My consultant filed Form 10-IEA opting me out of the new regime by mistake, but my return was computed under s.115BAC(1A). The CPC has processed me under the old regime. Can the return prevail over the form?
Yes, on these facts. The Bangalore Tribunal directed the CPC to process the return for AY 2025-26 under the new regime under s.115BAC(1A) as opted in the return, holding that a bona fide procedural mistake in filing Form 10-IEA should not subject the assessee to a regime contrary to the choice clearly reflected in the return filed afterwards. It rejected the Commissioner (Appeals)' view that digital verification of the Form made it conclusive.
Decided by the ITAT (Shri Waseem Ahmed (Accountant Member) and Shri Keshav Dubey (Judicial Member)) on 2026-08-17, reported as ITA No. 2152/Bang/2026 (ITAT Bangalore, 'A' Bench); Assessment Year 2025-26. It bears on section 115BAC, section 115BAC(1A), section 115BAC(6), section 139(1), section 143(1), section 250 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
The direction of travel here is the whole point and it is the opposite of the pre-2023 position. From AY 2024-25 the regime in s.115BAC(1A) is the default; it is opting OUT that requires a form, and Form 10-IEA is that form. An entry or an argument built on the older idea that s.115BAC is an option to be exercised is wrong for every current year. The second thing to take from this is the risk that was avoided. The assessee was a professional, so his opt-out would have fallen under clause (i) of s.115BAC(6), and under the proviso to that sub-section an option once exercised may be withdrawn only once, after which the person is never again eligible to exercise it while he has business or professional income. Had the stray Form 10-IEA stood and then been withdrawn, it would have consumed his single withdrawal. Note also the two limits the Tribunal relied on: the return was filed after the Form, and no deduction available only under the old regime had been claimed — an assessee who claims both is not within this reasoning.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, an individual practising law, filed Form 10-IEA on 30 September 2025 opting out of the new tax regime. He then filed his return of income for AY 2025-26 on 24 October 2025 declaring total income of Rs. 32,55,050 with the tax liability computed under the new regime in s.115BAC(1A). He claimed no deduction, exemption or allowance available exclusively under the old regime. Processing the return under s.143(1) on 29 January 2026 the CPC relied on the earlier Form 10-IEA, applied the old regime and raised a demand of Rs. 1,23,770. His case was that the Form had been filed inadvertently by his consultant during routine compliance work and did not represent his intention. The Commissioner (Appeals) dismissed the appeal, holding that the Form had been validly filed, had been digitally verified and signed, was therefore a conscious exercise of the option to opt out, and that there was no provision permitting a validly filed Form 10-IEA to be treated as non est merely because the assessee later said it was inadvertent.
The appeal was allowed. The order of the Commissioner (Appeals) was set aside and the Assessing Officer and CPC were directed to process the return for AY 2025-26 under the new tax regime under s.115BAC(1A) as opted for in the return and to recompute the tax liability accordingly, the consequential demand arising solely from processing under the old regime standing deleted subject to re-computation.
The short issue was whether the return should be processed under s.115BAC(1A) as declared in it or under the old regime on the basis of the Form 10-IEA filed before it (para 10). The Tribunal held that the subsequent conduct of the assessee assumed importance: the return was filed after the Form, the assessee consciously computed his income and tax under the new regime, and the return is the statutory document through which income is declared and tax computed, so a return that clearly reflects the regime intended cannot be ignored merely because an inconsistent Form was filed earlier and explained as a mistake (para 12.1). It followed the Pune Bench decision in Akshay Nitin Malu v. ITO, where an assessee who had filed Form 10-IE opting into the new regime but then filed a return under the old regime was held not to be compellable into the new regime, and held the principle applied although the regimes were reversed, because in both cases the option in the later return differed from the option in the earlier form (paras 12.2 and 12.3). It declined to treat digital verification as making the Form conclusive: verification establishes filing and authentication but cannot by itself negate an explanation of inadvertent filing where the return afterwards reflects a contrary choice (para 12.4). It weighed that the assessee had taken no inconsistent tax benefit, having claimed no deduction available only under the old regime, so there was no question of the benefit of both regimes (para 12.5).
