SANJANA CLOTHINGS PRIVATE LIMITED,INDORE vs. AID, CPC BENGALURU, BENGALURU

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2.5 That the assessee has now enclosed a hard copy of Form No.10IC at page 6 & 7 of paper book for allowing the lower rate of tax before this Tribunal.

2.6 That under the circumstances and in view of failure of the server, the assessee claimed that they did filed the requisite Form No.10IC but the same failed due to the technical error and hence constructive filing of Form No.10IC is there but the Page 3 of 16 manifest filing of the same is absent due to failure of the server.

The mistake if any is procedural and venial in the nature and that the same deserves to be waived in the interest of justice.

2.7 That the return of income filed by the assessee was processed by CPC. In the intimation issued u/s 143(1) of the Act to the assessee page 1 to 15 of the appeal memo, the CPC computed the tax liability of the assessee by denying the benefit of concessional rate of tax as per the provision of Section 115BAA of the Act.

2.8 That the aforesaid intimation u/s 143(1) of the Act bears Ack. No.7894460110311221 and that same is dated 24.08.2022 which is hereinafter referred to as the “impugned intimation order”.

2.9 That the assessee being aggrieved by the “impugned intimation order” prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the 1st appeal of the assessee on the grounds and reasons stated

Page 4 of 16 therein. The core grounds and reasons for the dismissal of the first appeal of the assessee was as under:-

“6. Observations, Findings and Decisions

I have carefully considered the facts of the case and the submission of the appellant I have perused the order dated 24.08.2022 passed u/s. 143(1) of the Income-tax by the C.P.C. Bengaluru for A.Y. 2021-22 as well as the grounds of appeal, statement of facts, and written submission filed by the appellant. From the intimation u/s 143(1) dated 24.08.2024 passed by CPC, Bangaluru it is observed that Assessing Officer has made adjustment u/s 143(1) and levied the tax of Rs. 1,26,678/ u/s 115JB and interest thereon of Rs. 5,523/-, Consequently, the additional demand of Rs. 85,950/- vide order dated 24.08.2022 in the intimation u/s 143(1).

Accordingly, in view of the above facts of the case and judicial pronouncements furnished by the appellant it is observed that the CPC computed the tax liability of the assessee by denying the benefit of concessional rate of tax, as per the provisions of section 115BAA of the Act and calculated the tax of the assessee u/s115JB of the Act. While appellant filed the return opted for benefit under concessional rate of tax under section 115BAA of the Act. The appellant filed the Form no.10IC in previous year 2020-21 on dated 31.12.2021 but same has failed to technical error as per the appellant.

6.2 It is essential to note that Section 115BAA of the Act allows domestic companies to pay tax at a concessional rate of 22% (plus applicable surcharge and cess) if they forgo specified deductions and incentives. According to sub-section (5) of Section 115BAA, read with Rule 21AE of the Income-tax Rules, 1962, the assessee company must electronically submit Form 10-IC on or before the due date for filing the return of income under Section 139(1) of the Act. This choice, once exercised, applies to subsequent assessment years. Failure to submit this option in the prescribed form by the due date specified in Section 139(1) results in the denial of the concessional tax rate.

6.3 The appellant has contested that he submitted Form 10-IC on 31.12.2021 in previous year 2020-21 which is within due date of filing of return but due to technical error same has been failed.

Considering the aforementioned facts, I find no error in the Assessing Officer's decision to disallow the appellant's claim for the benefit of Section 115BBA when processing the return under Section 143(1) of the Act on 24.08.2022.

6.4 In this connection, the provisions u/s 115BAA of the Act are relevant and extracted as under:-

CIRCULAR NO. 6/2022 [F. NO. 173/32/2022/ITA-1], DATED 17-3-2022

"Section 115BAA of the Income-tax Act, 1961 (the Act) was inserted by the Taxation Laws (Amendment) Act, 2019 w.e.f. 1-4-2020. 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 the rate of twenty-two per cent subject to satisfaction of conditions contained in sub-section (2) of the Suction.

1.2 As per sub-section (5) of section 115 BAA of the Act read with Rule 21AE of the income-tax Rules, 1962 (the Rules), the assessee company is required to submit Form 10-IC electronically on or before the due date of filing of return of income u/s 139(1) of the Act and such option once exercised shall apply to subsequent assessment years.

