2025 (2) TMI 1127 - AT - Income Tax

Benefit of new tax regime u/s 115BAC - Assessee entitlement to the benefits of the new tax regime un/s 115BAC despite filing a return under the old tax regime on the reason that portal system of Income Tax Department did not allow for choosing the new tax regime after the extended due date - HELD THAT - Unless the option exercised for the new tax regime by filling Form-10IE has been rendered invalid due to violation of the conditions contained in the relevant provisions thereto the benefits of new tax regime would be available or applicable in the subsequent assessment years but subject to fulfilling of prescribed conditions for the regime and the Assessee cannot be treated as in-eligible for the benefits of new tax regime which is certainly a benevolent provision for the benefit and welfare of the Assessees. Further requirement of filing form 10-IE is directory in nature and not mandatory and it is sufficient compliance if the said Form is filed/available before the AO at the time of assessment. Further if the assessee has opted for taxation u/s 115BAA of the Act and filed Form No. 10IC or 10IE electronically on or before 31.01.2024 or 3 months from the end of the month in which the CBDT Circular ( no 19/2023 dated 23.10.2023) is issued and whichever is later then the delay in filing of Form No. 10-IC as per Rule 21AE of the Rules for previous year relevant to A.Y. 2021-22 is liable to be condoned. Undoubtedly the benevolent provisions cannot be read or interpreted in the restrictive manner or in isolation to the propose or object of introducing the provisions and the Courts are supposed to interpret the benevolent provisions of the law in such a way that real effects of the same would come. Coming to the instant case we observe that till the date of processing the return filed by the Assessee for the A.Y. 2022-23 Form No.10IE for exercising the option for availing the benefits of new tax regime filed on 10-01-2022 for the AY 2021-22 was neither withdrawn nor rejected or made invalid but the same was still available or effective before the AO during the assessment proceedings or passing the Assessment order and therefore in our considered view the return filed by the Assessee should have been considered under the new tax regime/provisions. Thus the Assessee is entitled for the benefit of new tax regime and consequently the addition is deleted.

1. ISSUES PRESENTED and CONSIDERED

The primary issue considered was whether the Assessee was entitled to the benefits of the new tax regime under section 115BAC of the Income Tax Act, 1961, despite filing a return for the Assessment Year (AY) 2021-22 under the old tax regime due to technical constraints. The secondary issue was whether the filing of Form No. 10IE, which is required to opt for the new tax regime, is mandatory or directory in nature.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents: The case revolves around section 115BAC of the Income Tax Act, 1961, which allows taxpayers to opt for a concessional tax regime by filing Form No. 10IE. The Tribunal referenced several precedents, including decisions from the ITAT Amritsar Bench, ITAT Pune, ITAT Bangalore, and the Gujarat High Court, which have addressed similar issues regarding the mandatory or directory nature of filing specific forms and the impact of technical glitches on compliance.

Court's interpretation and reasoning: The Tribunal interpreted the requirement to file Form No. 10IE as directory rather than mandatory. It emphasized that technical glitches in the Income Tax Department's portal should not penalize taxpayers who have otherwise complied with the substantive requirements of the law. The Tribunal relied on precedents where courts have condoned delays or technical non-compliance due to portal issues, emphasizing the benevolent nature of tax provisions.

Key evidence and findings: It was undisputed that the Assessee filed Form No. 10IE on 10.01.2022 for AY 2021-22, opting for the new tax regime. However, due to technical issues with the portal, the Assessee filed the return under the old regime. The Tribunal noted that the return was processed and accepted by the Revenue Department, and there was no withdrawal of the option for the new tax regime.

Application of law to facts: The Tribunal applied the legal principles from previous decisions, holding that the filing of Form No. 10IE is directory. It concluded that the Assessee's compliance with the substantive requirement of opting for the new tax regime should not be negated by technical issues preventing timely filing.

Treatment of competing arguments: The Assessee argued that the new tax regime is a benevolent provision and that once opted, it cannot be denied unless withdrawn. The Revenue contended that filing the return under the old regime amounted to withdrawal of the option. The Tribunal sided with the Assessee, finding that technical issues prevented compliance and that the Assessee had not withdrawn the option.

Conclusions: The Tribunal concluded that the Assessee was entitled to the benefits of the new tax regime for AY 2022-23, as the option exercised for AY 2021-22 was not withdrawn or invalidated. The Tribunal emphasized the directory nature of Form No. 10IE filing and the need to interpret benevolent provisions in favor of the taxpayer.

3. SIGNIFICANT HOLDINGS

The Tribunal held that the requirement to file Form No. 10IE is directory and not mandatory, and technical glitches should not penalize taxpayers. It established that benevolent tax provisions should be interpreted to provide the intended benefits to taxpayers. The Tribunal directed the Centralized Processing Center (CPC) to consider the Assessee's Form No. 10IE and grant the benefits of the new tax regime.

Key principles established include the directory nature of procedural requirements in the presence of technical issues and the interpretation of benevolent provisions to ensure taxpayer benefits. The final determination was in favor of the Assessee, allowing the appeal and granting the benefits of the new tax regime for the relevant assessment years.

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