Failure to file form 10IC due to Non-appearance: ITAT Allows Concessional rate of tax u/s 115BAA of Income Tax Act [Read Order]

In a major ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) allowed concessional rate of tax under Section 115BAA of the Income Tax Act, 1961, due to non-appearance resulting in the failure to file Form 10IC.

The assessee, a private company, filed its income tax return for the Assessment Year (AY) 2020-21 on 14.10.2020, declaring a total income of Rs. 1,06,77,810/- and paid tax amounting to Rs. 26,87,391/- under Section 115BAA of the Income Tax Act. Subsequently, the return underwent processing under section 143(1), of the Income Tax Act, 1961, during which the Centralized Processing Center ( CPC ) calculated the tax liability to be Rs. 35,64,680/-. Dissatisfied with this assessment, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT (A)].

The CIT (A) issued notices to the assessee on various dates, including 17.01.2023, 23.03.2023, 31.05.2023, and 06.06.2023. However, as the assessee failed to respond to these notices, the CIT (A) proceeded to conclude the assessment, allowing the appeal for statistical purposes.

The counsel for the assessee Sanjay Parikh contended that the assessee submitted its arguments before the Commissioner of Income Tax (Appeals) [CIT(A)] on 19.06.2023  yet the CIT(A) failed to consider these submissions and concluded the appeal through an order dated 20.06.2023. On the merits of the case,

 Further argued that the counsel subsequently filed Form 10-IC in accordance with Rule 21AE of the Income Tax Rules, thereby qualifying for the concessional tax rate under Section 115BAA of the Income Tax Act. Consequently, the counsel requested that the demand raised in the order issued under Section 143(1) of the Income Tax Act, 1961 be deleted.

The counsel for the revenue P.D. Chougule argued that despite being given multiple opportunities, the assessee did not appear before the Commissioner of Income Tax ( Appeals ) [ CIT(A) ].

The bench observed that the assessee filed an income tax return and claimed the concessional tax rate under Section 115BAA of the Income Tax Act. However, since Form 10IC was not submitted along with the return filed under Section 139(1) of the Act,  the Centralized Processing Center ( CPC ) denied the concessional tax rate and imposed taxes at normal rates while passing the order under Section 143(1) of the Income Tax Act.

The assessee failed to respond to notices issued by the Commissioner of Income Tax (Appeals) [CIT(A)] dated 17.1.2023 and 23.03.2023. Although the assessee requested an adjournment in response to the notice dated 31.05.2023 to appear on 06.06.2023, the CIT(A) granted a final opportunity for appearance by 19.06.2023.

The two member bench of the tribunal comprising Pavan Kumar Gadale ( Judicial member ) and M.S Pathmavathy S ( Accountant member ) said that the counsel for the assessee claimed that Form 10IC was subsequently filed by the assessee. According to the aforementioned circular, the assessee should be entitled to apply the concessional tax rate under Section 115BAA of the Act. However, no documentary evidence supporting this claim was submitted.

The ITAT concluded that the assessee’s assertion regarding the filing of Form 10IC requires factual verification, the bench returning the appeal to the CIT (A) to examine the assessee’s claim based on any evidence that may be submitted and to allow the claim in accordance with the law.

In the result, appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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