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Facts
The assessee filed his income tax return for AY 2021-22 belatedly under section 139(4) and also opted for the new tax regime under section 115BAC by filing Form 10-IE on the same day. The return was processed, but the concessional tax rate was denied due to the delayed filing of Form 10-IE.
Held
The Tribunal held that the filing of Form 10-IE is a mandatory substantive requirement, but its delayed submission is a procedural omission, especially since the form was available before the intimation under section 143(1) was passed. The delay should not deny the benefit, considering the context of the first year of applicability of section 115BAC and the Supreme Court's directions regarding exclusion of time periods due to the pandemic.
Key Issues
Whether the denial of the benefit of Section 115BAC is justified due to the delayed filing of Form 10-IE, even though the form was submitted before the processing of the return.
Sections Cited
115BAC, 139(1), 139(4), 250, 154, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
O R D E R
Per Keshav Dubey, Judicial Member :
This appeal at the instance of the assessee is directed against the order of learned ADDL/JCIT(A) – 1, Ludhiana, dated 14.08.2025 vide DIN and Order No. ITBA/APL/S/250/2025-26/1079614747(1) passed under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2021-22.
The assessee has raised the following grounds of appeal:
1. The order of Honourable Additional/ Joint Commissioner of Income Tax (Appeals) (hereinafter referred as "ACIT(A)" for brevity) to the extent prejudicial to the Appellant is bad in law.
2. The ACIT(A) has erred in holding that the assessee is not eligible for claiming taxation under the provisions of section 115BAC of the Act, merely because he has filed his income tax return belatedly u/s 139(4) of the Act for the year under consideration on 17.02.2022 beyond the Page 2 of 7 due date, when the fact of the case is denial of for claiming taxation under the provisions of section 115BAC of the Act due to delayed filing of Form 10-1E.
3. The appellant had placed reliance on the decision of ITAT, Pune in case of Pran Panda & Rama Panda vs ITO, & 1510/KOL/2024, wherein the learnt bench took the view that the failure to file Form 10-IE within the due date is procedural requirement which does not affect the eligibility of the assessee to claim concessional tax rate benefit, However ACIT(A) erred in not considering the above decision of ITAT, Pune. ACIT(A) has taken the view that 4. The appellant had also placed reliance on the decision of Hon'ble ITAT Pune bench in the case of Akshay Devendra Birari vs DCIT, CPC, Bengaluru in wherein it was held that " it is not a mandatory requirement for filing of Form 10IE but directory in nature".
5. The ACIT(A) has erred in not appreciating the fact that: (i) ITR was filed within due date U/S 139(1) , but assessee's ITR was delayed and filed U/S 139(4). ACIT(A) failed to appreciate the fact that in both the above cases as well as in the case of the Assessee main contention is delay in filing Form 10-1E and it's effect on denial or otherwise of Claim of New Scheme of Taxation u/s 115BAC (ii) Form 10-1E was submitted on 17th February 2022, was before date on which the return was processed and the intimation under section 143(1) was issued, i.e., 28th October 2022. (iii) The learnt ACIT(A) failed to consider the fact that the assessee had continuously claimed the benefit of Section 115 BAC in all subsequent years and was not disputed. Assessee had filed his returns on due dates in all prior and subsequent years but due to ill health following Covid, could not file return of income by original due date for the financial year relevant to assessment year 2021-22 and filed belated return u.s 139(4), on 17.02.2022. (iv) Delay in submission of Form 10-1E is only a procedural deviation and beneficial provisions of law cannot be denied to the assessee merely because of some procedural lapse.
Brief facts of the case are that the assessee filed his return of income for the Assessment Year 2021-22 under section 139(4) of the Act on 17.02.2022 by declaring total income of Rs.11,43,120/- and opted for the new tax regime under section 115BAC of the Act. Further, the assessee had also Page 3 of 7 filed the Form No.10IE opting for tax as per new regime under section 115BAC of the Act on the same day i.e., on 17.02.2022. The said return of income was processed by the CPC and accordingly an intimation under section 143(1) of the Act was passed on 28.10.2022 by accepting the returned income. However, while passing the intimation under section 143(1) of the Act, the tax was charged at normal tax rate as per the old tax regime and accordingly a total demand of tax and interest of Rs.1,19,800/- was raised after giving credit of prepaid tax amounting to Rs.68,517/- as against Rs.1,17,985/- claimed by the assessee.
3.1 Thereafter, the assessee filed a rectification application as per the provisions contained in section 154 of the Act and accordingly a rectification Order under section 154 of the Act was passed by the CPC on 14.11.2024 by giving credit of full TDS and self-assessment tax paid by the assessee but continued to taxed under the old regime which resulted into the tax demand of Rs.64,990/-.
3.2 The assessee, thereafter, filed another rectification request by praying to condone the delay in filing ITR as well as Form No.10IE for the Assessment Year 2021-22 for the assessment year 2021-22. However, the CPC once again passed the rectification order under section 154 of the Act on 26.02.2025 confirming the demand raised of Rs.64,990/- for the Assessment Year 2021- 22.
Aggrieved by the rectification order passed by the CPC dated 26.02.2025, the assessee preferred an appeal before the learned CIT(A)/ADDL/JCIT(A).
