Inadvertent Form 10-IEA Cannot Override New Regime ITR Choice: ITAT Bangalore

Adit Nilesh Shah Vs DCIT (ITAT Bangalore)

Summary: The Bangalore Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for AY 2025-26 and directed the AO/CPC to process the return under the New Tax Regime under section 115BAC(1A), holding that the subsequently filed return clearly reflected the assessee’s intended tax regime and should be given effect. The assessee, an individual engaged in the profession of law, had declared total income of Rs. 32,55,050 and computed his tax liability under the New Tax Regime. Before filing the return, however, Form 10-IEA had been filed on 30.09.2025 opting out of the New Tax Regime. The assessee explained that the Form had been filed inadvertently by his consultant during routine compliance work and did not reflect his actual intention. The return filed on 24.10.2025 expressly adopted the New Tax Regime and did not claim deductions, exemptions or allowances exclusively available under the Old Tax Regime. While processing the return under section 143(1), the CPC relied on the earlier Form 10-IEA, processed the return under the Old Tax Regime and raised a demand of Rs. 1,23,770. The CIT(A), in an order under section 250, upheld the CPC’s action, observing that Form 10-IEA had been digitally verified and could not be ignored merely because the assessee subsequently claimed inadvertence. The Tribunal, however, considered the assessee’s subsequent conduct significant and relied on the Pune Bench decision in Akshay Nitin Malu v. ITO. It held that the principle in that case applied even though the regimes involved were reversed. Digital verification established authentication of Form 10-IEA but, in the peculiar facts, did not by itself negate the explanation of inadvertent filing where the subsequent return clearly reflected a contrary choice. Since the assessee had not claimed benefits of both regimes, the Tribunal held that the return should be processed as filed. The CIT(A)’s order was therefore set aside, the AO/CPC was directed to process the return under the New Tax Regime and recompute the tax liability, and the consequential demand arising solely from processing under the Old Tax Regime was directed to stand deleted subject to such recomputation.