Section 376 Income Tax Act 2025: Can the Department Defer an Appeal on an Identical Legal Question?
Section 376 allows the income-tax department, through a specified collegium, to defer a departmental appeal where an identical question of law is already pending before a jurisdictional High Court or the Supreme Court in a qualifying case. The procedure requires the assessee's acceptance and preserves a route to appeal after the other case is finally decided.
Source: Section 376, Income-tax Act, 2025, as amended by the Finance Act, 2026.
When can the department avoid filing an immediate appeal?
Under Section 376(1), the collegium must consider whether a question of law in the relevant case for a particular tax year is identical to a question arising either in the same assessee's case for another tax year or in another assessee's case for any tax year. The identical question must be pending in a qualifying High Court or Supreme Court appeal, reference or special leave petition, against an order in favour of the assessee in the other case.
Qualifying proceedings include High Court appeals under Section 260A of the Income-tax Act, 1961, or Section 365 of the 2025 Act; Supreme Court appeals under Section 261 of the 1961 Act or Section 367 of the 2025 Act; the specified references under the 1961 Act; and special leave petitions under Article 136 of the Constitution against orders of the Appellate Tribunal or jurisdictional High Court.
Where the conditions are satisfied, the collegium may decide and inform the Principal Commissioner or Commissioner not to file an appeal at that stage to the Appellate Tribunal under Section 362(2) or the jurisdictional High Court under Section 365(2). This is a discretionary mechanism, not a blanket prohibition on departmental appeals.
Section 376 explained subsection by subsection
| Subsection | Statutory rule | Practical effect |
|---|---|---|
| 376(1) | Collegium may recommend no immediate departmental appeal where the same question of law is pending in a qualifying higher-court proceeding. | Identical legal issue may arise for the same assessee in another year or for another assessee. |
| 376(2) | On collegium communication, Principal Commissioner or Commissioner directs the Assessing Officer to apply to the Tribunal or jurisdictional High Court in the prescribed form. | Application states that the appeal may be filed once the question is finally decided in the other case. |
| 376(3) | Application must be filed within 120 days of receipt of the relevant appellate order. | Time limit applies to the deferral application, not the later appeal. |
| 376(4) | Deferral application is directed if the assessee accepts that the legal question is identical; without acceptance, the officer proceeds with the ordinary appeal route. | Assessee acceptance is a statutory condition for using the application procedure. |
| 376(5) | If the relevant order is inconsistent with the final decision in the other case, the Commissioner may direct an appeal. | Department can revive the dispute through a later appeal where warranted. |
| 376(6) | Later appeal must be filed within 60 days to the Tribunal or 120 days to the High Court, counted from communication of the other case's decision to the jurisdictional Commissioner under the Board's procedure. | Separate deadlines govern the subsequent appeal. |
| 376(7) | Defines collegium as two or more specified senior income-tax authorities selected by the Board. | Not every individual officer can independently exercise the collegium's statutory role. |
Key time limits and filing steps
| Action | Deadline | Trigger |
|---|---|---|
| Application to defer appeal, Section 376(3) | 120 days | Receipt of order of Joint Commissioner (Appeals), Commissioner (Appeals) or Appellate Tribunal |
| Subsequent appeal to Appellate Tribunal, Section 376(6) | 60 days | Communication of final High Court or Supreme Court order in other case to jurisdictional Commissioner |
| Subsequent appeal to High Court, Section 376(6) | 120 days | Same communication trigger, following Board-specified procedure |
Important: The 120-day application window and the 60/120-day later appeal windows are different statutory periods. The later appeal is not automatically permitted merely because an application was submitted; Section 376(5) requires the prescribed circumstances and departmental direction.
Relevant statutory expressions
- Collegium - Section 376(7)
- A collegium comprising two or more Chief Commissioners, Principal Commissioners or Commissioners, as specified by the Central Board of Direct Taxes (the Board).
- Relevant case - Section 376(1)(a)
- The case of the assessee for the tax year in which the department is considering whether to defer an appeal.
- Other case - Section 376(1)(b)
- The qualifying case involving the identical question of law pending before the specified higher forum, against an order favourable to the assessee in that case.
- Identical question of law
- The same legal question arising in the relevant and other cases; factual similarity alone is not a substitute for the statutory requirement of identity of the question of law.
- Assessee's acceptance - Section 376(4)(a)
- Acceptance by the assessee in the relevant case that the question of law in the other case is identical to that arising in the relevant case.
Practical illustration
The Commissioner (Appeals) rules in favour of Company A on the interpretation of a tax deduction. The department identifies that the same legal question, arising in Company B's case, is already pending before the jurisdictional High Court against an order favourable to Company B. A Board-specified collegium may decide that an immediate departmental appeal in Company A's case should not be filed. If Company A accepts that the legal questions are identical, the Principal Commissioner or Commissioner can direct the Assessing Officer to file the prescribed deferral application within 120 days of receiving the appellate order. If the final decision in Company B's case conflicts with the order in Company A's case, the Commissioner may direct a later appeal, subject to the applicable 60-day or 120-day period.
Distinction from Section 375: Section 375 concerns an assessee's declaration for the same assessee across different tax years. Section 376 concerns a departmental collegium and can involve different assessees.
Frequently asked questions
Does Section 376 permanently bar the department from appealing?
No. It permits deferral at the initial stage and expressly contemplates a later appeal under Sections 376(5) and (6) after the other case's final decision.
Is the assessee's acceptance necessary?
Yes, for the deferral application route. Under Section 376(4), if acceptance of the identical question is not received, the department proceeds under the ordinary appeal provisions specified there.
Can the other case belong to a different taxpayer?
Yes. Section 376(1)(a)(ii) expressly includes a question of law arising in the case of any other assessee for any tax year.
Who constitutes the collegium?
Under Section 376(7), the Board specifies a collegium of two or more Chief Commissioners, Principal Commissioners or Commissioners.
What is the limitation for a later departmental appeal?
Section 376(6) provides 60 days for an Appellate Tribunal appeal and 120 days for a High Court appeal, counted from the specified communication of the other case's final order.
Related provisions
Section 362 - Appeals to Appellate Tribunal; Section 365 - Appeal to High Court; Section 373 - Departmental appeals; Section 375 - Assessee declaration for identical questions.
Legal note: This article explains the statutory provision. Applicable prescribed forms, Board procedures and current judicial interpretation should be checked for a particular case.