Filing of Form 10-IC prior to filing of return is not mandatory and in case of genuine hardship delay may be condoned – Allahabad High Court
In a recent judgment, Allahabad High Court has held that filing of Form 10-IC prior to filing of return is not mandatory and if genuine hardship” is shown then delay may be condoned and in this respect the provision of law shall be taken as a beneficial piece of legislation.
ABCAUS Case Law Citation:
4663 (2025) (07) abcaus.in HC
In the instant case, the Petitioner assessee had filed a Writ before the Hon’ble High Court inter alia praying issuance of direction to the Principal Commissioner of Income Tax, (PCIT) to condone the delay in filing Form 10-IC for AY 2020-21 and allow the petitioner to file the same and allow consequential relief.
The petitioner-company filed its income tax return under Section 139(1) for the assessment year 2020-21. The company in the return availed the benefit of the newly introduced Section 115BAA of the Income Tax Act, 1961 (the Act) by which a concessional rate of 22% was applied to the total income of an assessee and the Minimum Alternate Tax (‘MAT’) regime was made inapplicable.
However, the company did not file the newly introduced Form 10-IC. As a result, the Centralized Processing Center Bangalore issued an intimation order under Section 143(1) of the Act, creating a demand against the petitioner.
The assessee company filed a Petition u/s 119(2)(b) of the Income Tax Act, 1961 (the Act) after approximate delay of more than three years through its director requesting for condonation of delay, in-filing Form No.10-IC for the A.Y. 2020-21. The assessee company has stated that it had prepared the Form No. 10-IC for filing at the I.T. Portal, but due to the technical glitches it could not submit at the time of filing of ITR.
It was stated that the company only came to know about the non-filing of Form 10-IC when a demand was found on the portal. It was pleaded that the non-filing of Form 10-IC was not intentional but due to personal difficulties of the staff member and technical glitches and that non-filing of Form 10-IC was a procedural error and could be rectified.
The Assessing Officer in his report stated that the assessee company had submitted that the person in charge of Income Tax matters and his family members were suffering from COVID-19 during the year under consideration. On perusal of documents submitted by the assessee company, it appeared that its claim was correct and genuine. Therefore, the application for condonation of delay in filing of Form 10-IC may be accepted.
However, a different view was taken by the Range Head that the assessee company did not file any evidence with regard to technical problem/glitches of I.T. Portal. The assessee company does not fulfil the 3rd condition laid down in the CBDT Circular No. 6/2022 dated 17.03.2022 i.e. “Form 10-IC is filed electronically on or before 30.06.2022 or 3 months from the end of the month in which this circular is issued, whichever is later.” Therefore, it was recommended that the condonation application filed by the assessee company may not be considered.
Accordingly, the PCIT rejected the request for condonation of delay stating that the assessee company did not satisfy the conditions for condonation of delay u/s 119(2)(b) as stipulated in Circular No. 9/2015.
Before the Hon’ble High Court the Petitioner submitted that Principal Commissioner had not used his discretion under Section 119(2)(b) of the Act correctly. This section is for ensuring justice by allowing delay condonation applications when there were genuine hardship, however, the Commissioner took a very narrow view and ignored the clear human reasons for the delay. The non-filing of Form 10-IC was an unintended procedural oversight, not a deliberate act of tax evasion. The petitioner had clearly signified its intention to opt for the beneficial Section 115BAA of the Act by including it in its original income tax return and tax audit report. The subsequent substantial demand was a direct consequence of this technical lapse. The delay had occurred due to the unavoidable personal circumstances and there is no indication that the petitioner has sought any advantage by late filing.
It was submitted that the Principal Commissioner had ignored the Assessing Officer’s report, who, after reviewing the documentary evidence, deemed the petitioner’s claim “correct and genuine.” The impugned order failed to provide any cogent reasons for rejecting the finding and for concluding a lack of genuine hardship despite the detailed report in favour of the petitioner.
The petitioner relied upon the judgment passed by Hon’ble Supreme Court as well as various judgments of the Hon’ble High Courts in support of his contentions.
The Revenue submitted that under Section 115BAA, a condition is stipulated that Form 10-IC must be filed by the assessee before submitting the Income Tax Return (ITR) so that the concessional tax rate of 22% is payable by the assessee. In this case, the petitioner did not submit Form 10-IC within the prescribed period, as per the provisions of the Act, prior to filing its ITR. Therefore, there is no provision to allow the petitioner to submit its Form 10-IC subsequent to filing its ITR. Consequently, the impugned order had been passed in accordance with law.
The Hon’ble High Court opined that PCIT appeared to have fallen into error by adopting an excessively precise and stringent approach to the application for condonation of delay under Section 119(2)(b) of the Act. The very essence of this statutory provision is to confer discretionary power upon the tax authorities to mitigate “genuine hardship” faced by assessees. The undeniable and tragic circumstances of successive family deaths of the person handling petitioner company’s tax matters, unequivocally established a case of profound personal hardship that directly impaired the petitioner’s ability to ensure timely compliance. To dismiss such a well-substantiated cause as insufficient for condonation not only negates the remedial intent of Section 119(2)(b) but also constitutes an arbitrary exercise of discretion, particularly when the petitioner’s intent to avail the beneficial provisions of Section 115BAA was evident from its original return and audit report.
The Hon’ble High Court observed that indication of the arbitrary rejection by PCIT of the condonation of delay in filing Form 10- IC is strongly supported by various judgments that widely interpret “genuine hardship” under Section 119(2)(b) of the Act. The Hon’ble Supreme Court emphasized that “genuine hardship” signifies “genuine difficulty” and requires a purposeful interpretation of the provision, mandating a judicious exercise of discretion by statutory authorities. The Gujarat High Court held that “genuine hardship” must be construed liberally. The Bombay High Court further consolidated this liberal interpretation, asserting that the power to condone delay is for substantial justice and refusing it can defeat the interest of justice. The Madras High Court firmly stated that the an assessee feels that he would be paying more tax if he does not get the advantage of deduction will certainly constitute genuine hardship.
The Hon’ble High Court stated that when substantial justice and technical considerations are aligned against each other, the preference should be given to the cause of substantial justice and the authorities’ approach should be justice-oriented on merits. The clear and repeated position of law is that even if a procedural delay occurs due to “genuine hardship”, it should not prevent an assessee from receiving a rightful tax benefit.
Therefore, in light of the judgments of Hon’ble Supreme Court and Hon’ble High Courts, the Hon’ble High Court held that filing of Form 10-IC prior to filing of return is not mandatory and if “genuine hardship” is shown then delay may be condoned and in this respect the provision of law shall be taken as a beneficial piece of legislation.
Accordingly, the impugned order passed by the Principal Commissioner of Income Tax was quashed and the respondent authority was directed to condone the delay in filing Form 10-IC and accept Form 10-IC with consequential relief.
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