Ankit Bhatija vs ITO

PER MANISH AGARWAL, AM :

The present appeal is filed by the assessee against the order dated 04.09.2025 by Ld. Commissioner of Income Tax (A)/ADDL/JCIT(A)-2, Ahmedabad [“Ld. CIT(A)”] in Appeal No. NFAC/2022-23/10387994 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the rectification order dated 07.06.2024 passed u/s 154 of the Act pertaining to Assessment Year 2023-24.

Brief facts of the case are that the assessee has filed his return of income on 31.10.2023 declaring total income at 22,27,480/- and paid taxes as per concessional rate of tax under new Tax Regime as per section 115BAC of the Act. However, the CPC while processing the return charged the tax under old tax regime and created the demand. Against the said order, a rectification application was filed which was dismissed by CPC.

Against the said order, the assessee preferred appeal before Ld. CIT(A) who vide impugned order dated 04.09.2025 confirmed the order of CPC and dismissed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal wherein both the Grounds of appeal taken by assessee are with respect to the denial of option exercised by the assessee of computation of income and payment of tax under new tax regime as per section 115BAC of the Act.

Heard the contentions of both the parties at length and perused the material available on record. The solitary issue in this case is that the assessee was denied the benefit of concessional rate of tax under new tax regime as per section 115BAC of the Act. Before proceeding further, it will be relevant here to reproduce the relevant provisions of sub-section(5) of Section 115BAC of the Act.

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

A perusal of the aforesaid provisions of section 115BAC(5) of the Act would reveal that the statute had given a right to the assessee 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 Further, the said right to opt under the new regime has been withdrawn for the assessment year beginning on or after the first day of April-2024.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 10-IE on 15/03/2022. Though, the said option was exercised for AY 2021-22 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 filed delayed so far as the AY 2021-22 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 2021-22. However, the said Form was well within time for AY 2023-24. There was no option to the assessee to file afresh 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 15/03/2022. 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.

There is no dispute that for the year under appeal, assessee has filed the return u/s 139(1) however, in AY 2021-22, it was filed delayed on 15.03.2022 thus, the benefit is denied. Ld. CIT(A) has confirmed the order of CPC and denied the benefit for this sole reason. The Coordinate Pune Bench of Tribunal in ITA No. 782/Pune/2024 vide order dated 05.06.2024 under identical circumstances has held that the filing of Form 10-IE is directory in nature and not mandatory and since the Form 10-IE was very much available with the CPC when the return was processed, the CPC ought to have considered the same and allowed the benefit under new tax 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 assessee 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 assesses. 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.

Facts being identical, thus, by following the order of Co-ordinate Bench, Pune, we direct the CPC to allow the benefit of new tax regime and compute the tax accordingly. Both the Grounds of appeal of the assessee are allowed.

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

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