Belated New Tax Regime Option Denied for AY 2021-22, But Form 10-IE Sustains Future Benefits

By | October 14, 2026
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Belated New Tax Regime Option Denied for AY 2021-22, But Form 10-IE Sustains Future Benefits

Belated New Tax Regime Option Denied for AY 2021-22, But Form 10-IE Sustains Future Benefits

Issue

  1. AY 2021-22: Whether an individual who files Form 10-IE and exercises the option for the new tax regime under Section 115BAC after the due date prescribed under Section 139(1) can be validly treated under the old tax regime, and if so, whether Chapter VI-A deductions must be allowed upon processing under the old regime.
  2. AYs 2022-23 to 2023-24: Whether Form 10-IE filed for opting into the new tax regime under Section 115BAC(5) applies automatically to subsequent assessment years in terms of Section 115BAC(5)(i).

Facts

  • AY 2021-22:
    • The assessee filed an original return of income on 31.12.2021 under the old tax regime.
    • Later, on 15.03.2022, the assessee filed a revised return opting for the new tax regime and submitted Form 10-IE after the statutory due date under Section 139(1).
    • The Assessing Officer (AO) processed the return under the old tax regime but failed to allow the eligible deductions claimed under Chapter VI-A.
  • AYs 2022-23 to 2023-24:
    • The assessee had previously exercised the option for the new tax regime by filing Form 10-IE.
    • For subsequent assessment years (AYs 2022-23 to 2023-24), the tax authorities did not treat the return under the new tax regime despite the prior valid submission of Form 10-IE.

Decision

  • AY 2021-22 (Belated Option & Chapter VI-A Deductions): Matter Remanded.
    • The belated filing of Form 10-IE disentitled the assessee from opting into the new tax regime for AY 2021-22; the AO was correct in processing the return under the old tax regime.
    • However, once assessed under the old tax regime, the assessee is fully entitled to claim eligible deductions under Chapter VI-A. The matter was remanded to the AO to examine and allow those claims.
  • AYs 2022-23 to 2023-24 (Validity of Form 10-IE for Subsequent Years): In favor of Assessee.
    • Filing Form 10-IE is required to be done only once under Section 115BAC(5). Once validly exercised on or before the due date under Section 139(1) for an initial assessment year, the option automatically applies to subsequent assessment years as per Section 115BAC(5)(i).
    • The return for AY 2022-23 (and subsequent years) ought to have been processed under the New Tax Regime.

