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Facts
The assessee initially filed an Income Tax Return (ITR) under the old tax regime. Subsequently, a revised return was filed opting for the new tax regime under Section 115BAC, accompanied by Form 10IE, which was submitted 9 days after the extended due date due to technical glitches. The AO, CPC, Bangalore denied the benefit of the new regime and rejected the refund claim during processing under Section 143(1), an action upheld by the CIT(A) due to the belated filing of Form 10IE.
Held
The Tribunal held that the requirement to file Form 10IE is directory, not mandatory. Since the form was filed (albeit belatedly) and was available to the Assessing Officer at the time of assessment, the benefit of the new tax regime under Section 115BAC cannot be denied. The AO was directed to consider the Form 10IE for the purpose of assessment.
Key Issues
Whether the benefit of the new tax regime under Section 115BAC can be denied solely due to the belated filing of Form 10IE, given that the delay was minor and attributed to technical glitches, and whether the filing requirement is mandatory or directory in nature.
Sections Cited
Section 115BAC, Section 250, Section 143(1), Section 139(1), Section 250(6), Chapter VI-A, Section 139(5), Section 119, Section 234A, Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
ORDER Per: Udayan Dasgupta, J.M.: This appeal is filed by the assessee against the order of ld. Addl. CIT (A)-11, Delhi, passed u/s 250 of the Act, 1961 vide order dated 29.06.2024 which has emanated from the order of AO, CPC, Bangalore passed u/s 143(1) of the Act, vide assessment order dated 05.07.2022. 2. The grounds of appeal taken by the assessee in Form No. 36 are as follows:
1. That the Ld. CIT(A) vide order u/s 250(6) dated 29.06.2024 has erred in confirming the action of the AO in not providing the benefit of lower tax as per section 115BAC due to the fact that form 101E was not filed before the due date of filing of return u/s 139(1).
2. That the Ld. CIT(A) vide order u/S' 250(6) dated 29.06.2024 has erred in confirming the action of the AO without appreciating that form 101E could not be filed before the due date of filing of return u/s 139(1) due to technical glitch.
3. That the order passed u/s 250(6) of. the Income Tax Act, is bad in law as the requirement of filing of form 10IE before the due date of filing of return u/s 139(1) is directory in nature and as such the benefit of lower tax rate cannot be denied.
4. That the order passed u/s 250(6) of the Income Tax Act, is bad in law as since the adoption of lower tax rate as per section 115BAC cannot be brought under the ambit of adjustment u/s 143(1) which covers 'arithmetical error, incorrect claim, disallowance of loss, disallowance of expenditure, disallowance of deduction or addition of income appearing in form 26AS or form 16A'.
5. Without prejudice to the aforesaid grounds, the Ld. CIT(A) has erred in not appreciating that even if the benefit of lower tax rate as per section 115BAC is denied to the-assessee, then, in such a case, the assessee is entitled to avail deduction under chapter Vl- A of the income tax act 1961.
6. That the Ld. CIT(A) has erred in not accepting the form 101E and revised return filed on 24.03.2022 without considering the fact that it was filed before the processing of original return i.e on 27.03.2022.”
Brief facts emerging from records are that the assessee has filed his return of income on 11.01.2022 disclosing total income of Rs.16.80 lakhs which was processed u/s 143(1) on 27.03.2022 accepting the returned income. 3.1 In the instant case, the assessee filed this return under old regime claiming deductions under Chapter-VI A. which was subsequently revised on 24.03.2022 in which he opted for taxation under the new regime as per provision of section 115BAC, after filing form 10 IE claiming refund of Rs.26,000/-. However, the said claim has been rejected vide order dated 05.07.2022 u/s 143(1) of the Act, due to the fact that the appellant had failed to file form 10 IE before the due date of filing of return i.e. by 15.03.2022 (being the extension dates made by CBDT vide Circular No. 1/2022 during Covid period).
The assessee carried the matter before the ld. first appellate authority claiming that the mandatory form 10 IE filed as per provision of section 115BAC should have been accepted, considering the fact that during that period of time there were technical glitches in the portal which has prevented the assessee from filing the mandatory form in time and the same was belatedly filed by only 9 (nine) days. 4.1 The ld. first appellate authority has decided against the assessee by observing as follows: “8. On perusal of the submission and facts furnished in support of the contention raised in the grounds of appeal, it is evident that the appellant had faced technical difficulty in opting new tax regime vide Form No. 10-IE while exercising the option under clause(i) of subsection (5) of section 115BAC of the Act. However, clause (5) of section 115BAC specifically mentions that the "Nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person” within the due date of filing of the return of the income.
9. In view of the above discussion, the appeal raised the appellant is hereby dismissed.”
5. Now the assessee is in appeal before the tribunal on the ground contained in the memorandum of appeal and in course of hearing the ld. AR of the assessee submitted that in the instant case, the delay in filing the statutory form was only nine days and that too because of technical glitches which was prevalent in the system at that period of time and he also referred to various circulars which were issued by the Board extending the time period for compliance.
