R K AUTOMOBILES PRIVATE LIMITED,KASHMIRI GATE, NEW DELHI V. DCIT, C R BUILDING

ITA 5008/DEL/2024

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R.K. Automobiles Pvt Ltd appealed against the order of the CIT(A), which denied them the concessional tax rate of 22% under section 115BAA of the Income Tax Act, 1961, due to the non-filing of Form 10IC. The Tribunal found that the delay in filing the form was due to miscommunication within the assessee's team and was plausible under the circumstances. Additionally, the Tribunal noted that the tax rate applied by the CPC was incorrect as per the provisions of the Finance Act, 2020, which stipulated a 25% tax rate for companies with a turnover below 400 crores. The Tribunal's decision was influenced by precedents and the principle that procedural lapses should not override substantive benefits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312954 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Other Referred Cases: Aprameya Engineering Limited ITA No. 456/AHD/2024, Bholanath Precision Dicase Engineering Private Limited vs CIT(A) ITA No.1997/Mum/2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Condonation of delay; Reasonable cause; Procedural lapse
• Section: 119(2)(b)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘F’ BENCH, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 5008/DEL/2024 [A.Y 2020-21] R.K. Automobiles Pvt Ltd Vs. The I.T.O 2620/B, Hamilton Road Circle -19(1) Kashmiri Gate Delhi New Delhi PAN: AAACR 5153 N (Appellant) (Respondent) Assessee By : Shri R.S. Singhvi, CA Shri Rajat Garg, CA Department By : Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing : 30.04.2025 Date of Pronouncement : 30.04.2025 ORDER PER NAVEEN CHANDRA, AM :- This appeal by the assessee is directed against the order of the ld. CIT(A), Delhi dated 29.02.2024 for A.Y 2020-21. 2 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] 2. There is a delay of 170. The reasons stated by the ld. counsel for the assessee seem to be reasonable. Accordingly, we condone the delay. 3. Ground No. 1 with its sub-grounds is general in nature and not adjudicated as such. 4. Brief facts of the case relating to Ground No. 2 with its sub-grounds and Ground 3 are that the Assessee-Company has filed its return of income on 11.12.2020 after declaring income of Rs. 1,53,16,600/- and the consequential tax liability of Rs. 51,13,294/- was computed by applying the tax rate of 22% in terms of provisions of section 115BAA of the Income-tax Act, 1961 [the Act, for short]. 5. Subsequently, the return was processed and the Intimation dated 18.12.2021 u/s 143(1) of the Act was received wherein a tax liability of Rs. 16,21,510/- was worked by computing the tax @ 30% on the income declared in the return on the alleged ground that the assessee-company has not filed Form 10IC before due date or extended date of filling of ITR. As per the computation of income, tax was worked out in accordance with the provisions of section 115BAA of the Act. 3 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] 6. Aggrieved, the assessee went in appeal before the ld. CIT(A) who came to the conclusion that the assessee is not eligible for concession in tax as prescribed in section 115BAA of the Act as the return for A.Y 2020-21 was filed within the extended time limit for filing the income tax return u/s 139(1) of the Act, but the assessee failed to file form 10IC in terms of section 115BAA of the Act. The ld. CIT(A) also found that the assessee had filed two condonation applications u/s 119(2)(b) of the Act which were rejected by the CBDT vide order dated 22.09.2023 and 06.03.2025. 7. In this connection, the ld. counsel for the assessee submitted that the non-filling of Form 10-IC was on account of inadvertent omission on the part of the Senior Accountant. Even otherwise, the non-filling of Form 10-IC being a procedural deficiency or technical default, the assessee-company ought to be allowed to avail the benefit of concessional tax rate. Accordingly, the ld. counsel for the assessee requested to delete the tax demand raised on the assessee-company as the same is merely on account of a technical/bonafide omission. 4 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] 8. The ld. counsel for the assessee further submitted that the CBDT had issued a Circular No. 17/2004 dated 18.11.2024 conferring power to the CCIT/PCIT to condone the delay on certain grounds. 9. Per contra, the ld. DR relied upon the order of the ld. CIT(A). 10. We have heard the rival submissions and have perused the relevant material on record. We find that the assessee has fulfilled the criteria for the condonation of delay in filing Form 10IC. The assessee has filed ITR on 11.12.2020 within the due date which was15.02.2021. Further, the assessee opted for taxation u/s 115BAA and the assessee had reasonable cause due to miscommunication between the Statutory Auditor and the Sr. Accountant of the assessee company for the case of delay. 