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Facts
The assessee filed its return opting for the concessional tax regime under Section 115BAA but mistakenly filed Form 10-IB instead of the mandatory Form 10-IC. This led to the Centralized Processing Centre (CPC) disallowing the 115BAA benefit, computing tax under normal provisions, and raising an additional demand, which was upheld by the CIT(A).
Held
The Tribunal held that Section 115BAA is a concessional regime, not an exemption, hence procedural lapses like filing the wrong form should not defeat the substantive benefit when the assessee's intent was clear. It distinguished this case from those requiring strict interpretation of exemption provisions, concluding that the denial of benefit by CPC and CIT(A) was unsustainable.
Key Issues
Whether the benefit of Section 115BAA can be denied solely due to a procedural error (filing Form 10-IB instead of 10-IC) despite clear intent, and whether a Section 143(1) intimation can make substantive disallowances beyond clerical corrections.
Sections Cited
143(1), 115BAA, 234B, 234C, 10B(8), 139(1)
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िनधा"रती की ओर से/Assessee by : Shri P.N. Arora, Advocate (Virtual) राज" की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 17/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 22/07/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT, Appeal, Addl/JCIT(A)-6, Mumbai dt. 25/09/2024 for the Assessment Year 2023- 24.
At the outset the Registry has pointed out that the present appeal is barred by limitation by 04 days.
After considering the condonation application filed by the assessee in the present appeal, we condone the delay for which sufficient cause is shown, and admit the appeal for adjudication.
In the present appeal, Assessee has raised the following grounds:
1. That the Assessment Order dated 21/05/2024 passed by the Assessing Officer, National Faceless Assessment Centre, Delhi u/s 143(1) of the Income Tax Act, 1961 and the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi dated 25/09/2024 thereby confirming the order of the Assessing Officer (AO) are both against the facts of this case and are untenable under the law.
2. That no reasonable and proper opportunity of being heard was allowed by the AO, National Faceless Assessment Centre, Delhi before 2 passing the order u/s 143(1) thereby creating a demand of Rs.14,46,230/-. As such the order passed by the AO is liable to be cancelled. Similarly, the CIT(A) has also grossly erred in confirming the order of the AO without appreciating the facts of this case and without applying his mind. As such the order passed by the Ld. CIT(A) thereby confirming the order of the AO is bad in the eyes of law and the same is liable to be cancelled.
3. That the AO was not justified in creating a demand by passing Intimation u/s 143(1). The returned income along-with all the other details should have been accepted. The authorities below did not appreciate that the power of CPC is very limited u/s 143(1) and only the clerical/arithmetical mistake can be corrected. Thus, the powers of CPC u/s 143(1) are very limited and the order passed is bad in the eyes of law and the same is liable to be cancelled.
4. That the CIT(A) did not appreciate that the appellant has adopted exemption under new regime. The authorities below did not appreciate that even while working the tax in computation the tax was worked out under new regime. The CIT(A) further did not appreciate that the assessee instead of filing Form No.10(i)(c), by mistake filed Form No.10(i)(b). The CPC should have allowed an opportunity of being heard before rejecting the claim of the assessee. The whole tax was worked out in the computation of income u/s 115BAA and accordingly the tax was paid. Thus, the whole facts were very much clear and tax should have been worked in accordance with Form No.10(i)(c) as mentioned in the computation of income. The copy of computation of income is made part & parcel of grounds of appeal.
5. Briefly the facts of the case are that the assessee, CEE ENN Estates Private Limited, filed its return of income for the Assessment Year 2023–24 on 27.10.2023, declaring a total income of Rs.4,54,82,350/- and opting for taxation under the concessional regime of section 115BAA of the Income Tax Act, 1961. However, while processing the return under section 143(1) on 21.05.2024, the Centralized Processing Centre (CPC), Bengaluru disallowed the assessee’s option under section 115BAA on the grounds that it failed to file Form 10-IC, which is a mandatory requirement under section 115BAA(5) read with Rule 21AE of the Income Tax Rules. Instead, the assessee had mistakenly filed Form 10-IB, applicable under section 115BA, which was not relevant to the regime chosen. As a result, the CPC computed the tax liability under the normal provisions of the Act rather than under section 115BAA, which led to an increased tax demand of Rs.14,46,230/- along with interest under sections 234B and 234C. The AO concluded that in the absence of valid filing of Form 10-IC, the claim for concessional taxation under section 115BAA could not be allowed.