Circular No. Date Extended Reason for extension of date as explained by to CBDT in Circulars Circular No. 30th Difficulties reported by the taxpayers and other 9/2021 September, stakeholders in electronic filing of Income-tax dated 20-5- 2021 returns and various reports of audit 2021 CIRCULAR 31st Difficulties reported by the taxpayers and other NO. 17/2021 December, stakeholders in electronic filing of Income-tax 2021 returns and various reports of audit CIRCULAR 15th March On consideration of difficulties reported by the NO. 01/2022 2022 taxpayers and other stakeholders due to COVID and in electronic filing of various reports of audit under the provisions of the Income-tax Act,1961 (Act), the Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119 of the Act, provides relaxation in respect of the following compliances: 4. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st October 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November 2021 and 15th Februarv 2022 bv Circular No.9/2021 dated 20-5-2021 and Circular No.17/2021 dated 9- 9-2021 respectively, is herebv further extended to 15th March, 2022
He further submitted that after the technical glitches has been resolved and the utility started working, the assessee immediately filed Form 10 IE alongwith a revised return, on 24th March, 2022 under the new regime which was filed before processing of the original return and said revised return could not have been ignored, as per provision of law, as stipulated u/s 139(5) of the Act, and since the Form 10 IE was also available with the CPC Bangalore at the time of processing the return the said form also could not have been ignored by the AO.
6.1 Before concluding his argument he reiterated that it is a case, where Form 10IE has been filed which was just belated by nine days due to technical glitches in the portal and the said Form was available before the AO in course of assessment which should not have been ignored and the assessee should get the benefit of the new regime because the said filing is directory in nature as held by various courts and tribunals. 6.2 In support of his contention the ld. AR relied on various decisions of various tribunals: “(a) [20241165 taxmann.com 146 (Amritsar - Trib.) IN THE ITAT AMRITSAR BENCH Singh v. AO* Section 115BAC of the Income-tax Act, 1961 - Income of individuals and Hindu Undivided Family - Tax on total income (Option for new tax regime) - Assessment year 2021-22 - Assessee- individual filed return claiming deduction under Chapter VI-A under old scheme - Subsequently, assessee filed revised return, wherein assessee opted for new scheme of taxation under section 115BAC and also submitted Form 10-IE on date of filing revised return - Assessing Officer completed assessment under section 143(1) without allowing benefit of tax rate prescribed under new scheme of taxation on ground that Form 10-IE had not been filed within time allowed under section 139(1) - Whether since requirement of filing Form 10-IE was directory in nature and not mandatory and it was sufficient compliance if said form was before Assessing Officer at time of assessment, Assessing Officer was to be directed to take into consideration Form 10-IE filed by assessee - Held, yes [Para 10.6] [In favour of assessee] (b) 2024 (6) TMI 272 - ITAT PUNE AKSHAY DEVENDRA BIRARI VERSUS DCIT, CPC, BENGALURU Issues involved: Appeal against denial of benefit of New Tax Regime due to late submission of Form No.10IE. Summary: The appeal was filed by the assessee against the order of Addl./JCIT(A)-2, Chennai for the assessment year 2023-24. The appellant, an individual deriving income under the head "Salaries" and income from Futures and Options in shares, filed the Return of Income under section 115BAC in the New Tax Regime on 31.07.2023 declaring income of Rs. 40,54,450/-. The income was assessed at the same amount by the CPC under section 143(l)(a) on 10.01.2024, denying the benefit of the New Tax Regime. The CIT(A)/NFAC confirmed the CPC's action, stating that the appellant submitted Form No.10IE after the prescribed due date of 31.07.2023. The appellant then appealed before the Tribunal. Despite due notice, the appellant did not appear for the appeal hearing. The Senior DR argued that the New Tax Regime was optional from A.Y. 2023-24 onwards, and the appellant failed to file Form No. 10IE before the income tax return, leading to the denial of benefits. However, the Tribunal found that the Form No.10IE was available with the CPC at the time of processing the return, and it was not a mandatory requirement but directory in nature. Therefore, the Tribunal directed the CPC to consider the Form No. 10IE and allow the benefit of the New Tax Regime.”
6.3 He further referred to the following decisions of various tribunal in the matters on technical glitches: “(g) [2022 (l) TMI 947 - GUJARAT HIGH COURTTHE SOUTHERN GUJARAT INCOME TAX BAR ASSOCIATION, SURAT VERSUS UNION OF INDIA AND 1 OTHER (S) Extension of due date of filing of Tax Audit Report and the Income Tax Returns for the assessment year 2021-2022 till March 31, 2022 - seeking order or direction, directing the respondents not to levy interest under section 234A till the revised due dates provided vide Circular 17/2021 dated 09.09.2021 - appropriate directions to authorities for accepting the TAR and/ or ITR in physical form till the New Income Tax Portal stabilizes and becomes glitch free - HELD THAT:- All necessary steps shall be taken to ensure that the assesses are able to upload their Income Tax Returns/Tax Audit Reports online smoothly and without any difficulties. They have also assured that in the event of any technical glitch, the same shall be attended at the earliest and taken care of as explained in the affidavit filed today. Having regard to the stance of the CBDT as it emerges from the affidavit, we are convinced that no further adjudication is required in the present litigation. We appreciate the efforts put in by the CBDT to ensure that the assesses do not have to face any hardships or difficulties on account of the technical glitches in the portal.
