. Accordingly, the order of the Ld. Addl./JCIT(A) is set aside and the grounds raised by the assessee are allowed.

In the result, the appeal filed by the assessee is allowed.