The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has provided relief to a taxpayer who faced an additional tax demand of approximately ₹1.23 lakh after his income tax return was incorrectly processed under the old tax regime.
The taxpayer, Mr. Shah of Bengaluru, had filed his income tax return opting for the new tax regime under Section 115BAC of the Income-tax Act. However, due to an error by his tax consultant while processing the return, the return was dealt with under the old tax regime, resulting in a higher tax liability and consequential demand.
The matter reached the ITAT after the taxpayer challenged the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)].
The Bangalore Bench accepted the taxpayer’s contention that the incorrect tax-regime selection had resulted from the consultant’s mistake. It accordingly set aside the CIT(A)’s order and directed the Assessing Officer (AO) to process the return under Section 115BAC(1A) and recompute the taxpayer’s tax liability in accordance with the new tax regime.
The ruling effectively requires the tax authorities to reconsider the computation after taking into account the taxpayer’s eligibility and intended taxation under the applicable new tax regime. CASansaar