The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the assessment order which was assessed under the new regime citing that the return was filed under the new regime and conditions under section 115 BAC not completely satisfied.
Akshay Nitin Malu (assessee) is an individual who is engaged in the business of manufacturing cloth looms. The assessee opted for the new tax regime under section 115 BAC and therefore filed form 10 IE on 18.07.2022 which is a requirement under section 115 BAC of the Income Tax Act.
However, the assessee, considering that the new regime would not be beneficial for him, filed an Income Tax Return under the old regime. The Central Processing Center (CPC) assessed income as per the new regime on the ground that the assessee opted for the new regime under form 10 IE.
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Aggrieved by the order of the CPC, the assessee filed an appeal before the Commissioner of Income Tax (appeals) [CIT(A)]. The CIT(A) held that the provision under section 115 did not provide for the withdrawal of the exercised option for the same year. The CIT(A) also observed that the provision provides a withdrawal option only for the subsequent year to the year exercising the option.
Therefore, the CIT(A) upheld the order of the CPC and dismissed the appeal of the assessee. The assessee aggrieved by the order of CIT(A), preferred an appeal before the ITAT.
The counsel for the assessee argued that the assessee filed the return in the old tax regime and also submitted that the assessee had not fulfilled the conditions laid down under Section 115BAC of the Income Tax Act.
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On the other hand, the counsel for the revenue argued that Section 115 BAC did not provide for withdrawal of exercised option in the same year but it provided only in subsequent years. Therefore, the counsel sought to dismiss the appeal.
The two-member bench comprising Astha Chandra (Judicial Member) and R.K. Panda (Vice President) observed that the assessee filed a return as per the old regime of taxation. The tribunal further observed that the assessee had not fulfilled the conditions mentioned in Section 115BAC of the Income Tax Act.
Therefore, the tribunal accepted the contention of the assessee’s counsel and observed that the CIT(A) was not justified in upholding the order of CPC. The tribunal set aside the order of the CIT(A). Thereby, the appeal of the assessee was allowed.
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