Sanjay Sharma Vs Addl./JCIT (ITAT Delhi)
A Wrong Tick Cannot Inflate the Tax Bill: New Regime Allowed Where Computation Clearly Reflected Assessee’s Choice
The Delhi Bench of the ITAT has held that an assessee cannot be burdened with a higher tax liability merely because the accountant committed a clerical error while selecting the tax regime in the income-tax return. Where the tax computation forming part of the return was prepared under the new tax regime u/s 115BAC, but the return incorrectly indicated that the assessee had opted for the old regime, the tax liability had to be recomputed under the new regime in accordance with the assessee’s evident intention.
The appeal was filed by Mr. Sanjay Sharma as the legal heir of Late Divya Kala Sharma. The dispute arose from an order passed by the CPC, Bengaluru, u/s 154 for AY 2024-25 and the subsequent appellate order dated 26-03-2026.
Although several grounds were raised before the Tribunal, the only effective issue was whether the assessee was entitled to have her income and tax liability computed under the new tax regime u/s 115BAC.
In the return of income filed for AY 2024-25, the assessee’s accountant had prepared the tax computation by applying the rates and provisions of the new tax regime. However, while uploading the return in ITR-1, the accountant incorrectly mentioned that the assessee had chosen the old tax regime.
The return thus contained an internal inconsistency. The tax computation unmistakably reflected the new regime, whereas the relevant response or selection made in the return utility indicated the old regime. The CPC proceeded strictly on the basis of the option reflected in the return and computed the assessee’s tax liability under the old regime. This resulted in an additional demand.
The assessee filed an application for rectification before the CPC, explaining that the old-regime option had been selected by mistake and that the computation accompanying the return clearly demonstrated the intention to be governed by the new tax regime. The CPC rejected the rectification application.
The assessee then preferred an appeal before the National Faceless Appeal Centre. It was specifically explained that the entire tax liability had been computed under the new regime and that the contrary selection in ITR-1 was merely an inadvertent mistake committed by the accountant while uploading the return.
The relevant facts, including the new-regime tax computation and the incorrect selection made in the return, were placed on record before the appellate authority. Nevertheless, the assessee did not receive the requested relief and the matter reached the ITAT.
The Tribunal examined the return, the computation and the circumstances in which the demand had arisen. It found that the assessee had actually computed the tax liability under the new tax regime u/s 115BAC. The only mistake was that the accountant had incorrectly stated in the return that the assessee had not exercised the option of being governed by the new regime.
The ITAT treated this as a mere clerical error in uploading the return, rather than a conscious and informed choice by the assessee to adopt the old regime. The contemporaneous tax computation was considered a reliable indicator of the regime that the assessee had actually intended to follow.
The Tribunal observed that an assessee should not be fastened with an additional tax liability merely because of an accountant’s inadvertent mistake. Tax liability must be determined on the basis of the correct factual and legal position and not solely on an erroneous response entered in an electronic return.
Accordingly, in the interest of justice & fair play, the ITAT directed the AO to compute the assessee’s tax liability for AY 2024-25 under the new tax regime u/s 115BAC. The assessee’s grounds were allowed and the appeal was decided in her favour.
Author’s Comments
The ruling is short, but its principle is significant in an era of electronic return filing. A tax return consists of numerous fields, schedules, validations and yes/no selections. An inadvertent response in one field may produce a result fundamentally inconsistent with the computation and the assessee’s actual intention. The electronic utility should facilitate correct taxation; it should not convert an obvious clerical mistake into an irreversible tax election.
For AY 2024-25, the new tax regime operates as the statutory default for eligible individual taxpayers. A taxpayer intending to remain under the old regime must take the prescribed steps to opt out, subject to the applicable conditions. In the present case, the computation itself was prepared under the new regime. This made it evident that the contrary indication in ITR-1 was not a deliberate exercise of option but an uploading error.
The decision also affirms that a rectification or appellate authority should examine the return as a whole. A single dropdown selection cannot be isolated from the accompanying computation when the two plainly contradict each other. The substance of the taxpayer’s demonstrated choice must prevail over an accidental electronic entry.
However, the ruling should not be understood as permitting taxpayers to freely switch regimes after discovering which one produces a lower liability. Relief was granted because the tax computation contemporaneously filed with the return already reflected the new regime and supported the claim of a genuine clerical mistake. The strength of the assessee’s case lay in the internal evidence available in the original return itself.
The practical lesson is equally clear. Before filing an ITR, the tax computation, deductions claimed, regime-selection field and final tax payable must be cross-verified. Where a mismatch is discovered, the assessee should promptly file a revised return or rectification application, as legally available, and preserve the original computation, working papers & correspondence with the return preparer. A wrong tick may be curable—but prevention remains far easier than litigation.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, DELHI BENCH
This appeal of the assessee arises out of the order of the ld. CIT(A)/Addl./JCIT-3, Chennai having DIN & order No. ITBA/APL/S/250/2025-26/1087946169(1), dated 26.03.2026 against the order passed by CPC, Bengaluru u/s 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 03.02.2026 for the A.Y. 2024-25.
2. Though the assessee has raised several grounds of appeal before us, the only effective issue to be decided in this appeal is as to whether the assessee would be eligible for income to be computed as per the new tax regime u/s 115BAC of the Act in the facts and circumstances of the instant case.
3. We have heard the rival submissions and perused the material available on record. It is not in dispute that in the return of income filed by the assessee for A.Y. 2024-25, the accountant of the assessee had mentioned that return is filed under old tax regime even though the tax computation is made as per the new tax regime. Based on this, the ld. CPC processed the return and computed the tax liability as per old tax regime and raised demand on the assessee. The assessee filed a rectification application before the ld. CPC which stood rejected. The assessee preferred an appeal before the ld. NFAC. Before the ld. NFAC, it was clearly mentioned that computation of tax liability was made only under the new tax regime in the return but the accountant had erroneously mentioned in ITR-1 that assessee had chosen the old tax regime for computing the tax liability. All these facts are duly brought on record by the ld. NFAC. We find that assessee has duly computed the tax liability in the return under the new tax regime u/s 115BAC of the Act but wrongly stated in the ITR that she had not exercised the option of availing the new tax regime due to the mistake committed by her accountant while uploading the return. In our considered opinion, the assessee cannot be fastened with the tax liability for mere clerical error committed by her accountant. Hence, in the interest of justice and fair play and considering the totality of facts and circumstances, we direct the ld. AO to compute the tax liability of the assessee for the year under consideration under the new tax regime.
Accordingly, the grounds raised by the assessee are allowed.
4. In the result, the appeal of the assessee is allowed.
Order Pronounced in the Open Court on 15/09/2026.
