MAHENDRABHAI MANSUKHLAL SHETH,BHAVNAGAR vs. ACIT, CIRCLE 1, BHAVNAGAR, BHAVNAGAR

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ITA 1813/AHD/2026Status: DisposedITAT Ahmedabad28 October 2026AY 2025-264 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's appeal should be allowed. It was noted that the assessee had consistently intended to be assessed under the new tax regime, as evidenced by his original return and the Tax Audit Report. The filing of Form No. 10-IEA was accepted as an inadvertent clerical error. The Tribunal found it significant that the assessee had approached the competent authority under section 119(2)(b) for condonation of delay, which was granted, and subsequently filed a revised return opting for the new tax regime. Citing the Gujarat High Court's decisions in Mayur Foundation and S.R. Koshti, the Tribunal stated that appellate proceedings are a continuation of assessment proceedings and that the correct tax liability must be determined in accordance with law. Therefore, the subsequent condonation of delay and filing of the revised return were considered relevant for determining the correct tax liability. The impugned order of the CIT(A) was set aside, and the assessee's claim for taxation under section 115BAC was allowed.

What were the facts?

The assessee, Mahendrabhai Mansukhlal Sheth, filed an appeal against the order of the Addl/JCIT(A), Kochi, for Assessment Year 2025-26. The dispute arose when the Central Processing Centre (CPC) processed the assessee's return under section 143(1) of the Income-tax Act, 1961, opting for the old tax regime instead of the new one under section 115BAC, which the assessee had intended. This resulted in an additional demand of Rs. 1,41,430/-. The assessee's subsequent rectification application under section 154 was rejected, as was his appeal to the CIT(A). The assessee then filed an application under section 119(2)(b) for condonation of delay, which was allowed, and a revised return was filed opting for the new tax regime.

What were the issues?

1. Whether the assessee is entitled to opt for the new tax regime under section 115BAC of the Income-tax Act, 1961, despite the initial processing under the old tax regime due to an inadvertent clerical error in filing Form No. 10-IEA? Assessee's contentions: The assessee argued that he had consistently opted for the new tax regime in earlier years and that the filing of Form No. 10-IEA was a mere inadvertent clerical error. He further contended that after the condonation of delay under section 119(2)(b) and the filing of a revised return, the revised return should be considered for determining the correct tax liability. Reliance was placed on the Gujarat High Court decisions in CIT v. Mayur Foundation and S.R. Koshti v. CIT. Revenue's contentions: The Revenue, through the Sr. DR, supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 115BAC,Section 143(1),Section 154,Section 119(2)(b),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri Parimalsinh B. Parmar, AR
For Respondent: Ms. Kalpana Singh, Sr. DR
Hearing: 23.09.2026Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI TAPAS RAM MISRA, JUDICIAL MEMBER ITA No. 1813/Ahd/2026 (Assessment Year : 2025-26) Mahendrabhai Mansukhlal Sheth, Vs. 721/B/2, Near Blood Bank, ACIT, K.K. Avenue Road, Krishnanagar, Circle-1, Bhavnagar-364001 Bhavnagar [PAN: AGBPS 8725 R] (Appellant) .. (Respondent) Assessee represented by : Shri Parimalsinh B. Parmar, AR Department represented by: Ms. Kalpana Singh, Sr. DR Date of Hearing 23.09.2026 Date of Pronouncement 28.10.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the assessee against the order passed by the Ld. Addl/JCIT(A), Kochi (hereinafter referred to as "CIT(A)" for short), dated 20.03.2026 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2025-26.

2.

The assessee has raised multiple grounds of appeal. However, the grievance, in substance, revolves around the denial of the benefit of the new tax regime under section 115BAC of the Act while processing the return under section 143(1), resulting in an additional demand of Rs.1,41,430/- and the consequent rejection of the rectification application under section 154 of the Act.

3.

The brief facts are that the assessee, proprietor of Siddh Medical Agency, is engaged in the wholesale business of pharmaceutical goods. The assessee submitted that he had been consistently filing returns under the new tax regime in the earlier years. For the year under consideration, the return was filed on 28.11.2025, wherein the assessee opted for the new tax regime and computed the tax accordingly. The Tax Audit Report in Form No.3CD dated 09.11.2025 also

ITA No. 1813/Ahd/2026 Mahendrabhai Mansukhlal Sheth Vs. ACIT Asst.Year : 2025-26 - 2– reflected applicability of section 115BAC. However, on the same date, Form No.10-IEA was inadvertently filed by the assessee’s representative due to a clerical error. While processing the return, the CPC adopted the old tax regime on the basis of Form No.10-IEA and raised an additional demand of Rs.1,41,430/-.