The learned ADDL/JCIT(A)-1, Ludhiana, dismissed the appeal by distinguishing the facts of the present case with the facts of the cases as relied Page 4 of 7 upon by the assessee and held that the new tax regime under section 115BAC of the Act was effective w.e.f. 01.04.2021 and the assessee has to file his income tax return under section 139(1) of the Act along with the Form 10IE for the Assessment Year 2021-22 and accordingly the action of the AO for not allowing the concessional rate under the provisions of section 115BAC of the Act was confirmed.
Again, aggrieved by the order of learned ADDL/JCIT(A) – 1, Ludhiana, the assessee has filed the present appeal before this Tribunal.
Before us, the learned AR of the assessee vehemently submitted that the Form No.10IE was available for consideration at the time of processing of income tax return as well as while passing the rectification order by the CPC. Further, learned AR of the assessee, relying upon the certain decisions of the Co-ordinate Bench of the ITAT, submitted that the filing of Form 10IE is not a mandatory requirement but directory in nature and merely for a procedural / technical lapse, the benefit of section 115BAC can not be denied. Lastly the ld. AR of the assessee submitted that even otherwise, the Hon’ble Supreme Court in the case of the suo motu writ petition (Civil) No.3 of 2020 wherein MA 21 of 2022 was disposed giving direction that period from 15.3.2020 to 28.2.2022 shall stand excluded for the purpose of limitation under any general or specific loss in respect of all judicial or quasi-judicial proceedings.
The learned DR, on the other hand, heavily relied upon the Order of the learned ADDL/JCIT(A) – 1, Ludhiana, and submitted that as stipulated in section 115BAC of the Act, the assessee has to mandatorily exercise his option by filing the Form 10IE on or before the due date in order to take benefit of new tax regime under section 115BAC of the Act.
Thus, the only issue raised and contested by the assessee is about the rejection of tax benefit under the new regime for non-filing of the form 10IE on or before the due date specified under section 139(1) of the Act.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that due to covid-19 pandemic, the due date of filing the return of income for the Assessment Year 2021-22 as well as the exercising of the option by way of filing of the Form No.10IE was extended to 31.12.2021. The assessee filed his return of income belatedly under section 139(4) of the Act on 17.02.2022. The assessee had also filed the Form No.10IE on the same day i.e., on 17.02.2022 & exercised his option. It is to be noted that the assessee in his return also claimed the tax benefit as per the new tax regime as per provision contained in section 115BAC of the Act. The main contention of the assessee is that Form No.10IE as filed by the assessee on 17.02.2022 was available for consideration at the time of processing of the income tax return under section 143(1) of the Act and therefore the CPC should have considered the Form 10IE and allowed the option claimed by the assessee under the new tax regime under section 115BAC of the Act. The authorities below denied the concessional rate of tax to the assessee on account of delay in furnishing the Form No.10IE. We also take a note of the fact that for the Assessment Year 2021-22 which was the first year of applicability of section 115BAC of the Act. The scheme of section 115BAC of the Act as visualized under the Income Tax Act is that the option for availing of the concessional tax rates regime must be exercised on or before the time permissible for the filing of the return of income under section 139(1) of the Act for the person having income from business or profession. Section 115BAC of the Act unambiguously provides so when it states that “nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person having income from business or profession Page 6 of 7 on or before the due date specified under section 139(1) of the Act for furnishing the return of income for any previous year relevant to the Assessment Year commencing on or after 01.04.2021 and such option once exercised shall apply to subsequent Assessment Years”.
10.1 Undisputedly, in the present case, the assessee had filed the return of income as well as exercised his option u/s 115BAC by filing the Form 10IE belatedly. Considering the fact that the assessment year under consideration being the first year for the applicability of the beneficial provisions of section 115BAC of the Act, a lenient view may be taken more particularly when the assessee had complied with all other conditions of section 115BAC of the Act. Further we are also of the considered opinion that the filing of the form 10IE is the mandatory substantive requirement but not the mode and stage of filing, which is procedural. Once the form No. 10IE was available with the CPC before the processing the return/passing of intimation u/s. 143(1) of the Act, the requirement of law is satisfied. Admittedly, in the present case, the return of income as well as the Form No. 10IE was available before the CPC well before the passing of intimation u/s. 143(1) of the Act and the CPC after bearing in mind the return of income as well as the Form No. 10IE had passed the intimation u/s. 143(1) of the Act but denied the claim of the tax benefit u/s 115BAC of the Act on the ground that the assessee had not exercised his option by filing the Form 10IE on or before the due date for furnishing return u/s 139(1) of the Act which in our opinion was only a procedural omission.
10.2 Further, we are also of the considered opinion that the failure to file the Form 10IE on or before the due date for furnishing return u/s 139(1) of the Act should not result in any denial of the concessional tax benefits in view of the Apex Court suo moto writ petition (Civil No.3/2020), wherein the MA 21/2022 was disposed off by the Apex Court by giving a direction that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes Page 7 of 7 of limitations as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. In view of all the above discussions and bearing in mind the direction issued by the Apex Court in suo moto writ petition as above, we accept the plea of the assessee and direct the AO to accept the exercise of the option by the assessee for the concessional tax regime under section 115BAC of the Act for the Assessment year 2021- 22. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed.
Pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (WASEEM AHMED) (KESHAV DUBEY) Accountant Member Judicial Member Bangalore. Dated: 03.02.2026. /NS/*