1.3 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 of twenty-two per cent to such person."

6.5 In view of the fact of the case and submission furnished by the appellant it is perused that the appellant filed the return opted for benefit under concessional rate of tax under section 115BAA of the Act but he failed to file Form no.10IC for financial year 2020-21 on or before the due date due to technical error. Further the appellant is accepted that he has failed to file form 101C within due date. Hence, the action of the CPC is justified in denying the benefit of concessional rate of tax under section 115BAA of the Act. The addition made by the CPC is upheld. The ground raised by the appellant is dismissed, The grounds raised by the appellant have been considered on merit.

Page 6 of 16 2.10 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in the Form No.36 against the “impugned order” which are as follows:-

“1. That the authorities below are illegal, wrong and unjustified in levying and confirming the tax of Rs. 1,26,678/- u/s 115JB and 1 interest thereon of Rs.15,523/- without considering the facts and circumstances of the case properly. 2. That the appellant company craves leave to add, alter, amend and/or withdraw any grounds of appeal on or before the hearing of appeal”.

3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 24.09.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “impugned order” is illegal, bad in law and not proper. It thus deserves to be set aside by this Tribunal in the exercise of its appellate jurisdiction. It was contended by the Ld. AR that basis submission with documents filed on 01.08.2025 before this Tribunal that in the Income Tax Return the assessee has claimed the benefit of Section 115BAA before due date of filing and so also in the computation of income for the year under consideration. The assessee also filed From No.10IC during covid

Page 7 of 16 period before filing the return of income on 31.12.2021 but the same failed due to the technical error with no fault on the part of the assessee company. That in order to rectify the technical error the assessee company aired its grievances (supra) and the grievance was resolved as aforesaid (supra). The action on the part of the assessee in raising his grievance (supra) is a bonafide exercise and shows the good conduct and the bonafide attitude on the part of the assessee which must be appreciated.

Even the hard copy of Form No.10IC which was proposed to be uploaded on the portal is now attached to the paper book at page 6 & 7. It was therefore contended that the constructive filing of Form No.10IC is there, but the manifest filing is absent due to failure of server. The mistake if any is procedural and venial in nature. However the return of income filed by the assessee was processed by CPC. In the “impugned intimation order” the CPC computed the tax liability of the assessee by denying the benefit of concessional rate of tax u/s 115BAA of the Act.

3.2 It was next contended that as per Section 115BAA of the Act which begins with a non-obstante clause, a domestic company can opt for the concessional rate of tax at the rate of 22.5%

Page 8 of 16 subject to the fulfillment of certain conditions as laid down in Sub Section 2 of Section 115BAA and other sections. In terms with the aforesaid provision the assessee exercised its option under section 115BAA by furnishing the Form 10IC on 31.12.2021 for the benefit of Section 115BAA relating to the assessment year 2021-22 and that same failed due to technical reason in respect of which the assessee had even filed the grievance.

3.3 It was next contended that the CBDT had issued 3 circulars, namely Circular No.6/2022 dated 17.03.2022, Circular No.19/2023 dated 23.10.2023 and Circular No.17/2024 dated 18.11.2024 and our attention was invited to pages 8 to 14 of paper book filed by virtue of which CBDT for the purpose of condonation of delay in filing the Form No.10IC the fulfillment of the following conditions were laid down:-

(i) The Return of Income for the relevant assessment year has been filed on or before the due date specified u/s 139(1) of the Act;

(ii) The assessee has opted for taxation u/s 115BAA of the Act in case of condonation of delay is for Form No.10IC and u/s 115BAA of the Act in case of delay is for Form No.10ID in “filing status” in part-A GEN of the form of return of income ITR-6.

(iii) The assessee was prevented by reasonable cause from filing such form before the expiry of the time allowed and the case is of genuine hardship on merits (paper book page-

3).

3.4 That the last date to file the Form No.10IC as per last circular was 31.01.2025 but the return was already processed u/s 143(1) on 24.08.2022 and that the assessee had already filed appeal before CIT(A) on 24.04.2023.

3.5 It was also submitted that the assessee fulfills all the substantive conditions for availing the benefit of Section 115BAA Sub Section (2). Reliance was placed on few judgments in written submission cum synopsis and that the procedural relaxation can be given when substantive conditions are satisfied by the assessee. It was finally prayed that the benefit of Section 115BAA

Page 10 of 16 of the Act be extended to the assessee and impugned order be set aside.

