Archive · 7 Sep 2026
Bengaluru ITAT Overturns Tax Demand After Consultant's Regime Error
A taxpayer wanted his taxes calculated using the new tax rules.
His consultant accidentally filed a form saying he had chosen the old rules instead.
The tax department used that form and asked him to pay about ₹1.23 lakh more.
The taxpayer said the form was a mistake and that his tax return clearly used the new rules.
An appeals officer first rejected his argument.
The Income Tax Appellate Tribunal then reviewed the case.
It decided that the tax return filed later showed the taxpayer's real choice.
The tribunal ordered the department to recalculate the tax and remove the extra demand if the revised calculation supports it.
A Bengaluru taxpayer faced an additional tax demand of about ₹1.23 lakh after his consultant mistakenly filed Form 10-IEA.
The form indicated that he had opted for the old tax regime, although his subsequent return used the new regime.
The Centralised Processing Centre processed his return under the old regime on 29 January 2026.
The Bangalore ITAT allowed his appeal on 17 August 2026 and accepted the regime selected in his return.
The tribunal directed the authorities to recompute his liability under section 115BAC(1A) and delete the resulting demand.
- Who
- Mr Shah, a Bengaluru taxpayer, and the Income Tax Appellate Tribunal, Bangalore.
- What
- The tribunal directed tax authorities to process Shah's return under the new tax regime after a consultant mistakenly filed Form 10-IEA indicating the old regime.
- When
- Form 10-IEA was filed on 30 September 2025; the return was filed on 24 October 2025; the ITAT ruled on 17 August 2026.
- Where
- The case was heard by the Income Tax Appellate Tribunal in Bangalore and involved the Centralised Processing Centre in Bengaluru.
- Why
- The tribunal found that Shah's subsequently filed return consistently selected the new regime and that he had not sought benefits under both regimes.
Taxpayer's Position
Tax Authorities' Position
Which tax-regime choice should control?
Taxpayer's Position
Shah argued that the Form 10-IEA was filed accidentally by his consultant and did not reflect his intention. His later ITR consistently calculated tax under the new regime.
Tax Authorities' Position
The CPC relied on the earlier Form 10-IEA, which indicated that Shah had opted out of the new regime, and processed the return under the old regime.
Effect of the subsequent return
Taxpayer's Position
Shah argued that the subsequently filed ITR should be respected, particularly because he had not claimed deductions or exemptions under the old regime while seeking taxation under the new regime.
Tax Authorities' Position
The initial appeal before the Commissioner of Income Tax (Appeals) was dismissed, leaving the old-regime processing and resulting demand in place until the ITAT intervened.
- Taxpayer
- Mr Shah of Ali Asker Road, Bengaluru
- Declared income
- ₹32.55 lakh
- Additional demand
- About ₹1.23 lakh
- Form filed
- Form 10-IEA, indicating the old tax regime
- Relevant provision
- Section 115BAC(1A)
- ITAT outcome
- Appeal allowed; return to be processed under the new regime