The Income Tax Appellate Tribunal (ITAT) Bangalore cancelled a Rs. 1.23 lakh tax demand after a consultant mistakenly filed Form 10-IEA. The tribunal ruled on August 17, 2026, after Bengaluru taxpayer Mr Shah challenged the old regime assessment. Shah had declared Rs. 32.55 lakh income and prepared his income tax return under the New Tax Regime.
However, his consultant filed Form 10-IEA on September 30, 2025, indicating an old regime choice. The Centralised Processing Centre then processed his return under the old regime, creating the additional demand.
Shah later filed his ITR on October 24, 2025, clearly calculating tax under Section 115BAC(1A). The return showed a consistent New Tax Regime choice despite the earlier Form 10-IEA filing. The CPC processed the return under the old regime on January 29, 2026, relying on the submitted form.
The Commissioner of Income Tax Appeals rejected Shah’s plea before the case reached ITAT Bangalore. The tribunal considered the ITR and Shah’s conduct before accepting his actual tax regime choice.
The tribunal noted that Shah never claimed benefits from both tax regimes at once. It also found no evidence suggesting an intentional attempt to change the selected regime. ITAT Bangalore relied on the principle established by Pune ITAT in Akshay Nitin Malu v. ITO. The previous ruling gave importance to the regime choice shown in the subsequently filed ITR.
Chartered Accountant Suresh Surana explained the significance of the ruling. He said, ‘a bona fide procedural mistake’ should not force a taxpayer into another regime.
The tribunal set aside the CIT(A) order and directed the CPC to recompute Shah’s tax. It also ordered deletion of the Rs. 1.23 lakh demand linked to the old regime calculation. Form 10-IEA no longer applies from April 1, 2026, for Tax Year 2026-27 onwards.
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