Gujarat High Court allows delayed Form 10-ID for Section 115BAB due to portal issues

Overview of the Dispute

The Gujarat High Court in Royal Led Equipments Pvt. Ltd. Vs Chief Commissioner of Income Tax examined whether a delay in filing Form 10-ID for claiming concessional tax under Section 115BAB of the Income Tax Act 1961 could be condoned when the delay was attributable to technical problems on the income-tax e-filing portal.

The assessee, a company engaged in manufacturing LED contour linear solutions, had:

  • Filed its return of income for AY 2021-22 within time under Section 139(1)
  • Opted for the concessional regime under Section 115BAB in the ITR itself
  • Repeatedly attempted to upload Form 10-ID but failed due to portal glitches

Despite subsequent CBDT circulars recognising these systemic issues and generally permitting condonation of delay for similar cases, the assessee’s specific condonation application under Section 119(2)(b) was rejected. This led to the writ petition before the High Court.

The Court ultimately quashed the rejection order and directed the authorities to treat the belatedly filed Form 10-ID as valid, thereby restoring the assessee’s eligibility for the beneficial tax rate.

Chronology of Key Facts

Filing of Return and Attempted Exercise of Option

  1. The assessee company filed its return of income for AY 2021-22 on 28.10.2021 under Section 139(1) of the Act.
  2. In the return of income (ITR-6), the assessee clearly exercised the option for the concessional tax regime under Section 115BAB.
  3. As required by Section 115BAB read with Rule 21AF of the Income Tax Rules 1962, the assessee had to file Form 10-ID by the due date (07.11.2021 in this case).
  4. Multiple attempts were made by the assessee’s consultant to file Form 10-ID electronically before the due date, but due to persistent income-tax portal glitches, the form could not be uploaded in time.
  5. On 07.11.2021, the consultant publicly tweeted about these technical difficulties, specifically stating that Form 10-ID could not be filed due to portal malfunction.

Acceptance of Section 115BAB in Initial Processing

  • While processing the return under the centralized system, the Central Processing Centre (CPC) accepted that the assessee had opted for Section 115BAB based on the contents of the ITR.
  • Thus, the fact that the concessional regime was chosen in the return itself was not in dispute.

CBDT Circulars and Belated Filing of Form 10-ID

  1. Recognising widespread problems in filing statutory forms, the CBDT issued Circular No. 06 of 2022 dated 17.03.2022.
    • This circular provided a framework for condoning delay in filing Form 10-ID (for Section 115BAB) for AY 2021-22 where technical or other difficulties had prevented timely e‑filing.
  2. Eventually, the assessee succeeded in uploading Form 10-ID on the portal on 12.09.2022 for AY 2021-22.
  3. On the same date, the assessee also filed returns for AY 2022-23 and later for AY 2023-24, continuing to claim the concessional rate under Section 115BAB.

Impact on Later Assessment Years

  • For AY 2022-23, there was no taxable income; hence, the question of denial of the concessional rate did not cause any monetary impact.
  • For AY 2023-24, there was taxable income, and the return was processed under Section 143(1).
  • In the intimation dated 22.12.2023, CPC declined to grant the benefit of Section 115BAB, which alerted the assessee that the delayed Form 10-ID for AY 2021-22 had not been formally condoned.

Application under Section 119(2)(b) and its Rejection

Condonation Application

  • On 12.01.2024, the assessee filed an application under Section 119(2)(b) to the competent authority (Respondent No. 1) seeking condonation of delay in filing Form 10-ID for AY 2021-22.
  • Following established procedure, Respondent No. 1 sought reports from:
    • The jurisdictional Assessing Officer (Respondent No. 3), and
    • The Range Head

Adverse Order