A bona fide procedural mistake in filing Form 10-IEA should not result in the assessee being subjected to a tax regime contrary to the choice clearly reflected in the subsequently filed return of income.
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Handle my notice → Ask a CA on WhatsAppYes, on these facts. The Bangalore Tribunal directed the CPC to process the return for AY 2025-26 under the new regime under s.115BAC(1A) as opted in the return, holding that a bona fide procedural mistake in filing Form 10-IEA should not subject the assessee to a regime contrary to the choice clearly reflected in the return filed afterwards. It rejected the Commissioner (Appeals)' view that digital verification of the Form made it conclusive. This was decided by the ITAT (Shri Waseem Ahmed (Accountant Member) and Shri Keshav Dubey (Judicial Member)) and bears on section 115BAC, section 115BAC(1A), section 115BAC(6), section 139(1), section 143(1), section 250 of the Income Tax Act 1961. It is reported as ITA No. 2152/Bang/2026 (ITAT Bangalore, 'A' Bench); Assessment Year 2025-26. The direction of travel here is the whole point and it is the opposite of the pre-2023 position. From AY 2024-25 the regime in s.115BAC(1A) is the default; it is opting OUT that requires a form, and Form 10-IEA is that form. An entry or an argument built on the older idea that s.115BAC is an option to be exercised is wrong for every current year. The second thing to take from this is the risk that was avoided. The assessee was a professional, so his opt-out would have fallen under clause (i) of s.115BAC(6), and under the proviso to that sub-section an option once exercised may be withdrawn only once, after which the person is never again eligible to exercise it while he has business or professional income. Had the stray Form 10-IEA stood and then been withdrawn, it would have consumed his single withdrawal. Note also the two limits the Tribunal relied on: the return was filed after the Form, and no deduction available only under the old regime had been claimed — an assessee who claims both is not within this reasoning. If it applies to you, the first step is this: Check the sequence of dates first: this argument works where the return post-dates the Form, so that the return is the later and more considered expression of choice.
The assessee, an individual practising law, filed Form 10-IEA on 30 September 2025 opting out of the new tax regime. He then filed his return of income for AY 2025-26 on 24 October 2025 declaring total income of Rs. 32,55,050 with the tax liability computed under the new regime in s.115BAC(1A). He claimed no deduction, exemption or allowance available exclusively under the old regime. Processing the return under s.143(1) on 29 January 2026 the CPC relied on the earlier Form 10-IEA, applied the old regime and raised a demand of Rs. 1,23,770. His case was that the Form had been filed inadvertently by his consultant during routine compliance work and did not represent his intention. The Commissioner (Appeals) dismissed the appeal, holding that the Form had been validly filed, had been digitally verified and signed, was therefore a conscious exercise of the option to opt out, and that there was no provision permitting a validly filed Form 10-IEA to be treated as non est merely because the assessee later said it was inadvertent. The matter was decided on 2026-08-17 by the ITAT (Shri Waseem Ahmed (Accountant Member) and Shri Keshav Dubey (Judicial Member)). On those facts the ITAT held as follows. The appeal was allowed. The order of the Commissioner (Appeals) was set aside and the Assessing Officer and CPC were directed to process the return for AY 2025-26 under the new tax regime under s.115BAC(1A) as opted for in the return and to recompute the tax liability accordingly, the consequential demand arising solely from processing under the old regime standing deleted subject to re-computation.
