Belated Form 10-IE Does Not Invalidate Continuing Section 115BAC Option: ITAT Pune

Seema Kulkarni Vs ITO (ITAT Pune)

The appeal before the ITAT Pune arose from the order of the Additional/Joint Commissioner of Income Tax (Appeals), Panaji, for Assessment Year (AY) 2023-24. The assessee, an individual deriving income mainly from profession, filed her return of income on 26.06.2023 declaring income under the new tax regime under Section 115BAC of the Income-tax Act, 1961. While processing the return under Section 143(1), the Central Processing Centre (CPC) denied the benefit of Section 115BAC and raised a tax demand on the ground that Form 10IE for AY 2022-23 had been filed after the prescribed due date.

Findings of the First Appellate Authority

The Additional/JCIT(A) upheld the CPC’s action. It held that Section 115BAC(5) requires the option to be exercised before the due date under Section 139(1), and the requirement was mandatory. According to the appellate authority, filing Form 10IE beyond the prescribed due date disentitled the assessee from the concessional tax regime. Since the assessee was held to be ineligible for the new regime, the computation of tax under the normal provisions and the demand raised by the CPC were considered legally sustainable.

Grounds Before the Tribunal

Before the Tribunal, the assessee contended that once the option under Section 115BAC had been exercised, it continued to apply to subsequent assessment years unless specifically withdrawn under Section 115BAC(5)(i). It was further argued that, since the return for AY 2023-24 had been filed within the due date under Section 139(1), there was no requirement to file a fresh Form 10IE for the year. The assessee relied upon decisions of the Ahmedabad Bench in Arun Gopilal Samnani and the Jodhpur Bench in Sanju Soni, which had decided similar issues in favour of taxpayers. The Revenue supported the order of the first appellate authority.

Tribunal’s Analysis of Section 115BAC

The Tribunal observed that the facts were undisputed. The assessee had exercised the option for the new tax regime in AY 2022-23 by filing Form 10IE, although the form had been filed after the due date. For AY 2023-24, the return of income claiming the benefit of Section 115BAC had been filed within the prescribed due date. The Tribunal examined Section 115BAC, particularly sub-section (5), which provides that, for persons having income from business or profession, the option once exercised shall apply to subsequent assessment years unless withdrawn.

Reliance on Coordinate Bench Decisions

The Tribunal found merit in the assessee’s submissions and relied upon the Ahmedabad Bench decision in Arun Gopilal Samnani. That decision held that the first proviso to Section 115BAC invalidates the option only when the conditions prescribed in sub-section (2) are violated. It further held that failure to file Form 10IE within the prescribed due date under sub-section (5) does not invalidate the exercise of the option and that the requirement of filing Form 10IE is directory. Consequently, where the option had already been exercised in an earlier year, there was no requirement to file a fresh Form 10IE in the succeeding year unless the earlier option had become invalid under the statutory conditions.

The Tribunal also referred to the Jodhpur Bench decision in Sanju Soni, which followed the Ahmedabad Bench and held that denial of the new tax regime merely because the return and Form 10IE for the preceding year had been filed after the due date was not in accordance with law. The Jodhpur Bench similarly concluded that the option once exercised continues unless invalidated for the reasons specified under Section 115BAC or withdrawn in accordance with law.

Tribunal’s Decision

Following the coordinate bench decisions and noting that no contrary material had been produced by the Revenue, the Tribunal held that the Assessing Officer/CPC ought to have allowed the assessee’s claim for tax computation under Section 115BAC. The Tribunal set aside the order of the Additional/JCIT(A), directed the AO/CPC to modify the assessment accordingly, allowed the grounds raised by the assessee, and consequently allowed the appeal.

FULL TEXT OF THE ORDER OF ITAT PUNE

The appeal filed by the assessee is directed against the order dated 19.11.2025 of the Ld. Additional/Joint Commissioner of Income Tax (Appeals), Panaji [“Addl./JCIT(A)”] pertaining to Assessment Year (“AY”) 2023-24.

2. Briefly stated, the facts of the case are that the assessee is an individual and deriving income mainly from profession. For AY 2023-24, the assessee filed her return of income on 26.06.2023 declaring income of Rs.21,05,090/- claiming new tax regime u/s 115BAC of the Income Tax Act, 1961 (the “Act”). The return was processed by the Ld. Assessing Officer/Central Processing Center (“AO/CPC”) on 10.01.2024. While processing the return, the Ld. AO/CPC did not apply section 115BAC of the Act thereby raising a demand of Rs.85,850/-. The benefit of new tax regime u/s 115BAC has been denied by the Ld. AO/CPC on the ground that Form 10IE for AY 2022-23 was filed after due date by the assessee i.e. on 06.08.2022.

