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2024 Supreme(Online)(ITAT) 3364
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
SHRI SIDDHARTHA NAUTIYAL, J, SHRI MAKARAND V. MAHADEOKAR, ACJ
APRAMEYA ENGINEERING LIMITED AHMEDABAD – Appellant
Versus
WARD 1(1)(1) INCOME TAX OFFICER AHMEDABAD – Respondent
ITA No.456/Ahd/2024
For the Appellants/Petitioners: Shri Sunil Talati, CA
For the Respondents: Shri Ketan Gajjar, Sr.DR
Procedural lapses in filing tax forms should not deny substantive rights to tax benefits, balancing compliance and fairness.
Headnote:(A) Income Tax Act, 1961 - Sections 115BAA and 143(1) - Assessee's filing of Form 10IC delayed, resulting in tax assessment at normal rate instead of the lower concessional rate - The CIT(A) held strict compliance required for beneficial provisions; however, the tribunal recognized procedural lapses shouldn't preclude substantive rights. (Paras 5.2, 8.4)
(B) Fair Hearing - The Assessing Officer is mandated to provide reasonable opportunity before finalizing the tax assessment. (Paras 5.1)
Facts of the case:
The appellant filed a return showing substantial income but was taxed at the normal rate due to late submission of Form 10-IC opting for the lower tax rate under section 115BAA.
Findings of Court:
The appeal was allowed, emphasizing the need to balance procedural compliance with the substantive right to lower tax rates.
Issues: Whether the late submission of Form 10-IC warrants denial of the lower tax rate and whether due process was followed in the assessment.
Ratio Decidendi: The tribunal concluded that procedural requirements should not overshadow taxpayers' substantive rights, allowing the appeal based on the fairness principle. (Paras 8.5)
Result: Appeal partly allowed.
| Table of Content |
|---|
| 1. the rejection of lower tax rate claim due to late form submission. (Para 2 , 3) |
| 2. importance of fair hearing and compliance with procedural requirements. (Para 4 , 5 , 6) |
| 3. interpretation of procedural laws versus substantive rights in taxation. (Para 7) |
| 4. outcome of the appeal based on judicial precedents and principles of equity. (Para 9) |
आदेश/ORDER
PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER
This appeal by the assessee is directed against the order of the Add/Jt. Commissioner of Income Tax (Appeals) – 5 Mumbai (hereinafter referred as “the CIT(A)”), dated 23-02-2024, which dismissed the assessee's appeal against the intimation under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as “the Act”), passed by the Central Processing Centre (CPC) for the Assessment Year (AY) 2022-23. The primary issue is the rejection of the assessee's claim for taxation at a lower rate under section115BAA of the Act due to the non-filing of Form 10IC within the prescribed time.
Facts of the Case:
2. The assessee-company filed its return of income on 01.12.2022 declaring total income of Rs.10,15,26,720/-. The said return of income was processed u/s 143(1) of the Act, wherein the income returned was accepted u/s 143(1) of the Act. However, the CPC rejected the claim of option exercised by the assessee u/s.115BAA of the Act which resulted into tax being charged on the income at normal rate i.e.30% instead of at the rate of 22% as per provisions of section 115BAA of the Act as both the return and the Form 10-IC were filed belated.
3. Aggrieved by the intimation under section 143(1) of the Act, the assessee filed an appeal before Ld. CIT(A). Before Ld.CIT(A), the assessee submitted that the filing of form is mandatory but directory in nature. The assessee also submitted that the delay in filing Form 10-IC should be condoned in accordance with the provisions of section 119(2)(b) of the Act. Ld. CIT(A), however, dismissed the appeal stating that the beneficial provisions should be “strictly” and “literally” complied with and, therefore, a strict interpretation should be adopted. While doing so, he relied on the judgement of Hon’ble Apex court in the case of Principal Commissioner of Income Tax-III, Bangalore and another Vs. M/s.Wipro Limited (Judgment dated 11.07.2022 in the Civil Appeal No. 1449 OF 2022). While dismissing the plea of assessee to condone the delay in filing of form 10-IC, the Ld.CIT(A) stated that as per section 119(2)(b) of the Act, the first appellate authority does not have the power to condone the delay in filing such forms.
4. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before us with following grounds of appeal:
1. The Ld. CIT(A) has erred in confirming the order u/s.143(1) of the Income Tax Act, 1961 (“the Act”) passed by the Ld. AO by denying the benefit of the lower tax regime to tax at 22% opted by the appellant u/s. 115BAA (5) of the Act. Hence, the incorrect levy of tax rate at 30% on the income needs to be reduced to the lower tax rate as opted by the Appellant. The same be held now.
2. Without prejudice to the above, the Ld.CIT(A) has erred in not allowing to tax income at a rate of 25% even though the appellant satisfies the conditions of being a domestic company having a turnover less than 400 crores. Hence, the same needs to be held now.
3. The order passed by the Ld. CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
4. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing.
On ground number 1:
5. During the course of haring, the Ld.AR submitted the following key points:
a. The provisions of Section 143 (1) of the Act are clear in their requirement that prior to passing an intimation order, the Assessing Officer must provide the taxpayer with a reasonable opportunity to present their case and address any concerns or discrepancies. It is incumbent upon t
