Procedure where an identical question of law is pending before High Courts or Supreme Court.

376(1)

Irrespective of anything contained in this Act, where the collegium is of the opinion that—

• (a) any question of law arising in the case of an assessee for any tax year (such case being herein referred to as the relevant case) is identical with a question of law arising,— (i) in his case for any other tax year; or (ii) in the case of any other assessee for any tax year; and
• (b) such question of law is pending before the jurisdictional High Court under section 365 or the Supreme Court in an appeal under section 367 or in a Special Leave Petition under article 136 of the Constitution, against the order of the Appellate Tribunal or the jurisdictional High Court, which is in favour of such assessee (such case being herein referred to as the other case), the collegium may, decide and inform the Principal Commissioner or Commissioner not to file any appeal, at this stage, to the Appellate Tribunal under section 362(2) or to the jurisdictional High Court under section 365(2) in the relevant case against the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Appellate Tribunal.

376(2)

Irrespective of anything contained in section 362(3) or section 365(2)(a), the Principal Commissioner or the Commissioner shall, on receipt of a communication from the collegium under sub-section (1), direct the Assessing Officer to make an application to the Appellate Tribunal or the jurisdictional High Court, in such form as prescribed, stating that an appeal on the question of law arising in the relevant case may be filed when the decision on such question of law becomes final in the other case.

376(3)

The application referred to in sub-section (2) shall be filed within one hundred and twenty days from the date of receipt of the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) or of the Appellate Tribunal.

376(4)

The Principal Commissioner or Commissioner shall direct the Assessing Officer—

• (a) to make an application under sub-section (2), if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case; and
• (b) to proceed as per section 362(2) or section 365(2)(b), if no such acceptance is received irrespective of anything in section 362(3) or section 365(2)(a).

376(5)

If the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the order of the Appellate Tribunal referred to in sub-section(1), is not in conformity with the final decision on the question of law in the other case, as and when such order is received, the Principal Commissioner or Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal or the jurisdictional High Court, against such order, and save as otherwise provided in this section, all other provisions of Parts A.2 and A.3 of this Chapter shall apply accordingly.

376(6)

Every appeal under sub-section (5) shall be filed within sixty days to the Appellate Tribunal or one hundred and twenty days to the High Court, from the date on which the order of the jurisdictional High Court or the Supreme Court in the other case, is communicated to the Principal Commissioner or the Commissioner (having jurisdiction over the relevant case), as per the procedure specified by the Board.

376(7)

In this section, “collegium” means a collegium comprising two or more Chief Commissioners or Principal Commissioners or Commissioners, as specified by the Board.

Explanation

Section Summary:

Section 376 of the new income tax law provides a procedure for handling cases where an identical question of law is already pending before a High Court or the Supreme Court. The purpose is to avoid redundant appeals and ensure consistency in legal interpretations across similar cases. This section allows the tax authorities to defer filing appeals in certain situations until the pending question of law is resolved by the higher courts.

Key Changes:

1. Introduction of the Collegium: A new concept of a "collegium" (comprising two or more Chief Commissioners, Principal Commissioners, or Commissioners) is introduced to decide whether to defer filing an appeal in cases involving identical legal questions.
2. Deferral of Appeals: The section allows tax authorities to delay filing appeals in cases where the same legal issue is already pending before a higher court.
3. Time Limits for Applications: Specific timelines (120 days and 60 days) are prescribed for filing applications or appeals once a decision on the pending question of law is finalized.

Practical Implications:

1. For Tax Authorities: The collegium can decide to hold off on filing appeals in cases where the same legal issue is already under consideration by a higher court. This reduces unnecessary litigation and ensures uniformity in legal interpretations.
2. For Assessees: If an identical legal question is pending in another case, the assessee may experience a delay in the resolution of their case. However, this ensures that the final decision aligns with the higher court's ruling, providing clarity and consistency.
3. Efficiency in Litigation: This provision streamlines the litigation process by avoiding multiple appeals on the same legal issue, saving time and resources for both taxpayers and the tax department.

Critical Concepts:

1. Collegium: A group of senior tax officials (Chief Commissioners, Principal Commissioners, or Commissioners) authorized to make decisions on deferring appeals in cases involving identical legal questions.
2. Identical Question of Law: A legal issue that is the same or substantially similar to one already pending before a higher court.
3. Timelines:
   • 120 days to file an application to the Appellate Tribunal or High Court after receiving the order.
   • 60 days to file an appeal to the Appellate Tribunal or 120 days to the High Court after the higher court's decision is communicated.

Compliance Steps:

1. For Tax Authorities:
   • The collegium must review cases to identify identical legal questions pending before higher courts.
   • If the collegium decides to defer an appeal, the Principal Commissioner or Commissioner must direct the Assessing Officer to file an application stating that the appeal will be filed once the pending legal question is resolved.
   • Ensure compliance with the prescribed timelines for filing applications or appeals.
2. For Assessees:
   • If the assessee agrees that the legal question in their case is identical to one pending in another case, they must provide written acceptance to the tax authorities.
   • Be prepared for potential delays in case resolution while awaiting the higher court's decision.

Examples:

1. Scenario 1: An assessee, Mr. A, has a case where the tax department disputes the deductibility of a certain expense. The same legal issue is already pending before the Supreme Court in another taxpayer's case. The collegium decides to defer filing an appeal in Mr. A's case until the Supreme Court rules on the issue. Once the Supreme Court delivers its judgment, the tax department will apply the ruling to Mr. A's case.
2. Scenario 2: A company, XYZ Ltd., has a case involving the interpretation of a specific tax provision. The same provision is under review by the High Court in another case. The collegium identifies the identical legal question and instructs the Assessing Officer to file an application stating that an appeal will be filed once the High Court's decision is final.

This section ensures that legal questions are resolved consistently and efficiently, reducing the burden on both taxpayers and the judiciary.