Appellate authority not to proceed in certain cases.

385

No income-tax authority or the Appellate Tribunal shall proceed to decide any issue for which an application has been made by an applicant, being a resident, under section 383(1).

Explanation

Section Summary:

Section 385 of the new income tax law restricts income-tax authorities and the Appellate Tribunal from deciding any issue for which a resident taxpayer has already filed an application under Section 383(1). This section ensures that once a taxpayer has sought resolution for a specific issue through the prescribed mechanism (Section 383(1)), the matter cannot be adjudicated further by the authorities or the Tribunal until the application is resolved.

Key Changes:

• New Restriction: Previously, there was no explicit prohibition preventing income-tax authorities or the Appellate Tribunal from proceeding with an issue while a taxpayer's application under Section 383(1) was pending. This section introduces a clear restriction to avoid parallel proceedings.
• Focus on Resident Taxpayers: The restriction applies specifically to resident taxpayers who have filed applications under Section 383(1).

Practical Implications:

• For Taxpayers: Resident taxpayers can now be assured that once they file an application under Section 383(1), the issue will not be decided by the authorities or the Tribunal until the application is resolved. This prevents conflicting decisions and ensures a streamlined process.
• For Authorities and Tribunal: Income-tax authorities and the Appellate Tribunal must halt proceedings on any issue for which an application under Section 383(1) is pending. This may delay the resolution of certain cases but ensures consistency in decision-making.

Critical Concepts:

• Section 383(1): This section allows resident taxpayers to file applications for resolution of specific tax issues. The exact nature of these issues is defined under Section 383(1).
• Parallel Proceedings: The section prevents overlapping or conflicting decisions by ensuring that once an application is filed, no other authority can adjudicate the same issue.

Compliance Steps:

1. For Taxpayers: If you are a resident taxpayer and have filed an application under Section 383(1), ensure that the issue is not being simultaneously pursued by income-tax authorities or the Appellate Tribunal.
2. For Authorities and Tribunal: Upon receiving notice of an application under Section 383(1), halt any proceedings related to the issue until the application is resolved.

Examples:

• Scenario 1: A resident taxpayer files an application under Section 383(1) to resolve a dispute regarding the classification of income. While the application is pending, the income-tax authority initiates proceedings on the same issue. Under Section 385, the authority must stop the proceedings until the application is resolved.
• Scenario 2: A resident taxpayer has a pending appeal before the Appellate Tribunal regarding a tax deduction. If the taxpayer files an application under Section 383(1) for the same issue, the Tribunal cannot proceed with the appeal until the application is resolved.

This section ensures clarity and prevents conflicting decisions, benefiting both taxpayers and authorities.