2025 (4) TMI 268 - AT - Income Tax

Denial of Benefit of lower tax as per section 115BAC due to the fact that form 10IE was not filed before the due date of filing of return u/s 139(1) i.e. 31.12.2021 - HELD THAT - We find that the Assessee could not file its return of income on or before the date of filing of return of income as required u/s 139 of the Act but filed its ITR within the extended period of time (extended by CBDT). But in this case there was some technical glitch on the part of the CPC and Income Tax Portal of filing of return of income. Assessee has already brought on record different case laws in its favour passed by different authorities. We find that the Assessee has filed its return during the extended period (as already extended for filing of the return by the CBDT vide its different Circulars mentioned above). A copy of form 10 IE was also filed before the processing of the return. Therefore we find that the Assessee has fulfilled its duty as required under the law. Accordingly the findings given by the Addl. CIT(A) on different issue raised by the Assessee cannot be sustained. Thus Assessee s appeal filed before us on all the issues is allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

1. Whether the Assessee was entitled to the benefit of the lower tax rate under section 115BAC despite failing to file Form 10-IE before the due date as prescribed under section 139(1).

2. Whether the requirement to file Form 10-IE before the due date is mandatory or directory.

3. Whether the technical glitch on the Income Tax portal justified the delay in filing Form 10-IE.

4. Whether the denial of the benefit under section 115BAC by the CPC under section 143(1) was beyond the scope of section 143(1).

5. Whether the Assessee could claim deductions under Chapter VI-A if the benefit under section 115BAC was denied.

ISSUE-WISE DETAILED ANALYSIS

1. Entitlement to the Benefit under Section 115BAC

- Relevant Legal Framework and Precedents: Section 115BAC provides an option for individuals and Hindu Undivided Families to be taxed at lower rates subject to certain conditions, including the filing of Form 10-IE before the due date under section 139(1).

- Court's Interpretation and Reasoning: The Court considered whether the filing of Form 10-IE was a mandatory requirement for availing the benefits of section 115BAC. It was argued that the requirement was directory, not mandatory, especially given the technical glitches that prevented timely filing.

- Key Evidence and Findings: The Assessee had filed the revised return and Form 10-IE within the extended deadline due to technical issues acknowledged by the CBDT. The CPC rejected the claim for a refund due to the late filing of Form 10-IE.

- Application of Law to Facts: The Court noted that the Assessee filed the Form 10-IE within the extended period and that the delay was due to technical glitches beyond the Assessee's control.

- Treatment of Competing Arguments: The Revenue argued that the filing requirement was mandatory, while the Assessee contended that the requirement was directory, supported by precedents where similar provisions were deemed directory.

- Conclusions: The Court concluded that the requirement was directory, allowing the Assessee to benefit from section 115BAC despite the delay.

2. Technical Glitch Justification

- Relevant Legal Framework and Precedents: The CBDT had extended deadlines due to technical glitches, recognizing the systemic issues affecting timely filings.

- Court's Interpretation and Reasoning: The Court acknowledged the technical difficulties faced by taxpayers and noted that the CBDT had extended deadlines multiple times due to these issues.

- Key Evidence and Findings: The Assessee provided evidence of the technical glitch and the subsequent extension of deadlines by the CBDT.

- Application of Law to Facts: The Court found that the Assessee acted promptly once the portal issues were resolved, filing the necessary forms within the extended timeframe.

- Treatment of Competing Arguments: The Revenue's insistence on strict adherence to the original deadline was countered by the Assessee's reliance on the extended deadlines and technical issues.

- Conclusions: The Court accepted the technical glitch as a valid reason for the delay, aligning with the CBDT's extensions.

3. Scope of Section 143(1)

- Relevant Legal Framework and Precedents: Section 143(1) allows for adjustments based on arithmetical errors or incorrect claims apparent from the return.

- Court's Interpretation and Reasoning: The Court considered whether the denial of the section 115BAC benefit fell within the scope of section 143(1) adjustments.

- Key Evidence and Findings: The denial was based on the late filing of Form 10-IE, not on an arithmetical error or incorrect claim.

- Application of Law to Facts: The Court found that the denial exceeded the scope of section 143(1), which did not cover such procedural issues.

- Treatment of Competing Arguments: The Assessee argued that the denial was beyond the scope of section 143(1), while the Revenue maintained its position based on procedural compliance.

- Conclusions: The Court held that the denial was inappropriate under section 143(1).

SIGNIFICANT HOLDINGS

- Preserve Verbatim Quotes of Crucial Legal Reasoning: "The requirement of filing Form 10-IE is directory in nature and not mandatory, and it was sufficient compliance if said form was before the Assessing Officer at the time of assessment."

- Core Principles Established: The Court established that procedural requirements related to form submissions may be considered directory, especially in the presence of technical issues and extensions granted by the CBDT.

- Final Determinations on Each Issue: The Court allowed the Assessee's appeal, granting the benefit of the lower tax rate under section 115BAC and acknowledging the technical glitch as a valid reason for the delay in filing Form 10-IE.