Benefit of New Tax Regime for AY 2023-24 allowed despite one-day delay in previous Form 10-IE

ORDER

Sanjay Garg, Judicial Member. – The present appeal has been preferred by the assessee against the order of the office of the Learned Commissioner of Income Tax Appeal, Addl/JCIT A-4, Chennai, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 19/ 06/ 2025 for the Assessment Year (AY) 202324.

2. The assessee, in this appeal, has raised the following grounds of appeal:

“1. On the facts and circumstances of the case and in law, the Id. CTT(A) has grossly erred in confirming the Action of the Ld. AO erred in determining the income tax payable under section 115JC without appreciating that I had duly Opted to pay Tax under section 115BAC.

2. It is humbly prayed that the Ld. AO may please be directed to determine my sax payable for the year under reference u/s 115BAC and relief be granted.

1, the appellant Crave leave to add, alter, amend, amplify or delete any of the above mentioned Ground of Appeal on or before or at the Time of hearing.”

2.1 The brief facts of the case are that the assessee an individual, filed her return of income for AY 2023-24 on 28/07/2023 declaring an income of Rs.15,58,470/ – and opted for taxation under the new regime u/ s.115BAC of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). Subsequently, the return was processed u/s.143(1) of the Act. However, the CPC computed the tax under the old regime.

3. Aggrieved by the said order, the assessee filed rectification application u/s.154 of the Act, however, the AO/CPC did not accept the rectification request and computed the tax under the old regime.

4. Being aggrieved by the said order of the CPC, the assessee preferred the appeal before the Ld. CIT(A). It was pleaded before the CIT(A) that the assessee had filed the return for the assessment year under consideration, i.e. AY 2023-24 on 28/07/2023 and self-assessed tax was computed under the new tax regime u/s.115BAC of the Act. It was also pleaded that in the return of income, the assessee had clearly mentioned that she had opted to pay the tax under the new regime u/s.115BAC of the Act and had duly filed the Form 10IE under Acknowledgement No.794607200081122 in AY 2022-23. Copy of the letter was also furnished before the Ld. CIT(A). It was also submitted before the Ld. CIT(A) that the assessee had not opted out of the said section in the year under consideration and specifically mentioned that she may be taxed u/ s.115BAC of the Act. That the CPC, however, while processing the return u/s.143(1) of the Act, has taxed the assessee under the old regime u/ s.115JC of the Act.

4.1. The Ld. CIT(A) after considering the submissions of the assessee and the material on record noted that the assessee had filed Form 10IE for AY 202223 on 08/11/2022, whereas, the last date for filing Form 10IE was extended upto 07/11/2022. Since the filing of the Form 10IE was delayed by one day, therefore, the CPC processed the return of the assessee for AY 2022-23 under the old regime. The Ld. CIT(A) referring to the provisions of Section 115BAC of the Act, observed that in order to get the benefit of new tax regime u/ s.115BAC of the Act, the assessee was required to file the Form 10IE within the due date specified u/s.139(1) of the Act for filing of return of income, beginning from 2021-22 and the option, once exercised would be applicable for the subsequent assessment years unless it is revoked. He further observed that the assessee had submitted Form 10IE for AY 2022-23 dated 08/11/2022, whereas, the due date for filing the return of income u/s.139(1) of the Act was 31/10/2022, which was extended to 07/11/2022 for AY 2022-23. That since Form 10IE was not filed within the due date for AY 2022-23 and the same was not filed for AY 2023-24 as this Form could be filled only once and which was filed for AY 2022-23, which was after the due date, hence the AO/ CPC had rightly denied the option of taxation under the new regime u/ s.115BAC of the Act exercised by the assessee for AY 2023-24 and rightly processed the same under the old regime. He, therefore, dismissed the appeal of the assessee.

5. Being aggrieved by the said order of the Ld. CIT(A), the assessee has come in appeal before us.

6. We have heard the rival contentions of the Ld. Representatives of the parties and gone through the record. Before proceeding further, it will be relevant here to reproduce the relevant provisions of sub-section(5) of Section 115BAC of the Act.

(5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person,—

Provided that the option under clause (i), once exercised for any previous year can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section, except where such person ceases to have any income from business or profession in which case, option under clause (ii) shall be available.

Provided further that the provisions of this sub-section shall not apply for any previous year relevant to the assessment year beginning on or after the 1 st day of April, 2024.

6.1. The second proviso reproduced hereinabove has been inserted by Finance Act, 2023, w.e.f. 1.4.2024.

7. A perusal of the aforesaid provisions of section 115BAC of the Act would reveal that the statute had given a right to the assessees to opt for taxation under the new regime u/ s.115BAC of the Act and this option could be exercised on or after the first day of April-2021 and such option once exercised would apply to subsequent assessment years. Further, the said right to opt under the new regime has been withdrawn for the assessment year beginning on or after the first day of April-2024. The assessment year under consideration is AY 2023-24. The assessee had already exercised to get taxed under the new regime by way of filing a valid Form 10IE on 08/11/2022. Though, the said option was exercised for AY 2022-23 and was to be applicable and to continue for subsequent years also. However, the CPC did not grant the benefit to the assessee for opting for taxation under the new regime on the ground that the Form was delayed by one day so far as the AY 2022-23 was concerned. Here, the peculiar fact to be noted is that the assessee had duly exercised his option to be taxed under the new regime and the same has never been withdrawn by the assessee. He was denied the benefit of the taxation under the new regime because of delayed filing of Form 10IE for AY 2022-23. However, the said Form was well within time for AY 2023-24. There was no option to the assessee to file a fresh Form for AY 2023-24 as the option to file the Form 10IE, as noted by the CIT(A) also, could be exercised once by the assessee and that option stood exercised by the assessee on 08/11/2022. The assessee duly mentioned in the return of income for AY 2023-24 that Form 10IE was already on record and also Acknowledgement number and date of filing of the said Form and it has been duly intimated to the authorities that she has not withdrawn the exercised option of taxation under the new regime and that return may be processed and she may be taxed as per the provisions of section 115BAC of the Act. A perusal of above said provisions would reveal that the assessee had right to exercise the said option of taxation under new regime upto the AY 2023-24. Therefore, the lower authorities are not justified in not allowing the assessee to avail the benefit of the taxation under the new regime. It has been, time and again, held that the income-tax authorities are not supposed to punish the litigations for their bonafide mistakes, rather they should assist the assessees to pay their due taxes and also to claim the benefit of exemptions/deductions/tax relief, if any, available to them under the statute. The Government had rolled out the new tax regime for the benefit of the citizens and the tax-authorities are supposed to help the citizens to avail such benefits instead of standing in the way as an obstacle in implementation of assessee-friendly government schemes. It has also been held, time and again, that the Department should charge only the legitimate taxes from the assessees. In this case, the assessee had duly availed the benefit of new tax regime and there was no reason for the lower authorities to deny the same.

8. In view of our above observations, the AO is directed to tax the assessee as per the provisions of section 115BAC of the Act.

9. In the result, the appeal of the assessee stands allowed.