Key Takeaways

  • Strict Compliance for Initial Form 10-IE Filing: To opt into the new tax regime under Section 115BAC, Form 10-IE must strictly be submitted on or before the due date specified under Section 139(1). A belated filing will invalidate the option for that assessment year.
  • Old Regime Processing Restores Chapter VI-A Deductions: If a taxpayer’s claim for the new tax regime is rejected due to procedural delay, the AO must calculate tax liability under the old regime and allow all eligible Chapter VI-A deductions.
  • Continuity of New Tax Regime Option: A single timely exercise of Form 10-IE remains valid for subsequent assessment years under Section 115BAC(5)(i) for taxpayers with business/professional income without requiring a fresh filing every year.
IN THE ITAT AHMEDABAD BENCH ‘SMC’
Mina Manoj Agrawal
v.
Income-tax Officer
Sanjay Kumar, Judicial Member
and Narendra Prasad Sinha, Accountant Member
IT Appeal Nos. 470 to 472 (AHD) of 2026
[Assessment years 2021-22 to 2023-24]
SEPTEMBER  18, 2026
Manan Agarwal, AR for the Appellant. Rakesh Rathi, Sr. Dr. for the Respondent.
ORDER
Sanjay Kumar, Judicial Member.- This batch of three appeals has been filed by the same Assessee against separate orders dated 16.12.2025, 17.12.2025 and 17.12.2025 passed by Commissioner of Income Tax, Appeal ADDL/JCIT(A), Thiruvanantpuram [hereinafter referred to as ‘the CIT(A)’] for the Assessment Years 2021-2022, 2022-2023 and 2023-2024 respectively under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. We have taken these appeals together as these appeals are pertaining to the same Assessee and issues involved are connected through a common string, i.e., filing of Form 10-IE by the Assessee and, therefore, these are heard together and being decided together by way of this common order.
2.1 First, we would take up ITA No. 470/Ahd/2026.
ITA No. 470/Ahd/2026:
2.2 The grounds taken in the present appeal are as under:
“1 . The Ld. CIT (A) has erred in law and in fact in upholding the order of the Ld. AO and thereby dismissing the appeal of the appellant.
2. The Ld. AO has erred in law and in fact in not allowing the claim of deductions under Chapter VI-A of the Act.
3. The Appellant reserves the right to add, alter, amend, modify, delete all or any of the grounds of appeal either partially or completely.”
2.3 Ground Nos. 1 and 3 are formal in nature, which require no adjudication. The only grievance raised in Ground No. 2 by the Assessee is that he has not been granted the claim of deduction under Chapter VI-A of the Act.
3. Brief facts of the case are that the Assessee filed her return of income for Assessment Year 2021-22 on 31.12.2021 under the old tax regime. Subsequently, the return was revised by the Assessee on 15.03.2022 and the assessee opted for the new tax regime, and Form No. 10-IE in this regard was filed by the Assessee on 15.03.2022, i.e., after the due date for filing the return u/s 139(1) of the Act. The revised return was processed by the CPC under Old Tax Regime, and a demand of Rs. 3,44,120/- was generated on account of disallowance of credit of prepaid taxes and non-consideration of rates of the new tax regime. Subsequently, CPC suo motu rectified its order and enhanced the demand to Rs. 3,46,730/-. The Assessee filed a rectification application before the learned Assessing Officer (hereinafter referred to as the “AO”) to allow the credit of prepaid taxes.
3.1 The Ld. AO, in the impugned order, treated the Assessee’s claim under the old tax regime and gave the benefit of prepaid taxes, however, no benefit of deductions under Chapter VI-A was granted to her. Aggrieved by the same, the Assessee preferred an appeal before the Ld. CIT(A), which was dismissed by the Ld. CIT(A) vide impugned order dated 16.12.2025.
3.2 Against which the appellant is in appeal before us, and the short issue raised by the Assessee/appellant in the present appeal is the non-allowance of the claim of deduction under Chapter VI-A of the Act while treating the return of the Assessee under the old tax regime.
4. The Ld. AR before us submitted that in case when the AO did not agree with the option exercised by the Assessee for treatment under the new tax regime, it was still incumbent upon the AO to grant Chapter VI-A deduction to the Assessee.
5. The Ld. Sr. DR, on the other hand, supported the orders of the AO and the Ld. CIT(A).
6. We have heard the parties and perused the materials on record. Since the option for the new tax regime for Assessment Year 2021-22 was exercised by the Assessee only with its revised return of income u/s 139(5) of the Act on 15.03.2022, i.e., much after the return dated 31.12.2021 u/s 139(1) of the Act was filed by the Assessee. The belated exercise of option for the new tax regime for a particular Assessment Year disentitles the Assessee’s claim for the new tax regime in terms of Section 115BAC(5) of the Act, and hence, no fault can be found in the action of the AO in treating the return filed by the Assessee under the old tax regime.
7. Having said so, we are of the considered opinion that under the old tax regime, the Assessee is entitled to deductions under Chapter VI-A of the Act. The Assessee had opted for the new tax regime belatedly, which option was not allowed by the authorities in terms of Section 115BAC(5) of the Act and the return filed by the assessee was rightly treated as filed under Old Tax Regime by the authorities. Once the return was treated under Old Tax Regime, the assessee becomes entitled to claim eligible deduction under the provisions of Chapter VI-A of the Act. Hence, Ground No. 2 of the present appeal is, therefore, allowed, and the case of the Assessee is remitted to the file of the Ld. AO for examining and pursuantly allowing the claim of deductions of the Assessee under Chapter VI-A of the Act, if otherwise found eligible to claim these deductions in accordance with law.
8. In the result, the appeal of the Assessee is allowed for statistical purposes.
9. Now, we would take up ITA No. 471/Ahd/2026.
ITA No. 471/Ahd/2026:
10. In this appeal, the Assessee has raised the following grounds:
“1 . The Ld. CIT (A) has erred in law and in fact in upholding the order of the Ld. AO and thereby dismissing the appeal of the appellant.