3.6 Per contra the Ld. DR appearing for and on behalf of the revenue interalia contended that the issues of the filing of Form No.10IC was resolved by the government (CBDT) and circulars placed on paper book pages 8 to 14 are proof enough in this regard. With regard to hard copy of the Form No.10IC paper book page 6 & 7 it was submitted that vide CBDT Circular No.17/2024 dated 18.11.2024 page book page 12 which was last circular on issue it was contended by the Ld. DR that the assessee ought to exercised the remedy provided therein but the same was not availed off for reason best known to the assessee. It was emphasized that even till date no effort has been made by the assessee in respect of filing of the Form No.10IC and that mere enclosing specimen form at page 6 & 7 of paper book before the ITAT is not a compliance in law as correct and proper place is at portal or before the designated authorities as specified in the 3 circulars relied upon by the assessee. It was also contended that the provisions of Section 115BAA of the Act binds the assessee and in this regard emphasis was laid on Section 115BAA(5) of the Page 11 of 16 Act, including Rule 21AE. It was prayed that appeal be dismissed and impugned order be upheld.

4. Observations,findings & conclusions.

4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.

4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “impugned order” basis law and by following the due process.

4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered opinion that the “impugned order” is passed by the Ld. CIT(A) in the first appeal.

The assessee no doubt could not file the Form No.10IC due to the technical glitches on the portal but simultaneously the CBDT vide Circular No.19/2023 dated 23.10.2023 had taken the necessary corrective steps for the assessment year 2021-22 the year under consideration and had permitted the assessee to fill up the Form No.10IC on or before 31.01.2024 or 3 months from the end of the month in which this circular is issued,

Page 12 of 16 whichever is later. The assessee admittedly has not exercised this option. Further the CBDT vide Circular No.17/2024 dated 18.11.2024 for Assessment Year 2020-21, 2021-22, 2022-23 took number of corrective measures which were as under:-

“3. With a view to avoid genuine hardship to the asses sees in exercising the option, under section 115BAA of the Act read with Rule 21AE of the Rules or under section 115BAB of the Act read with Rule 21AF of the Rules, the CBDT in exercise of the powers conferred under section 119(2)(b) of the Act, hereby authorizes: a) the Pr. Commissioners of Income Tax (,Pr. CslT')/ Commissioners of Income Tax ('CsIT') to admit and deal with the applications for condonation of delay in filing of Form No. 10-IC or Form No. IO-JD for Assessment Years 2020-21 , 2021-22 and 2022-23 where there is a delay of upto 365 days. b) the Pr. Chief Commissioners of Income Tax (,Pr. CCsIT')/ Chief Commissioners of Income Tax ('CCsIT')/ Directors General of Income Tax ('DsGIT') to admit and deal with the applications for condonation of delay in filing of Form No. 10-IC or Form No. 10-JD for Assessment Years 2020-21, 2021-22 and 2022-23 where there is a delay of more than 365 days.

5. No application for condonation of delay in filing of Form No. IO-IC or Form No. IO-ID shall be entertained beyond three years from the end of the assessment year for which such application is made. The time limit for filing of such application within three years from the end of the assessment year will be applicable for application filed on or after the date of issue of this Circular. A condonation application should be disposed of, as far as possible, within six months from the end of the month in which such application is received by the Competent Authority.

Page 14 of 16 explanation given to us. In these facts and circumstances keeping in mind the bonafide attitude of the assessee in raising a grievance at proper time and place and also claiming the benefit u/s 115BAA of the Act before the due date of filing of return of income and further the act of preferring the first appeal before the Ld. CIT(A), we are inclined to accede to the arguments canvassed by the Ld. AR and accept his contentions in order to meet the ends of justice.

4.4 However we hold that by virtue of Section 115BAA(5) of the Act the requirement of Form No.10IC is mandatory and that is why CBDT gave several opportunities to the assessee which present assessee company could not make use off. Nevertheless in view of our observation made in para 4.3 (supra) we accept the contention of the assessee company and set aside the “impugned order” with a direction to the assessee to now file the Form No.10IC within one month from the date of receipt of this order on portal and direct CPC to open the window for this limited purpose only.

5.2 In the result appeal of the assesse is allowed for statistical purpose.

Order pronounced in open court on 30.09.2025.