3. Aggrieved, the assessee filed an appeal before the Ld. Addl./JCIT(A) who confirmed the action of the Ld. AO/CPC by observing as under:

“7.1 Ground no. 01 raised by the appellant is related with the issue of rejection of option under section 115BACof IT Act which is adjudicated on the basis of facts of the case, merit and impugned assessment order as under :

Upon careful perusal of impugned assessment order and information available or record it is seen thatthe appellant argued that since Form 10-IE was submitted in an earlier year and business income continued, she should be deemed to have opted for the alternative regime. However, this argument ignores the express statutory condition of exercising the option before the due date u/s 139(1) of IT Act.

The language of Section 115BAC(5) is mandatory and not directory. The legislature has consciously linked the exercise of option to the due date of return filing to ensure certainty in revenue collection and computational uniformity. Where the return is filed belatedly, the assessee is automatically excluded from the concessional regime.

This position has been consistently upheld in judicial pronouncements:

• • CIT v. Shelly Products (2003) 261 ITR 367 (SC): Concessions or exemptions under fiscal statutes must be claimed strictly in the manner prescribed.
  • Goetze (India) Ltd. v. CIT (2006) 284 ITR 323 (SC): Any claim not made in the valid return cannot be entertained later.
  • ITO v. R. L. Rajgharia [2018] 169 ITD 127 (Kol. Trib.): Concessional rate benefits under optional regimes require strict adherence to the procedural timeline under Section 139(1).

Therefore, the CPC was justified in rejecting the option under Section 115BAC since the return was not filed within the due date. Accordingly, ground no.01 raised by the appellant being devoid of merit is dismissed herewith.

7.2 Ground no.02raised by the appellant is related with the issue of computation of tax under normal regime which is adjudicated on the basis of facts of the case, merit and impugned assessment order as under:

Upon careful perusal of impugned assessment order and information available or record it is seen that this ground is consequential to Ground No. 1. Since the appellant is ineligible for the new tax regime, computation under the normal rate schedule is proper.

The CPC’s processing under Section 143(1) is a mechanical and statutory function where data validation is performed through system-based parameters. The CPC system automatically disallows any concessional option when the filing is belated. Such action is fully aligned with Section 143(1)(a)(ii), which permits adjustment of “any incorrect claim apparent from any information in the return.”

The following case laws relied upon by this appellate authority affirm the principle of strict compliance with procedural timelines for concessional regimes:

• • Union of India v. Dharmendra Textile Processors (2008) 306 ITR 277 (SC): Tax provisions prescribing conditions for benefits must be strictly complied with: leniency is impermissible.
  • Keshavji Ravji & Co. v. CIT (1990) 183 ITR 1 (SC): Equity has no place in taxation; benefits flow only from express statutory language.
  • CBDT FAQ on New Tax Regime (2020-21): Belated returns filed under Section 139(4) cannot opt for the new regime.

Therefore, the CPC’s computation of tax under normal provisions is legally sustainable, and the demand raised is in accordance with law. Accordingly, ground no.02 raised by the appellant being devoid of merit is dismissed herewith.”

4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :

“1. On the basis of facts and in the circumstances of the case and as per law, the lower authorities have erred in denying the benefit of tax determination u/s 115BAC (New Scheme of Taxation) of the Income Act, 1961 (the Act) even when the benefit of New Scheme of Taxation is continued in terms of sub-sec (5)(i) of sec 115BAC, till it is withdrawn by the assessee as per proviso to sub-sec (5) of sec 115BAC of the Act.

2. Without prejudice to Ground No 1 above, in the facts and circumstances of the case as well as in law, the rejection of New Scheme of Taxation CPC, Bengaluru is beyond its scope provided u/s 143(1) of the Act.

3. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal.”

5. The Ld. AR submitted that Form 10IE was filed belatedly by the assessee for AY 2022-23 on 06.08.2022 in order to claim new tax regime u/s 115BAC of the Act. Even though the return of income for the year under appeal is e-filed on 26.06.2023 i.e. before the due date for filing of return u/s 139(1) of the Act for AY 2023-24, the benefit of new tax regime has been denied to the assessee as new Form 10IE was not filed by her.

6. Referring to the provision of section 115BAC (5)(i) of the Act, the Ld. AR submitted that there is no need for the assessee to file new form for AY 2023-24 as the old form which was earlier filed for AY 2022-23 shall continue unless it is withdrawn by the assessee. In support of his above contention, the Ld. AR relied on the decision of the Ahmedabad Bench of the Tribunal in the case of Arun Gopilal Samnani Vs. ITO (2025) 236 TTJ 258 (Ahd.) and the Jodhpur Tribunal in the case of Sanju Soni Vs. ITO (2025) 238 TTJ 578 (Jodhpur) wherein under the similar set of facts as that of the assessee in the present case, the Tribunal has allowed the assessee, option of paying taxes as per the new tax regime u/s 115BAC of the Act. He therefore submitted that the benefit of new tax regime u/s 115BAC of the Act should be allowed to the assessee.