2. The Ld. AO erred in law and in fact in not considering the Form 10-IE filed by the appellant for the previous assessment year.
3. The Ld. AO erred in law and in fact in processing the ITR of the appellant as per the old tax regime and thereby denying the benefit of Section 115BAC of the Act.
4. The Appellant reserves the right to add, alter, amend, modify, delete all or any of the grounds of appeal either partially or completely.”
11. Brief facts of the case are that the present appeal relates to Assessment Year 2022-23, and in this Assessment Year, while filing the return of income, the Assessee did not file Form No. 10-IE along with the return on the pretext that the same was filed by her on 15.03.2022 in the preceding assessment year itself. The CPC processed the return under the old tax regime and raised a demand of Rs. 23,170/-. The sole grievance of assessee in the present appeal is that as the assessee had filed option for New Tax Regime by filling its option in Form 10-IE on 15.03.2022 itself, the return of assessee ought to have been treated under New Tax Regime in terms of Section 115BAC(5) of the Act. The Assessee filed an online rectification request, which was again processed with the same amount of demand.
11.1 Aggrieved thereby, the Assessee preferred an appeal before the Ld. CIT(A).
12. The Ld. CIT(A) held that Form 10-IE had not been filed by the Assessee for the present assessment year 2022-23 before the due date specified u/s 139(1) of the Act, its return was rightly treated under Old Tax Regime. Ld. CIT(A) accordingly held that the order u/s 154 of the Act to be in order, and computation of income in the old tax regime was accordingly upheld by the Ld. CIT(A). Ld. CIT(A) did not considered filing of Form 10-IE by the assessee relevant for exercise of option for the present assessment year 202223.
13. We have heard the parties and perused the material on record.
14. The Ld. AR submitted that Form 10-IE was filed by the Assessee on 15.03.2022 itself along with the revised return u/s 139(5) of the Act for Assessment Year 2021-22. He submits that in the scheme of the Act, Form 10-IE is to be filed only once, and once such option is exercised, the same will continue to apply to subsequent years also, therefore, there was no need or obligation on the part of the Assessee to furnish Form 10-IE again, which was otherwise filed by him on 15.03.2022, i.e., on a date prior to the filing of the return u/s 139(1) of the Act for Assessment Year 2022-23.
15. Per contra, the Ld. Sr. DR supported the order passed by the Ld. CIT(A).
16. We find force in the submissions made by the Ld. AR for the Assessee. Section 115BAC(5) of the Act reads as under:
“(5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person,—
(i) having income from business or profession, on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, and such option once exercised shall apply to subsequent assessment years;
(ii) having income other than the income referred to in clause (i), alongwith the return of income to be furnished under sub-section (1) of section 139 for a previous year relevant to the assessment year:
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.”
17. In the scheme of the Act, filing Form 10-IE for opting for the new tax regime is required to be done only once in terms of Section 115BAC(5), and once such option is exercised by the Assessee, the same applies to subsequent Assessment Years also in terms of Section 115BAC(5)(i) of the Act. The only condition for a valid filing of Form 10-IE is that it should have been filed on or before the due date of filing the return u/s 139(1) of the Act for the relevant assessment year. The assessee can exercise this option on any date on or before 01.04.2021. If the date of exercise of option falls before due date of filing return u/s 139(1) of the Act, the option so exercised will be valid for the said assessment year, otherwise the option will not be valid for the relevant assessment year in which the assessee has exercised its option. The case of assessee for assessment year 2021-22 in ITA No. 470/Ahd/2026 was exactly falling in this category. Therefore, we have upheld the treatment of assessee’s return under Old Tax Regime by the authorities below. The impugned order passed by ld. CIT(A) itself records that Form 10-IE was filed by the Assessee in the present case on 15.03.2022 and, therefore, the filing of Form 10-IE on 15.03.2022 by the Assessee is not disputed in the present case. The Ld. CIT(A) has disallowed the claim of the new tax regime only on the count that it was not filed before the due date specified u/s 139(1) of the Act for Assessment Year 2022-23. Such a finding of the Ld. CIT(A) is not in consonance with the provisions of Section 115BAC. In our considered opinion, the option exercised by the Assessee by filing of Form 10-IE will remain valid for subsequent years also in terms of Section 115BAC(5)(i) of the Act. We, therefore, are of the considered view that the return filed by the assessee for assessment year 202223 ought to have been treated under New Tax Regime in terms of provisions of Section 115 BAC(5) of the Act. Accordingly, the appeal succeeds on this count, and the matter is remanded back to the file of the Ld. AO for computing the income of the Assessee under the new tax regime for the present Assessment Year 2022-23.
18. In the result, the appeal of the Assessee is allowed for statistical purposes in terms of the aforesaid directions.
19. Now, we would take up ITA No. 472/Ahd/2026:
ITA No. 472/Ahd/2026:
20. Both the parties have agreed that the issue involved in the present case, i.e., ITA No. 472/Ahd/2026 for the Assessment Year 2023-24 is identical to that of ITA No. 471/Ahd/2026 for the Assessment Year 2022-23 and, therefore, the result of ITA No. 471/Ahd/2026 will apply mutatis mutandis to the present case, i.e., ITA No. 472/Ahd/2026.
21. In the result, the present appeal is allowed for statistical purposes in terms of directions given by us at Para No. 17 in ITA No. 471/Ahd/2026.
22. In conclusion, all the present captioned appeals filed by the Assessee are allowed for statistical purposes in terms of the aforesaid directions.