New Tax Regime benefit allowed in view of direction of SC despite belated Form 10IE

New Tax Regime benefit granted despite belated filing of Form 10IE in view of directions of Supreme Court for exclusion of covid period from limitation

In a recent judgment, ITAT Bangalore has held that the failure to file the Form 10IE on or before the due date for furnishing return u/s 139(1) should not result in denial of the option of new tax regime u/s 115BAC in view of the Apex Court direction that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitations.

ABCAUS Case Law Citation:
5049 (2026) (02) abcaus.in ITAT

In The instant case, the appellant assessee had challenged the order of CIT(A) in confirming that assessee was not eligible for claiming taxation under the provisions of section 115BAC of the Act, merely because he had filed his income tax return belatedly u/s 139(4) of the Act for the Assessment Year 2021-22.

The appellant assessee Brief facts of the case are that the assessee filed his return of income for the relevant Assessment Year under section 139(4) of the Act and opted for the new tax regime under section 115BAC of the Act. The assessee had also filed the Form No.10IE opting for tax as per new regime under section 115BAC of the Act on the same day. 

The said return of income was processed by the CPC under section 143(1) of the Act.  However, while passing the intimation under section 143(1) of the Act, the tax was charged at normal tax rate as per the old tax regime and accordingly a demand of tax and interest was raised. Despite filing a rectification application u/s 154 of the Act by the assessee, CPC continued to taxed under the old regime.

Aggrieved by the rectification order passed by the CPC, the assessee preferred an appeal before the CIT(A).

The Tribunal observed that due to covid-19 pandemic, the due date of filing the return of income for the Assessment Year 2021-22 as well as the  exercising of the option by way of filing of the Form No.10IE was extended to 31.12.2021.  The assessee filed his return of income belatedly under section 139(4) of the Act on 17.02.2022.  The assessee had also filed the Form No.10IE on the same day i.e., on 17.02.2022 & exercised his option of new tax regime.

The main contention of the assessee was that Form No.10IE as filed by the assessee on 17.02.2022 was available for consideration at the time of processing of the income tax return under section 143(1) of the Act and therefore the CPC should have considered the Form 10IE and allowed the option claimed by the assessee under the new tax regime under section 115BAC of the Act. 

The Tribunal further observed that section 115BAC of the Act unambiguously provides so when it states that “nothing contained in this section shall apply unless  option is exercised in the prescribed manner by the person having income from business or profession on or before the due date specified under section 139(1) of the Act for furnishing the return of income for any previous year relevant to the Assessment Year commencing on or after 01.04.2021 and such option once exercised shall apply to subsequent Assessment Years.

The Tribunal opined that considering the fact that the assessment year under consideration being the first year for the applicability of the beneficial provisions of section 115BAC of the Act, a lenient view may be taken more particularly when the assessee had complied with all other conditions of section 115BAC of the Act. Further the filing of the form 10IE is the mandatory substantive requirement but not the mode and stage of filing, which is procedural.  Once the form No. 10IE was available with the CPC before the processing the return/passing of intimation u/s. 143(1) of the Act, the requirement of law is satisfied.

Further, the Tribunal opined that the failure to file the Form 10IE on or before the due date for furnishing return u/s 139(1) of the Act  should not result in any denial of the concessional tax benefits in view of the Apex Court direction that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitations as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. 

In view of all the direction issued by the Apex Court the Tribunal directed the AO to accept the exercise of the option by the assessee for the concessional tax regime under section 115BAC of the Act for the Assessment year.

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