ANIRUDDHA MOHAN JOSHI,MUMBAI vs. WARD 16(2)(1), MUMBAI, MUMBAI

The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') on 29th January 2026. But while processing, the CPC taken into consideration the Form No. 10- IEA for opting out of the option of new scheme of assessment under Section 115BAC, which was filed by the assessee on 31st August 2025. Accordingly, a demand of Rs.1,41,480/- was raised. The rectification request filed by the assessee thereon on 11th February 2026 was also rejected by the learned CPC vide order under Section 154 dated 17th February 2026. Aggrieved with the intimation under Section 143(1) dated 29th January 2026, the assessee filed appeal before the learned CIT(A).

The learned CIT(A) noted that when the assessee himself opted out of the new tax regime by filing Form 10-IEA, the claim made in the return of income was tantamount to incorrect claim and therefore learned CPC was justified in making the adjustment.

Before us, the assessee has assailed the finding of the learned CIT(A) on three grounds.

As far as first ground is concerned, it was submitted that assessee in the return of income clearly had mentioned that assessee was opting out of the new tax regime and therefore learned CPC should have followed the option given in the return of income rather than in the Form No. 10-IEA. The learned counsel in this respect relied on the decision of the Co-ordinate Bench of Pune Tribunal in the case of Akshay Nitin Malu vs. Income Tax Officer in ITA No. 1651/PUN/2024 for Assessment Year 2022-23. Before us, the learned counsel also filed a copy of the acknowledgment of said Form No. 10-IEA filed for the year under consideration on 31st August 2025 and also filed a page of the return of income indicating Clause A(19)(b) where assessee has ticked the box for 'No' against the option, namely 'Do you wish to opt out of new tax regime for current assessment year?'.

In ground number 3 and 4, the assessee has raised the issue that learned CPC while passing the order under section 143(1) dated 29.01.2026 did not issue prior intimation to the assessee as mandated under section 143(1) of the Act. In this respect, the assessee was asked to produce the relevant details from the Income Tax portal to substantiate that no such intimation was issued either by way of the mail or by way of the physical letter. But no such information was filed by the assessee to substantiate that such mail, such intimation, such prior intimation was not received by him. 5 7.1 Before us, the learned counsel for the assessee relied on the decision of the Hon'ble High Court of the Bombay in the case of Rallis India Limited Vs. Central Processing Centre and others in Writ Petition No. 37314 of 2025 dated 19th January 2026. But in the said case, the department in their affidavit in reply accepted the fact that no notice or proposed adjustment was issued to the said assessee. And therefore, in those facts, the Hon'ble High Court held that processing the return and making adjustment was in breach of the principle of the natural justice and accordingly, said intimation order was quashed and set aside. The facts of the Rallis India Limited (Supra) being different from the assessee, same is not applied over the facts of the instant case. Accordingly, the ground numbers 3 and 4 of the appeal of the assessee are dismissed.

In ground number 5, the assessee has made an alternative plea that if on the basis of the Form 10-IE it is held that assessee has opted out of the new tax regime, then assessee should be allowed the deduction eligible under the old tax regime. In our opinion, there is a merit in the submission of the assessee. If CPC is holding that assessee has opted out of the new tax regime and old tax regime of this is applicable, then the deduction entitled under the old tax regime should be allowed to the assessee. Accordingly, we set aside the order of the learned CIT(A) and restore the matter to the Assessing Officer for limited claim of alternative request of the assessee to allow the claim of the deduction eligible under the old tax of the regime. The ground number 4 of the appeal of the assessee is accordingly allowed.

In the result, appeal of the assessee is partly allowed.