7. The Ld. DR, on the other hand, supported the order of the Ld. CIT(A)/NFAC.

8. We have heard the Ld. Representatives of the parties and perused the material on record as well paper book filed by the Ld. AR on behalf of the assessee. We have also perused the decisions cited by the Ld. AR. The facts of the case are not in dispute. The assessee filed her return of income for the relevant AY 2023-24 on 26.06.2023 claiming the option of paying taxes under new tax regime as per the provisions of section 115BAC of the Act. For AY 2022-23, the assessee had exercised the option of paying taxes as per new tax regime u/s 115BAC of the Act and accordingly filed Form 10IE for the said AY 2022-23 on 06.08.2022 in order to claim the applicability of section 115BAC of the Act. Admittedly, Form 10IE for AY 2022-23 was filed after the expiry of the due date. The benefit of new tax regime has been denied to the assessee on the ground that Form 10IE for AY 2022-23 was belatedly filed and new form is not submitted for AY 2023-24. It is the submission of the Ld. Counsel for the assessee that once the assessee is exercised the option by filing Form 10IE for AY 2022­23 it shall continue for AY 2023-24 unless it is withdrawn by the assessee himself as per the provisions of section 115BAC(5)(i) of the Act.

9. Section 115BAC of the Act reads as under :

“Tax on income of individuals, Hindu undivided family and others

(1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, the income-tax payable in respect of the total income of a person, being an individual or a Hindu undivided family, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2021 shall, at the option of such person, be computed at the rate of tax given in the following Table, if the conditions contained in sub­section (2) are satisfied, namely:-

TABLE

Provided that where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and other provisions of this Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year:

Provided further that where the option is exercised under clause (1) of sub­section (5), in the event of failure to satisfy the conditions contained in sub­section (2), it shall become invalid for subsequent assessment years also and (2) Not relevant. (3) Not relevant (4) Not relevant. (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 (1), 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 (1), 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:”

10. We find some force in the arguments advanced by the Ld. AR that since the assessee has opted for new tax regime u/s 115BAC of the Act by filing Form 10IE for AY 2022-23, it shall continue for AY 2023-24 as the assessee has not withdrawn the same and the return of income for the relevant AY 2023-24 has been filed within the prescribed due date, the assessee claim is correct. In our considered view, the Ld. AO/CPC and the Ld. Addl./JCIT(A) was not justified in denying the claim of the assessee.

11. We find that the Ahmedabad Bench of the Tribunal in the case of Arun Gopilal Samnani (supra) on the impugned issue involving the similar set of facts has held as under :

“12. As is evident from the bare perusal of the above, individuals and HUF have been given option for paying taxes at the rates prescribed in section 115BAC of the Act w.e.f. 1st April, 2021 subject to the condition that their income is computed as prescribed under sub-section (2) ,which says that the income is to be computed without claiming any exemption or deductions, loss or depreciation as specified in the said sub-section. The first proviso to section 115BAC states that the option exercised by the assessee shall be invalid, if the assessee fails to satisfy the conditions mentioned in sub­section (2).That is the only prescription in law for treating the option to have been invalidly exercised. Sub-section (5) prescribes that for claiming the benefit of option, the assessee having income from business or profession needs to file prescribed form by the due date prescribed in the said section initially and such option exercised would thereafter be applicable for subsequent years. The prescribed form as per the Rule is form no.10-IE. The assessees in the present case have returned income from business and profession which is reflected in the intimation made u/s 143(1) of the Act.

12.1 As is evident from the literal reading of the section itself, the assessee‘s option is treated as invalid only if it does not fulfil the conditions prescribed under sub-section (2) of section 115BAC of the Act, which is of computing its income without claiming any exemption, deduction, loss or depreciation specified in sub-section (2). The failure to file Form No.10-IE within the prescribed due date as per sub-section (5) does not invalidate the assessee‘s claim of the option. The mandate of filing the Form No.10-IE is only directory. What invalidates the exercise of option has been clearly mentioned in the first proviso to section 115BAC of the Act.

12.2 Therefore, in the facts of the present case, in the preceding year when the assessee had filed Form No.10-IE while exercising its option of paying taxes as per the new regime, the option was not invalidated as per sub section (2) to section 115BAC of the Act. The option though was denied to the assessee for the reason that the Form No.10-IE was not filed within the prescribed time, clearly the assessee‘s exercise of option in the preceding year was not invalid. That therefore, when the assessee again opted paying taxes under the new regime in the impugned year, there was no requirement for the assessee to file a fresh Form No.10-IE at all, as per sub section (5) to section 115BAC of the Act. It is only if the earlier option is treated as invalid that the assessee has to go about exercising the option afresh in the succeeding years.