4.

Subsequently, the assessee filed an application under section 154 of the Act, stating that Form No.10-IEA had been filed inadvertently and that his intention was to be assessed under the new tax regime. The rectification application was rejected and the appeal filed before the Ld. CIT(A) was also dismissed.

5.

The assessee thereafter filed an application under section 119(2)(b) of the Act on 24.04.2026 seeking condonation of delay. The competent authority, vide order dated 04.06.2026, condoned the delay. Pursuant thereto, the assessee filed a revised return on 12.06.2026, again opting for the new tax regime and computing the tax liability under section 115BAC of the Act.

6.

The Ld. AR submitted that the assessee had consistently opted for the new tax regime and that the filing of Form No.10-IEA was only an inadvertent clerical error. It was further submitted that, after condonation of delay under section 119(2)(b), the revised return filed pursuant thereto should be considered for determining the correct tax liability. Reliance was placed on the following decisions of the Hon’ble Gujarat High Court in the cases of :-

(i) CIT v. Mayur Foundation [2005] 274 ITR 562 (Guj.) (ii) S.R. Koshti v. CIT [2005] 276 ITR 165 (Guj.).

7.

The Ld. DR, on the other hand, supported the orders of the lower authorities.

8.

We have heard the rival submissions and perused the material available on record. It is not in dispute that the assessee, in the original return, opted for

ITA No. 1813/Ahd/2026 Mahendrabhai Mansukhlal Sheth Vs. ACIT Asst.Year : 2025-26 - 3– the new tax regime and computed his tax liability accordingly. The Tax Audit Report also reflected applicability of section 115BAC. The filing of Form No.10- IEA on the same date was stated to be an inadvertent clerical error. We also note that, pursuant to the observation of the Ld. CIT(A), the assessee approached the competent authority under section 119(2)(b) of the Act. The delay was condoned vide order dated 04.06.2026 and, pursuant thereto, the assessee filed the revised return on 12.06.2026, again opting for the new tax regime. In these circumstances, the subsequent condonation of delay and filing of the revised return, in our opinion, are relevant for determining the correct tax liability of the assessee. The Hon’ble Gujarat High Court in Mayur Foundation (supra) has held that appellate proceedings are a continuation of the assessment proceedings. Further, in S.R. Koshti (supra), the Hon’ble High Court has held that the correct tax liability of the assessee has to be determined in accordance with law.

9.

In view of the above and considering the totality of the facts, we find that the assessee had consistently intended to be assessed under the new tax regime and that the filing of Form No.10-IEA was an inadvertent error. In view of the subsequent condonation of delay and filing of the revised return, the assessee’s claim for taxation under section 115BAC deserves to be accepted. Accordingly, the impugned order of the Ld. CIT(A) is set aside and the assessee’s claim for taxation under section 115BAC of the Act is allowed.

10.

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

Order pronounced in the open Court on 28.10.2026

Sd/- Sd/-

(TAPAS RAM MISRA) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 28.10.2026 **btk

ITA No. 1813/Ahd/2026 Mahendrabhai Mansukhlal Sheth Vs. ACIT Asst.Year : 2025-26 - 4– JEETENDR Digitally signed by JEETENDRA आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : DEVENDRABHAI UPADHYAY A DN: c=IN, o=PERSONAL, अपीलाथ�/ The Appellant title=6087, 1. 2.5.4.20=7e5568a89b633f174b ��थ�/ The Respondent. DEVENDR 28a80f5e63c638da40b7313fb4 2. 7ebaefda841cf59d1703, संबंिधतआयकरआयु�/ Concerned CIT postalCode=380059, 3. ABHAI st=Gujarat, serialNumber=816dc56e89621 4. आयकरआयु�(अपील) /The CIT(A)- 1a1a21ccc4abc94ddc94458f4a UPADHYA 1b37be8e1854e9399295106d 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 4, cn=JEETENDRA DEVENDRABHAI UPADHYAY Y Date: 2026.10.30 15:46:15 6. गाड�फाईल /Guard file. +05'30' आदेशानुसार/ BY ORDER,

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