2025 (3) TMI 1280 - HC - Income Tax

Denial of benefits of provisions of Section 115BAB - no filing Form 10-ID before the due date - procedural lapse in filing the form - petitioner s application u/s 119 (2) (b) came to be dismissed - HELD THAT - Once a benefit is claimed in the return of income the filing of a separate Form pursuant to the claim of the said benefit is merely procedural in nature and should not be denied particularly if the Assessee has been able to show sufficient cause for the lapse. In the present case the very fact that a series of Circulars namely Circular Nos. 6/2022 19/2023 and recently 17/2024 have been issued by the CBDT goes to show that there has been a problem in large number of cases which the Assessee has faced in respect of filing Form 10-IC and 10-ID in time. Given the acknowledgment of the problem by the Department it must be said that the Assessee has shown sufficient cause. Further had the application of the Assessee u/s 119 (2) (b) not been dismissed and per chance had remained pending as on 18.11.2024 the case of the Assessee for condonation of delay u/s 119 (2) (b) would have been squarely covered by Circular No. 17 of 2024 and the Respondent-authorities following the said Circular would have automatically condoned the delay in the Petitioner s case. This Court deems it appropriate to exercise its jurisdiction under Article 226 of the Constitution of India to quash and set aside the impugned order dated 26.06.2024 passed by the Respondent No. 1 u/s 119 (2) (b) and further direct the Respondent-authorities to accept Form 10-ID filed u/s 115BAB read with Rule 21AF of the Rules filed on 12.09.2022 to be legal and valid. The petition therefore succeeds.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

• Whether the delay in filing Form 10-ID by the Petitioner under Section 115BAB of the Income Tax Act, 1961, can be condoned under Section 119(2)(b) of the Act.
• Whether the procedural lapse in filing the form within the prescribed time limit should prevent the Petitioner from availing the benefits of a lower tax rate under Section 115BAB.
• The applicability of CBDT Circulars in condoning the delay and their impact on the Petitioner's case.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Form 10-ID and Condonation under Section 119(2)(b)

• Relevant Legal Framework and Precedents: Section 115BAB provides for a lower tax rate for certain domestic companies, contingent upon filing Form 10-ID within the prescribed time. Section 119(2)(b) allows the CBDT to condone delays in certain circumstances. The CBDT had issued Circulars No. 6/2022, 19/2023, and 17/2024 addressing procedural difficulties faced by assessees.
• Court's Interpretation and Reasoning: The Court noted that the CBDT Circulars acknowledged widespread issues with filing forms due to technical glitches. The Court emphasized that procedural lapses should not prevent substantive benefits if sufficient cause for the delay is shown.
• Key Evidence and Findings: The Petitioner faced technical difficulties with the income tax portal, acknowledged by a tweet from their consultant. The CBDT issued Circulars to address such hardships, indicating a systemic problem.
• Application of Law to Facts: The Court applied the principles from previous judgments, emphasizing that procedural requirements should not override substantive rights when genuine hardship is demonstrated.
• Treatment of Competing Arguments: The Respondent argued that the Petitioner's application was not pending when the latest Circular was issued, thus ineligible for condonation under that Circular. The Court found this argument insufficient, given the broader context of acknowledged systemic issues.
• Conclusions: The Court concluded that the delay should be condoned, as the Petitioner demonstrated genuine hardship and had fulfilled substantive requirements.

Procedural Lapse vs. Substantive Benefit

• Relevant Legal Framework and Precedents: Precedents such as V.M. Procon Pvt. Ltd. and Xavier Kelavani Mandal emphasized that procedural lapses should not deny substantive benefits when genuine hardship is shown.
• Court's Interpretation and Reasoning: The Court reiterated that procedural requirements should not bar substantive claims if the taxpayer has shown sufficient cause for the delay.
• Key Evidence and Findings: The Petitioner had claimed the benefit in their tax return, and the delay was due to acknowledged technical issues.
• Application of Law to Facts: The Court applied the principles from previous cases to determine that the procedural lapse should not prevent the Petitioner from availing the tax benefits.
• Treatment of Competing Arguments: The Respondent's reliance on procedural technicalities was countered by the Court's focus on substantive justice and the CBDT's acknowledgment of technical issues.
• Conclusions: The Court concluded that the procedural lapse should not prevent the Petitioner from receiving the substantive tax benefits.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: "Once a benefit is claimed in the return of income, the filing of a separate Form pursuant to the claim of the said benefit is merely procedural in nature and should not be denied particularly if the Assessee has been able to show sufficient cause for the lapse."
• Core Principles Established: The judgment reinforces the principle that procedural lapses should not override substantive rights when genuine hardship is demonstrated, and sufficient cause is shown.
• Final Determinations on Each Issue: The Court quashed the impugned order dated 26.06.2024, directed the Respondent authorities to accept the Form 10-ID filed by the Petitioner as legal and valid, and allowed the petition.