ITAT Mumbai Quashes CPC Intimation: Delayed E-Verification Due to Portal Glitches Cannot Invalidate Timely ITR Filing Under Section 139(1)

Introduction to the Dispute

In the era of digital tax administration, the intersection of statutory compliance and technological infrastructure frequently becomes a battleground for litigation. A critical issue that often arises is the treatment of income tax returns that are uploaded within the statutory deadlines but are e-verified at a later date due to technical anomalies on the official portal. The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, recently addressed this exact predicament in the case of Sandeep Arjun Narang Vs ITO.

The core controversy revolved around whether a delay in the e-verification process—caused entirely by system glitches—could fundamentally alter the character of an income tax return from a timely filed return under Section 139(1) of the Income Tax Act 1961 to a belated return under Section 139(4). This classification is not merely academic; it carries profound financial implications, particularly concerning the assessee's right to opt out of the default new tax regime under Section 115BAC(6) and claim specific deductions. The Tribunal's decision to rule in favor of the assessee reinforces the judicial stance that substantive rights cannot be extinguished due to procedural delays stemming from infrastructural inadequacies.

Factual Matrix of Sandeep Arjun Narang Vs ITO

The dispute pertains to the Assessment Year 2024-2025. The assessee successfully uploaded their income tax return on the designated portal on 25.07.2024, well within the prescribed statutory due date. However, the critical final step of e-verification could not be executed simultaneously. According to the submissions made before the Tribunal, technical glitches on the income tax portal prevented the immediate authentication of the return. Consequently, the e-verification was only completed a month later, on 25.08.2024.

The Centralized Processing Centre (CPC) processed the return and issued an intimation dated 08.05.2025 under Section 143(1) of the Income Tax Act 1961. In this processing phase, the CPC automated system treated the date of e-verification as the effective date of filing. Because the e-verification occurred after the due date, the CPC reclassified the submission as a belated return filed under Section 139(4).

The Section 115BAC(6) Complication

The reclassification of the return triggered a severe financial disallowance. The assessee had structured their tax computations based on the old tax regime, which allows for various traditional deductions and exemptions. Under the current statutory framework, the new concessional tax regime is the default option. To continue availing the benefits of the old regime, an assessee must explicitly exercise their option to opt out of the new regime within the due date specified under Section 139(1), as mandated by Section 115BAC(6).