3 6. Against the order of the Ld. AO the assessee went in appeal before the Ld. CIT(A). The CIT(A), after examining the case records and submission filed by the assessee, dismissed the appeal. It was held that the grounds relating to lack of opportunity of being heard before the adjustment under section 143(1) were untenable, as the returned income had not been adjusted but accepted in full, only the tax computation differed due to the non-filing of Form 10-IC. The CIT(A) observed that since Form 10-IC was not filed by the assessee, the AO was justified in computing tax under regular provisions. The CIT(A) cited Supreme Court rulings in Wipro Ltd. and Dilip Kumar & Co. to emphasize the strict interpretation of beneficial tax provisions, reiterating that failure to strictly comply with procedural requirements disentitles the assessee to claim the benefit under section 115BAA. The claim of the assessee for exemption was thus rightly disallowed, and the resultant interest under sections 234B and 234C was found to be statutorily correct.
Against the order of the Ld. CIT(A), the assessee preferred an appeal before the Tribunal.
During the course of hearing the Ld. AR for the assessee submitted that the AO and CIT(A) both erred in rejecting the option for concessional tax under section 115BAA, despite clear intention and corresponding computation in the return. It was pointed out that the assessee had inadvertently filed Form 10-IB instead of Form 10-IC due to a bonafide mistake, though the entire return and computation reflected the adoption of the new concessional tax regime. The AR emphasized that the CPC should have granted an opportunity to rectify the mistake before finalizing the intimation, especially considering that tax was paid in line with the new regime and not the regular one. The AR further argued that section 143(1) allows only for clerical or arithmetic corrections and not substantive disallowances, and hence, the CPC exceeded its jurisdiction. It was also asserted that the Ld. CIT(A) mechanically upheld the AO’s order without appreciating these factual and legal submissions, and therefore, both orders deserve to be quashed. It was submitted that the decision of the Hon'ble 4 Supreme Court in the case of Wipro Ltd. and Dilip Kumar & Co. are not applicable to the facts of the case and are clearly distinguishable.
Per contra, the Ld. DR relied on the orders of the lower authorities.
We have carefully perused the record and considered the submissions advanced. The sole issue before us is whether the assessee is entitled to the benefit of the concessional tax regime under Section 115BAA of the Income Tax Act, 1961, despite not having filed Form 10-IC as prescribed under Rule 21AE of the Income Tax Rules. It is an undisputed fact that the assessee, in its return of income for A.Y. 2023–24, had explicitly opted for taxation under Section 115BAA. This choice was consistently reflected in the return, computation of income, and the tax audit report. Hence, the assessee's intent to be governed by the provisions of Section 115BAA is well-established on record. The CPC, however, denied this benefit solely on the ground of non-filing of Form 10-IC electronically within the prescribed timeline, and the CIT(A) upheld the same, relying inter alia on the decision of the Hon’ble Supreme Court in Principal Commissioner of Income-tax v. Wipro Ltd. [(2022) 140 taxmann.com 223 (SC)]. In our considered view, reliance on the decision in Wipro Ltd. is misplaced in the present factual context. That decision (see Para 8) dealt with Section 10B(8), an exemption provision, where the Supreme Court held that both conditions—filing of a declaration and doing so before the due date under Section 139(1)—are mandatory. The Court observed that in exemption claims, the statutory conditions must be “strictly and literally complied with.” However, in the present case, the assessee is neither claiming an exemption nor deduction, but is merely opting for a concessional tax regime offered under Section 115BAA, which prescribes a lower rate of tax subject to certain procedural compliances. The critical distinction is that Section 115BAA is not an exemption or deduction provision, but part of the computation mechanism under Chapter XII of the Act. Hence, the ratio of Wipro Ltd. (para 8), which is based on a strict interpretation applicable to exemptions under Chapter III, does not directly apply to the present facts. Further, it is well-settled that procedural lapses should not defeat substantive 5 rights, especially where the taxpayer has demonstrated intent and bonafide compliance in all other respects. The long-standing CBDT Circular No. 14(XL- 35) dated 11.04.1955 (notified in 1957) obligates assessing officers to assist taxpayers in claiming the reliefs to which they are entitled. A pedantic view that penalises minor or trivial unintentional procedural non-compliance by denying a statutory benefit otherwise substantiated on record goes against the spirit of fair tax administration. The assessee’s failure to file Form 10-IC, though technically a lapse, does not, in our view, override the consistent and unambiguous disclosure of the intent to opt for Section 115BAA in the return, computation, and audit report. We are also mindful that the Revenue has not doubted the substantive eligibility of the assessee under Section 115BAA. Accordingly, we are of the opinion that the benefit of Section 115BAA cannot be denied merely on account of procedural non-filing of Form 10-IC, when the intention to opt for the said regime is borne out from contemporaneous records. The decision of the CPC and the order of the CIT(A) are, therefore, not sustainable in law.
In the result, appeal of the Assessee is allowed.