We take notice of one pertinent feature emerging from the affidavit and i.e. the E- mail ID, which has been created to assist the filing of Tax Audit Report. A team of six members or if need be, more are to examine and resolve the E-mails received at this E-mail ID. Our suggestion to Mr. Singh as well as to Mr. Krishnamurthy is that one such E-mail ID may also be created for the Income Tax Returns. Our suggestion has been graciously accepted by Mr. Singh and Mr. Krishnamurthy. They have assured that the needful shall be done in this regard also. We are convinced that with the cooperation of one and all, we have been able to resolve the controversy as regards the technical glitches in the Income Tax Portal. At this stage, Mr. Hemani, the learned Senior Counsel submitted that by and large all issues can be said to have been taken care of with view of what has been stated in the affidavit except the issue as regards the lew of interest under Section 234A of the Income Tax Act. We do not intend to look into the above controversy in the present litigation as we are informed that one writ application as regards Section 234A is already pending before this High Court. This issue shall be looked into as and when the pending writ application is taken up for hearing by this Court. We close both the writ applications and dispose of the same accordingly. The affidavit, which has been filed today on behalf of the respondents Nos.l and 2 shall be taken on record. (h) 2023 (11) TMI 656 - BOMBAY HIGH COURTMATRIX PUBLICITIES AND MEDIA INDIA PVT. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-16 (1), MUMBAI & ORS Delay in issuing refund - ACIT said that the system (under the control of CPC, Bangalore) needs to capture the refund already approved via web service rectification order and till this issue is resolved proceedings in this case cannot be completed - HELD THAT:- This is the standard excuse given by the Department when it comes to giving refunds. The excuse used is that the system under the control of Centralized Processing Center ("CPC"), Bangalore has some issues and, therefore, amount is not being released to assessees. Interest is payable in law until the date of refund and the Department does not realize that it is public money that is used to pay interest. That is a waste and burden on the exchequer. We would only hope that the Finance Ministry looks into it with seriousness and tries to put an end to the problem faced by all assessees and the Income Tax Officers. A copy of this order be sent to the PMO, the Hon'ble Finance Minister GOI, the Hon'ble Law Minister GOI, the Central Board of Direct Taxes and to the Attorney General for India for information and necessary action. We only hope this problem gets resolved at the earliest. Had the department sorted out its technical issues, totally unrelated to any substantial legal issue, nevertheless contravening the fundamental right of Petitioner to receive undisputed amount of refund, the present proceedings would not have crept into the litigation arena. Respondents either by itself or through CPC shall ensure that the amount is credited to Petitioner's account on or before 4th November 2023 with interest upto the date of payment in accordance with law.”
As such, referring to all the above judgments, the ld. AR prayed that the benefit of new regime may please be allowed to the assessee and the mandatory form filed 10IE may please be considered for the purpose of assessment because the same was available before the AO in course of assessment proceedings.
The ld. DR relied on the order of the ld. CIT(A), but he could not counter the arguments of the ld. AR relating to the technical glitches in the portal which has prevented the assessee from filing the mandatory Form 10IE within the stipulated period.
We have heard the rival submission and considered the material on record and we find that in the instant case, the original return was filed on 11.01.2022 under the old regime claiming deduction under Chapter VIA and subsequently, the said return has been revised on 24th March 2022 under the new regime and the mandatory Form 10IE as per provisions of section 115BAC has been dully filed on 24th March 2022 (placed in paper book page 18-19, alongwith the revised return of income itself filed u/s 139(5) claiming refund of 26,000/-. The sequence is as under):
S.No Events Date Original return filed 1. 11.01.2022 Original return processed 27.03.2022 2. 3. Due date of filing form 10IE 15.03.2022 4. Revised return of Income filed 24.03.2022
Form 10IE filed 24.03.2022 Claim of refund rejected by CPC 05.07.2022 6.
It is also observed that the due date of filing the statutory Form 10IE was 15th 9.1 March 2022 which is belated by nine days on account of technical glitch in the portal. 9.2 We also observed that the said revised return has been considered by the AO CPC, Bangalore and assessment has been completed u/s 143(1) on 5TH July 2022 but without giving the benefit of the new regime by denying the benefit of lower rate of taxes u/s 115BAC and at the same time the benefit of deduction under Chapter-VI A has also not been allowed. 9.3 We find that the said benefit has been disallowed only because the statutory Form 10IE has not been filed within the stipulated time but there has no denying the fact that the said Form has been filed alongwith the revised return and the said Form was before the AO at the time of assessment which could not have been ignored. It has been held by the Coordinate Bench of the Tribunal that when the assessee has opted for new scheme on taxation u/s 115BAC and also submitted Form 10IE then the benefit of tax rate prescribed under the new scheme of taxation cannot be denied and the requirement of filing Form 10IE was simply directory in nature and not mandatory and it was sufficient compliance if the said Form was before the AO at the same time of assessment. The same view has also been taken by the ITAT, Pune