12.3 In the light of the same, and in view of the fact that the assessee had filed Form No.10-IE in the preceding year, when it exercised its option of paying taxes under the new regime for the first time, the denial of exercise of this option in the impugned year for failure to file Form No.10-IE, we hold, is not accordance with law.

13. The order of the ld.CIT(A), upholding the intimation made on the assessee, computing its taxability as per the old regime, is therefore set aside, and the AO is directed to allow the assessee‘s option of paying taxes as per the new regime under section 115BAC of the Act.”

12. The case of the assessee also finds support from the decision of the Jodhpur Tribunal in the case of Sanju Soni (supra) wherein relying on the decision of the Ahmedabad Bench in the case of Arun Gopilal Samnani (supra), the Tribunal held as under :

“10. In Arun Gopilal Samnani v. Income-tax Officer * [2025] 174 taxmann.com 33 (Ahmedabad – Trib.) , applicability of section 115BAC of the Act was involved. The question was as to whether the assessee despite having opted to pay taxes under the new regime as prescribed under section 115BAC of the Act in its income tax return, was rightfully denied its benefit by the CPC, Bangalore?

11. Therein, as per facts, form no.10-IE was not filed by the assessee in the impugned year. The same was filed by the assessee in the preceding year along with his return of income, but the said form having not been filed within the prescribed time, the assessee had not been granted the benefit of paying taxes in the new regime in the preceding year.

So, the issue there was as to whether in the impugned year also, the assessee was required to file Form No.10-IE to opt for paying taxes under new regime as per section 115BAC of the Act.

As is evident from the bare perusal of the above, individuals and HUF have been given option for paying taxes at the rates prescribed in section 115BAC of the Act w.e.f. 1st April, 2021 subject to the condition that their income is computed as prescribed under sub-section (2). Sub-section (2) provides that the income is to be computed without claiming any exemption or deductions, loss or depreciation as specified in the said sub-section.

The first proviso to section 115BAC states that the option exercised by the assessee shall be invalid, if the assessee fails to satisfy the conditions mentioned in sub-section (2). In this way, said failure is the only prescription in law for treating the option to have been invalidly exercised.

Sub-section (5) prescribes that for claiming the benefit of option, the assessee having income from business or profession needs to file prescribed form by the due date prescribed in the said section initially and such option exercised would thereafter be applicable for subsequent years.

In other words, the failure to file Form No.10-IE within the prescribed due date as per sub-section (5) does not invalidate the assessee’s claim of the option.

12. In Arun Gopilal Samnani ^„s case, it has been observed that the mandate of filing the Form No.10-IE is only directory. Therein, in the preceding year when the assessee had filed Form No.10-IE while exercising its option of paying taxes as per the new regime, the option was not invalidated as per sub section (2) to section 115BAC of the Act. The option was denied to the assessee for the reason that the Form No.10-IE was not filed within the prescribed time. The assessee’s exercise of option in the preceding year was not invalid. It was observed that when the assessee again opted paying taxes under the new regime in the impugned year, there was no requirement for the assessee to file a fresh Form No.10-IE at all, as per sub section (5) to section 115BAC of the Act. As further observed therein, it is only if the earlier option is treated as invalid due to specified violation or failure that the assessee has to go about exercising the option afresh in the succeeding years.

In the given facts and circumstances, when the assessee therein had filed Form No.10-IE in the preceding year, exercising its option of paying taxes under the new regime for the first time, the denial of exercise of this option in the impugned year, on failure to file Form No.10-IE, was held to be against the provisions of law.

13. Applying the above said decision to the given facts and circumstances of this case, we are of the view that the Assessing Officer should have allowed the assessee to exercise option under the new regime instead of denial of exercise of said option in the impugned years, simply because the ITR for the previous year and Form 10 IE for the previous year, were filed after the due date.”

13. Based on the above facts and respectfully following the decisions of the Co-ordinate Bench(es) of the Tribunal in the case of Arun Gopilal Samnani (supra) and in the case of Sanju Soni (supra) and in the absence of any contrary material brought on record by the Revenue, we are of the view that the Ld. AO/CPC should have allowed the assessee’s claim of tax determination u/s 115BAC of the Act. The order of the Ld. Addl./JCIT(A) upholding the intimation order passed by the Ld. AO/CPC is therefore set aside and the Ld. AO/CPC is directed to modify the assessment accordingly. The grounds of appeal raised by the assessee are thus allowed.

14. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 26th March, 2026.