ITR filed under old regime, tax calculated under new regime; Delhi ITAT gives taxpayer relief

A Delhi ITAT ruling has given relief to a taxpayer whose accountant mistakenly selected the old tax regime in ITR-1 even though tax had been computed under the new regime. The tribunal directed the AO to compute the taxpayer’s liability under the new regime.

A taxpayer cannot be made to pay higher tax merely because an accountant made a clerical error while filing the income tax return, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held.

In a recent ruling for assessment year 2024-25, the tribunal allowed the appeal of Sanjay Sharma, legal heir of late Divya Kala Sharma, after her accountant incorrectly stated in the ITR that she had filed her return under the old tax regime. The tax computation in the return, however, had been made under the new tax regime under section 115BAC of the Income Tax Act.

The error resulted in the Centralised Processing Centre (CPC), Bengaluru, processing the return under the old tax regime and raising a tax demand. The taxpayer subsequently approached the CPC seeking rectification, but the request was rejected. The matter then went before the National Faceless Assessment Centre (NFAC), before ultimately reaching the Delhi ITAT.

The case concerns the return filed for AY 2024-25. According to the tribunal order, the accountant had indicated in the return that the taxpayer had filed it under the old tax regime, even though the tax liability had actually been computed under the new regime.

The tribunal noted that the discrepancy was specifically brought before the NFAC. The records showed that the tax computation in the return was made under the new tax regime, while the accountant had erroneously stated in ITR-1 that the taxpayer had chosen the old regime.

The CPC nevertheless processed the return using the old tax regime. Since that resulted in a higher tax liability, a demand was raised against the taxpayer. The taxpayer filed a rectification application with the CPC, but it was rejected.

The taxpayer then challenged the matter before the NFAC and subsequently the ITAT Delhi.

The Delhi ITAT examined whether the taxpayer could claim taxation under the new regime despite the incorrect selection reflected in the ITR.

The tribunal found that the taxpayer had in fact computed the tax liability under section 115BAC in the return. It also recorded that the incorrect statement about the tax regime was the result of a mistake by the accountant while uploading the return.

The bench of M. Balaganesh, Accountant Member, and Sudhir Kumar, Judicial Member, said the taxpayer could not be made liable for the higher tax merely because of the accountant's clerical mistake.

"In our considered opinion, the assessee cannot be fastened with the tax liability for mere clerical error committed by her accountant," the tribunal said.

Considering the facts and in the interest of justice and fair play, the ITAT directed the Assessing Officer to compute the taxpayer's liability for the relevant year under the new tax regime. The appeal was accordingly allowed.

The ruling highlights the importance of checking the tax regime selected in the filed ITR rather than relying entirely on the person who prepares the return.

In this case, the tax computation itself reflected the new tax regime, but the regime selection in ITR-1 was different. That mismatch led to CPC processing the return under the old regime and resulted in a demand. The taxpayer first had to pursue rectification and then appeal through the tax authorities before receiving relief from the tribunal.

The Delhi ITAT order, ITA No. 5309/Del/2026, was heard on 4 August 2026 and pronounced on 15 September 2026.

The ruling does not mean every incorrect tax-regime selection will automatically be reversed. The tribunal's decision was based on the facts and material on record in this particular case, including the fact that the tax computation in the return itself had been made under the new regime.

Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.