I have a question about Bani Israel (The children of Israel).

Question:
I have a question about Bani Israel (The children of Israel). How come in the Qur'an it says that the Bani Israel were the chosen ones by God, that they were superior to any other humans on earth, yet, they did not follow the commands of Nabi Musa (a.s). Could you please shed some light as to why they were considered the chosen ones?

Answer:
I have personally found AllamehTabatabai's explanation of this issue the most convincing one. In the volume one of his Tafsir under the Holy verse: “And thus we have made you a medium ummah (people) that you may be the bearers of witness to the people and (that) the Apostle may be a bearer witness to you...” (2:143),
First he discusses what it mean to be “bearers of witness” and explains that it involves knowledge of the unseen, intentions and so on. Then he argues that this is not something that ordinary people can be capable of. He concludes that this verse does not apply to all Muslims even not to majority of them, but rather a few people in Islamic Ummah are capable of doing so. These people bear witness to all other nations and prophet Mohammad (s.a) bears witness to them. And this is the meaning of a medium Ummah. In other words, those who act as a medium between the Holy Prophet (s.a) and other people are from Muslims, but not that all Muslims are medium and bearers of witness.
He then argues that the same is true about Bani Israel when Allah (SWT) says to them that “Children of Israel ...I have exalted you above the nations” (2:47; 2:122). This does not mean that every single individual among Bani Israel is superior to all others. This only means that exalted individuals come from them. Verse (6:86) also supports this interpretation for it says: “We gave him Isaac and Jacob...Among his descendants were David and Solomon, Job, and Joseph and Moses and Aaron; Zacharias and John, Jesus and Elias...; and Ishmael, Elisha, Jonah and Lot. All these WE EXALTED ABOVE NATIONS ...” As we see this “Fazl” (or exaltation) is given to certain individuals from Bani Israel and through them Allah (SWT) bestowed his blessing over children of Israel.
This is a very brief response and there are might be some other aspects which needs more time and space.

Refrence:

Ref: http://dartabligh.org