11. We find that the assessee’s second application for condonation was rejected. The assessee filed another application on 27.01.2025 which was again rejected on the ground that the application was beyond the prescribed period of three years. We find that the assessee’s application should be considered as continuation of earlier applications filed within 5 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] time and the Revenue should adopt an approach to actuate the liberal intent of the CBDT Circular [supra]. 12. Accordingly, we are of the considered view that the reason for delay in filing Form 10IC in light of CBDT Circular [supra] is plausible and acceptable. We condone the delay and direct the income to be computed as per provisions of section 115BAA of the Act. 13. We are fortified in coming to this conclusion, by the decision of the ITAT, Ahmedabad Bench in the case of Aprameya Engineering Limited ITA No. 456/AHD/2024 order dated 11.06.2024. “8.2. Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. SC ruling in the case of CIT v. G.M. Knitting Industries (P.) Ltd. reported in (2015) 376 ITR 456 emphasized that the making of a claim of deduction is mandatory, but timing is directory. Even if the claim is made during the assessment proceedings, such a claim is to be allowed. 8.3. After considering the submissions, the judicial precedents cited and the specific facts of the case, we are of the opinion the delay in filing Form 10-IC, though a procedural requirement, should not 6 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] invalidate the assessee's substantive right to the benefit of section 115BAA of the Act. 8.4. The CBDT's Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. These Circulars indicate a degree of administrative flexibility and a recognition that procedural lapses should not necessarily lead to the denial of substantive benefits. Moreover, denying the benefit based solely on this lapse would be against the principles of equity and justice, especially when there is no dispute regarding the assessee's eligibility for the lower tax rate.” 14. Accordingly, Ground No. 2 and 3 taken together with its sub- grounds are allowed. 15. The third ground raised by the assessee company is against the arbitrary tax rate of 30% applied by the CPC while computing the tax payable. 16. In this connection, the ld. counsel for the assessee submitted that the CPC after disallowing the befit of concessional rate of 22% claimed by the Appellant u/s 115BAA of the Income Tax Act, 1961 has computed the tax liability by imposing the regular tax rate of 30% without even appreciating the basic fact that the tax rate for A.Y. 2020-21 was 25%. As per the provisions of Finance Act, 2020 in case the total turnover or 7 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] gross receipts of the Assessee during the previous year 2017-18 does not exceed Rs. 400 crores, the tax rate for A.Y. 2020-21 shall be 25% of the total income. 17. The ld. counsel for the assessee relied upon the latest judgement of Mumbai, ITAT in in the case of Bholanath Precision Dicase Engineering Private Limited vs CIT(A) ITA No.1997/Mum/2022 wherein on the identical facts the matter was remanded back to the file of the Assessing to reconsider the tax rate in accordance with law. In the present case, the gross turnover for the F.Y. 2017-18 is 39.14 crores that is much below the limit of 400 crores as laid down in the Act. In light of the above factual and legal position, the ld. counsel for the assessee requested to compute the tax liability @ 25% as per the provisions of Finance Act, 2020. 18. The ld. DR relied upon the orders of the authorities below. 19. We have heard the rival submissions and have perused the relevant material on record. We find substance in the contention of the ld. counsel for the assessee. We, therefore, remit the issue to the file of the Assessing Officer with a direction to examine whether the assessee fulfils the criteria of gross turnover of the impugned year and compute 8 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] the tax liability at the rate as prescribed in law. Ground No. 3 is allowed for statistical purposes. 20. In the result, appeal of assessee in ITA No. 5008/DEL/2024 is partly allowed for statistical purposes. Order pronounced in open court on 30.04.2025. Sd/- Sd/- [SATBEER SINGH GODARA] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 30th APRIL, 2025. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi 9 ITA No.5008/DEL/2024 R.K. Automobiles [A.Y 2020-21] Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order "