I have client with an app in the app store that was at version 4.05 and they accidentally submitted a new build as version 5.06 when they meant to submit it as 4.06. They aren’t ready yet for a full version number increase. Long story.
Is it possible to submit the next version as 4.06 to get it back on track? Or is not allowed to upload a lower version to iTunes Connect?
Yes. The version numbers only need be distinct.
From the Developer Guide: