Delay in Filing Form 10-IC Condoned as Bona Fide Intent Was Evident from Simultaneous Filing with Return.

Issue

Whether a minor delay in filing Form 10-IC to opt for the concessional tax regime under section $115 B AA$ of the Income-tax Act, 1961, should be condoned, especially when the assessee’s intent was clear and the delay was attributed to a genuine oversight.

Facts

For the assessment year 2021-22, the assessee-company decided to be taxed under the concessional regime of section $115 B AA$ .
It filed its income tax return belatedly on March 30, 2022, and in that return, it computed and offered its income to tax as per the provisions of section $115 B AA$ .
Crucially, on the very same day, it also uploaded Form 10-IC, which is the required declaration to opt for this scheme.
However, due to a 15-day delay in filing Form 10-IC beyond its due date, the tax authorities denied the benefit of section $115 B AA$ and instead assessed the company under the MAT provisions of section $115 J B$ .
The company’s application to the authorities for condonation of this minor delay under section $119 (2) (b)$ was rejected. The rejection was based on the grounds that certain conditions of a CBDT circular were not met and the reason provided (an oversight by their Chartered Accountant) was not considered genuine.

Decision

The court ruled decisively in favour of the assessee.

The order rejecting the condonation of delay was set aside.
The court held that filing the income tax return within the original due date under section $139 (1)$ is not a mandatory pre-condition to be eligible for the benefit of section $115 B AA$ .
It observed that the simultaneous filing of the tax return (calculated under section $115 B AA$ ) and Form 10-IC was clear evidence of the assessee’s bona fide intent to opt for the new tax regime.
The court found no reason to disbelieve the assessee’s submission that the brief delay was due to a genuine oversight on the part of their Chartered Accountant.
Consequently, the 15-day delay in filing Form 10-IC was condoned, allowing the assessee to be taxed under section $115 B AA$ .

Key Takeaways

Substance Over Form: The judiciary often prioritizes the genuine intent of a taxpayer over minor procedural lapses. If the intention is clear, procedural delays can be excused to avoid undue hardship.
Bona Fide Intent is Crucial: The act of filing the tax return computed under the desired section, along with the required form on the same day, is powerful evidence of a taxpayer’s genuine intention.
Belated Return is Not a Bar: This ruling clarifies that a company can still claim the benefit of section $115 B AA$ even if it has filed a belated return, provided the option in Form 10-IC is exercised.
Human Error is a Valid Reason: A reasonable explanation, such as an oversight by a tax professional, can be accepted as a “genuine reason” for condoning minor delays in compliance.

HIGH COURT OF BOMBAY

Gem Nuts & produce Exports Co. (P.) Ltd

Principal Commissioner of Income-tax-1^*

B.P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.

WRIT PETITION (L) NO. 11406 of 2025

AUGUST 25, 2025

Dharan V. Gandhi and Aanchal Vyas, Advs. for the Petitioner. Ms. Sushma Nagaraj and Krithika Anand, Advs. for the Respondent.

ORDER

1. By this Petition, the Petitioner is, inter alia, challenging the Order passed by Respondent No.1 dated 12.02.2024 rejecting the application filed by the Petitioner for seeking condonation of delay of 15 days in filing Form 10IC under Section 119(2)(b) of the Income-tax Act, 1961 (‘the Act’) for the AY 2021-22.

2. For the AY 2021-22, the time limits to file return of income were extended from time to time because of the COVID pandemic. Vide Circular No. 1/2022 dated 11 January 2022, the Central Board of Direct Taxes (‘CBDT’) had extended the time limit to file audit report under section 44AB of the Act to 15.02.2022 and the time limit to file return of income to 15.03.2022. Further, the time limit to file belated return was extended to 31.03.2022 vide Circular No. 17/2019 dated 09.09.2021.

3. For the AY 2021-22, the Petitioner had filed its return of income belatedly on 30.03.2022 disclosing a total income of Rs. 6,710/-and paid taxes of Rs.2,708/-. In the said return, the Petitioner had offered its income to tax under Section 115BAA of the Act. Since, the Petitioner had opted for Section 115BAA of the Act, therefore, it was exempt from the application from Section 115JB of the Act. Simultaneously, the Petitioner also uploaded Form No. 10-IC on 30.03.2022, as required under Section 115BAA of the Act.

4. The return of the Petitioner was processed under Section 143(1) of the Act by Respondent No.3 vide intimation dated 13.11.2022. In the said intimation, the Petitioner was denied the benefits of Section 115BAA of the Act and was assessed for a deemed total income of Rs.2,64,73,734/- under section 115JB of the Act and tax was, thus, arrived at Rs.44,18,995/- which was at 17.472 % of the deemed total income. Further, after levying interest under Section 234A, 234B and 234C and after allowing credit of prepaid taxes of Rs.2,708/- a total tax demand of Rs.54,35,730/- was raised.

5. The Petitioner subsequently was informed that the reason for such adjustment was because of delay in filing of Form 10IC. It was advised to get such delay condoned by filing an application with Respondent No. 1. In fact, the Central Board of Direct Taxes had issued Circular No.19/2023 dated 23.10.2023 granting powers to field authorities to condone delay in filing of Form 10IC on fulfillment of certain conditions. As a result, the Petitioner filed an application with Respondent No. 1 for condonation of delay in filing of Form 10IC vide letter dated 29.12.2023. It was submitted that such delay was due to oversight of the Chartered Accountant. A request was accordingly made to condone the delay of mere 15 days in uploading Form 10IC.

6. However, Respondent No.1 rejected the application for condonation of delay in filing the return of income vide his order dated 12.02.2024. The rejection was on the ground that two conditions of Circular No.19/2023 (supra) were not fulfilled and that the Petitioner has not provided a genuine reason. It is the said Order which has been challenged in the present Petition.

