2024 (9) TMI 1691 - AT - Income Tax

Denial of concessional tax rate u/s 115BAA - non-filing of Form 10IC electronically before the due date - HELD THAT - As not disputed that for claiming tax rate u/s 115BAA Assessment Year 2020-21 is the very the first Assessment Year and due to the fault on the part of the System as mentioned by the assessee it would have happened that the assessee has not filed the Form alongwith the return of income. It is not the case of the Revenue that the assessee is not entitled for the tax rate u/s 115BAA. If the assessee had filed Form 10IC within the prescribed time alongwith return of income as held by various Hon ble High Courts including the jurisdictional High Court the CIT (A) has co-terminus power as that of the AO. CIT (A) is required to consider the report in Form 10IC and therefore it will be appropriate to take on record the Form 10IC and consider the same in consonance with the return of income filed by the assessee and after verifying the same the AO will adjudicate the issue. Assessee appeal partly allowed for statistical purpose.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

1. Whether the intimation under Section 143(1) of the Income Tax Act, 1961, issued by CPC, Bengaluru, is valid and requires rectification.

2. Whether the assessee is entitled to the concessional tax rate under Section 115BAA of the Income Tax Act despite the non-filing of Form 10IC electronically before the due date.

3. Whether the non-filing of Form 10IC is a procedural lapse that can be condoned, allowing the assessee to avail of the benefits under Section 115BAA.

4. Whether the charging of interest under Sections 234B and 234C of the Income Tax Act is justified.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Intimation under Section 143(1)

The relevant legal framework involves Section 143(1) of the Income Tax Act, which allows for the processing of returns and the issuance of intimation. The Court considered whether the intimation was issued correctly, focusing on the procedural aspects and the application of the law.

The Court noted that the intimation was based on the regular tax rate due to the non-filing of Form 10IC. The assessee contended that this was a technical error and not a substantive issue, arguing that the intimation should be rectified.

The Court acknowledged the procedural lapse but emphasized the need for compliance with statutory requirements. However, it recognized the technical difficulties faced by the assessee and considered the possibility of rectification.

2. Entitlement to Concessional Tax Rate under Section 115BAA

The legal framework revolves around Section 115BAA, which provides for a concessional tax rate for eligible domestic companies. The crux of the issue was whether the failure to file Form 10IC electronically invalidated the claim for this rate.

The Court examined precedents where similar procedural lapses were condoned, allowing taxpayers to benefit from statutory provisions. The assessee cited several cases, including decisions from the Gujarat High Court and the Delhi High Court, where procedural non-compliance did not bar entitlement to benefits.

The Court found that the assessee had indeed opted for the concessional rate in the return and audit report. It was noted that the delay in filing Form 10IC was due to technical issues, and the form was eventually submitted during appellate proceedings.

The Court concluded that the assessee's entitlement to the concessional rate should not be denied solely due to the procedural lapse, especially when the intention to avail the benefit was clear and consistent.

3. Procedural Lapse and Condonation

The Court considered whether the non-filing of Form 10IC could be condoned. The assessee argued that the lapse was procedural and should not affect the substantive right to the concessional rate.

The Court referred to principles of natural justice and previous judicial decisions that favored a liberal interpretation of procedural requirements when substantive rights were involved. The Court emphasized that procedural lapses should not overshadow the substantive entitlement to tax benefits.

The Court decided that the procedural lapse could be condoned, and the form should be accepted for consideration, allowing the assessee to claim the concessional rate under Section 115BAA.

4. Charging of Interest under Sections 234B and 234C

The legal framework involves Sections 234B and 234C, which pertain to the charging of interest for defaults in payment of advance tax and deferment of advance tax, respectively.

The Court considered whether the interest charged was justified given the circumstances of the case. The assessee argued that the interest was unjustifiable due to the procedural issues encountered.

The Court did not provide a detailed analysis on this issue, as the primary focus was on the entitlement to the concessional rate. However, the Court implied that the interest issue might need reconsideration in light of the rectification of the tax rate.

SIGNIFICANT HOLDINGS

The Court held that the procedural lapse in filing Form 10IC should not bar the assessee from availing the concessional tax rate under Section 115BAA. It emphasized the principle that procedural requirements should not defeat substantive rights, especially when technical difficulties are involved.

The Court directed that Form 10IC be taken on record and considered in conjunction with the return of income. The Assessing Officer was instructed to verify the form and adjudicate the issue of entitlement to the concessional rate, ensuring the assessee is given an opportunity for a hearing in line with natural justice principles.

The appeal was partly allowed for statistical purposes, indicating that while the procedural aspect was resolved, further verification and adjudication were required on the substantive issue.