The short issue was whether the return should be processed under s.115BAC(1A) as declared in it or under the old regime on the basis of the Form 10-IEA filed before it (para 10). The Tribunal held that the subsequent conduct of the assessee assumed importance: the return was filed after the Form, the assessee consciously computed his income and tax under the new regime, and the return is the statutory document through which income is declared and tax computed, so a return that clearly reflects the regime intended cannot be ignored merely because an inconsistent Form was filed earlier and explained as a mistake (para 12.1). It followed the Pune Bench decision in Akshay Nitin Malu v. ITO, where an assessee who had filed Form 10-IE opting into the new regime but then filed a return under the old regime was held not to be compellable into the new regime, and held the principle applied although the regimes were reversed, because in both cases the option in the later return differed from the option in the earlier form (paras 12.2 and 12.3). It declined to treat digital verification as making the Form conclusive: verification establishes filing and authentication but cannot by itself negate an explanation of inadvertent filing where the return afterwards reflects a contrary choice (para 12.4). It weighed that the assessee had taken no inconsistent tax benefit, having claimed no deduction available only under the old regime, so there was no question of the benefit of both regimes (para 12.5). In the words reproduced by the source cited on this page: "A bona fide procedural mistake in filing Form 10-IEA should not result in the assessee being subjected to a tax regime contrary to the choice clearly reflected in the subsequently filed return of income." The decision followed or applied Akshay Nitin Malu v. ITO [2025] 173 taxmann.com 684 (Pune - Trib.) — followed; the Tribunal reproduced its para 9.
It was decided by the ITAT on 2026-08-17 and is reported as ITA No. 2152/Bang/2026 (ITAT Bangalore, 'A' Bench); Assessment Year 2025-26. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 115BAC, section 115BAC(1A), section 115BAC(6), section 139(1), section 143(1), section 250, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed. The order of the Commissioner (Appeals) was set aside and the Assessing Officer and CPC were directed to process the return for AY 2025-26 under the new tax regime under s.115BAC(1A) as opted for in the return and to recompute the tax liability accordingly, the consequential demand arising solely from processing under the old regime standing deleted subject to re-computation. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 115BAC, section 115BAC(1A), section 115BAC(6), section 139(1), section 143(1), section 250 of the Income Tax Act 1961, and was decided by Shri Waseem Ahmed (Accountant Member) and Shri Keshav Dubey (Judicial Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Confirm that the return claims no deduction or exemption available exclusively under the old regime; the Tribunal relied on the absence of any inconsistent benefit. Do not attempt to fix a stray Form 10-IEA by withdrawing it where the client has business or professional income — the proviso to s.115BAC(6) permits one withdrawal only, and after it the person is never again eligible to opt out. Where the CPC processes contrary to the return, take the point in appeal rather than by rectification alone; the Commissioner (Appeals) here held the Form conclusive and the Tribunal reversed. Do not read this as authority that a Form 10-IEA can be ignored at will — the Tribunal decided it on the peculiar facts, on an explained inadvertent filing, and said so.
Validity check could not be completed. Validity check could not be completed. No search for later treatment was run. The order does not address the proviso to s.115BAC(6), which permits a person with business or professional income to withdraw the opt-out only once and thereafter never to exercise it again; the Tribunal treated the Form as an inadvertent filing rather than as an exercised option withdrawn, so the proviso was not engaged on its reasoning. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The report cites the Pune Bench decision it follows, Akshay Nitin Malu v. ITO, by a commentary citation ([2025] 173 taxmann.com 684) rather than by appeal number; that is the Tribunal's own citation string as printed and I have not retrieved that order, so nothing is stated about it beyond what this order records. The order refers to the appellate authority both as 'Addl./JCIT(A)-3, Chennai' and as 'the ld. CIT(A)'. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed. The order of the Commissioner (Appeals) was set aside and the Assessing Officer and CPC were directed to process the return for AY 2025-26 under the new tax regime under s.115BAC(1A) as opted for in the return and to recompute the tax liability accordingly, the consequential demand arising solely from processing under the old regime standing deleted subject to re-computation.
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