7. Mr. Gandhi, the learned Counsel for the Petitioner, submitted that the delay in filing of Form 10IC is merely of 15 days. The said delay has occurred purely due to oversight of the Chartered Accountant. It was submitted that audit of the books of accounts was completed by 10.11.2021. It was submitted that the Petitioner is a dormant company and does not have funds for business operations. Form 10IC was filed along with the return of income i.e., on 30.03.2022. He also submitted that the filing of Form 10IC is a procedural requirement. In respect of non-compliance of conditions of Circular 19 of 2023, he submitted that there are three conditions and out of the three conditions, two conditions are complied with. The only condition which is not complied with is that the return of income was not filed within the due date prescribed under Section 139(1) of the Act. In this regard, he submitted that firstly, to claim benefits under section 115BAA of the Act, there is no requirement that the return of income has to be filed within the due date prescribed under Section 139(1) of the Act. He also submitted that in any event, even if the case of the Petitioner does not fall in the automatic route prescribed in the said circular, then even independently, Respondent No. 1 can condone the delay, dehors the Circular. Lastly, he submitted that, the year under consideration was affected due to the COVID pandemic and a liberal view should be taken. To support his contentions, he relied upon the decision of this Court in Neumec Builders (P.) Ltd. v. CBDT /(Bombay), Mirae Asset Venture Investments india (P.) Ltd. v. Pr. CIT [2025] 405 (Bombay) and Shree Jain Swetamber Murtipujak Tapagachha Sangh v. CIT (Exemptions) [2024] 161 482 ITR 38 (Bombay).

8. Ms. Nagaraj, the learned Counsel for the Respondent, supported the Impugned Order. She submitted that the conditions of Circular No.19/2023 are not fulfilled and therefore, delay cannot be condoned. She further submitted that the Petitioner has not provided any evidence to justify the reasons for delay in filing of Form 10IC, and that no affidavit of the Chartered Accountant was filed in relation to the reasons for the delay. Accordingly, she submitted that the Impugned Order of Respondent No. 1 should be upheld.

9. We have considered the rival submissions and the material on record. It is not in dispute that the delay is of 15 days and that Form 10IC was filed along with the return of income. Firstly, we shall deal with the violation of the conditions of Circular No.19/2023 (supra). The said Circular stipulates three conditions. They are:

(a)

The return of income for the relevant assessment year has been filed on or before the due date specified under section 139(1) of the Act;

(b)

The assessee company has opted for taxation under section 115BAA of the Act in item (e) of “Filing Status” in “Part A-GEN” of the Form of Return of Income ITR-6; and

(c)

Form No. 10-IC is filed electronically on or before 31-1-2024 or 3 months from the end of the month in which this Circular is issued, whichever is later.

10. Respondent No. 1 in his order has mentioned that two conditions i.e., condition of filing return of income and opting for taxation under section 115BAA of the Act, in the return of income are not fulfilled. Insofar as the 2^nd condition is concerned, we find that the Petitioner has duly opted for taxation under section 115BAA of the Act in item (e) of “Filing Status” in “Part A-GEN” of the Form of Return of Income ITR-6. The same is evident from page 55 of the paper book. Thus, to this extent, the finding of Respondent No.1 is incorrect. As far as the 1^st condition is concerned, it is true that the Petitioner had not filed its return of income on or before the due date specified under section 139(1) of the Act. However, as rightly pointed out by Mr. Gandhi, there is no such requirement under Section 115BAA of the Act to claim benefit under the said section. In other words, if Form 10IC is filed within the due date specified under section 139(1) of the Act but if the return of income is filed beyond such due date specified under section 139(1) of the Act, even then an assessee would be eligible to claim benefit under section 115BAA of the Act. Thus, filing of return of income within the due date specified under section 139(1) of the Act is not a condition precedent for claiming benefit under section 115BAA of the Act. In any event, even if the conditions of Circular No.19/2023 (supra) are not fulfilled, then the Petitioner may not be eligible for the straightforward benefit under the said circular. However, that does not mean, that Respondent No.1 otherwise does not possess power to condone delay under section 119(2)(b) of the Act dehors such Circular. Thus, the first ground for rejection of application for condonation of delay cannot be countenanced.

11. In this regard, reference can be made to the decision of this Court in Neumec Builders (P.) Ltd. (supra). In the said judgment, this Court was dealing with a case of delay in filing of Form 10IC by 9 days. In this case as well, the return of income was filed belatedly i.e., beyond the due date specified under section 139(1) of the Act. Considering the cause shown by the Petitioner, the Court condoned the delay in filing of Form 10IC.

12. The second reason for rejection of the application that no genuine reasons have been provided by the Petitioner, also cannot be accepted. There is no reason for disbelieving the Petitioner that the delay of 15 days was on account of oversight of the Chartered Accountant. The fact that books of accounts were finalised by 10.11.2021 and that the return of income and Form 10IC were filed simultaneously shows the bonafide of the Petitioner. Further, considering the length of delay, which is of hardly 15 days, we are inclined to take a lenient view in the matter. We are supported by the decision of this Court in Shree Jain Swetamber Murtipujak Tapagachha Sangh (supra), wherein this Court condoned the delay in filing Form 10 which occurred on account of inadvertence and oversight of the Chartered Accountant.

13. In light of the above discussion, we quash and set aside the impugned order passed under Section 119(2)(b) of the Act dated 11.02.2025 and condone the delay of 15 days in filing of Form 10IC for AY 2021-22.

14. Since the delay has been condoned, the respondent shall once again process the petitioner’s returns in accordance with law by giving effect to this order on the basis that form 10IC has been filed within time.

15. Accordingly, Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.

16. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.