Section 376: procedure where an identical question of law is pending (Department's side)

Introduction

Section 376 allows the Department to defer a repetitive appeal when a qualifying question of law is already pending before a higher court in an assessee-favourable case. Unlike section 375, the other case can concern the same assessee or another assessee.

The process has two distinct deadlines: an initial application to preserve the option to appeal, and a later appeal if the final higher-court decision conflicts with the relevant-case order. The assessee’s acceptance that the questions are identical affects whether the application route is used.

Key takeaways

When the collegium can hold back a departmental appeal

This applies where the collegium is of the opinion that a question of law arising in an assessee's case for a tax year (the "relevant case") is identical to a question of law arising in that assessee's case for another year, or in another assessee's case for any year, and that question is pending - in the assessee's favour - before the jurisdictional High Court (under section 260A of the Income-tax Act, 1961 or section 365 of this Act), the Supreme Court (under section 261 of the 1961 Act or section 367 of this Act), or in a reference or Special Leave Petition on the same point (the "other case").

In that situation, 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 to the jurisdictional High Court under section 365(2), against the order in the relevant case.

Filing an application to keep the option open

On receiving the collegium's communication, the Principal Commissioner or Commissioner must direct the Assessing Officer to apply to the Appellate Tribunal or jurisdictional High Court, in the prescribed form, stating that an appeal on the question of law in the relevant case may be filed once the question of law becomes final in the other case.

This application must be filed within one hundred and twenty days from the date of receipt of the order of the Joint Commissioner (Appeals), Commissioner (Appeals) or Appellate Tribunal.

The Principal Commissioner or Commissioner directs the Assessing Officer to make the application if the assessee accepts that the question of law is identical; if no such acceptance is received, the Department proceeds with a normal appeal under section 362(2) or 365(2)(b) instead.

Appealing once the other case is finally decided

If the order in the relevant case is not in conformity with the final decision on the question of law in the other case, the Principal Commissioner or Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal or jurisdictional High Court against that order, with the rest of the appeals/revisions provisions applying accordingly.

Such an appeal must be filed within sixty days (to the Appellate Tribunal) or one hundred and twenty days (to the High Court), from the date the order of the jurisdictional High Court or Supreme Court in the other case is communicated to the Principal Commissioner or Commissioner having jurisdiction over the relevant case, as per the Board's procedure.

What is a "collegium"

For this section, "collegium" means a collegium comprising two or more Chief Commissioners or Principal Commissioners or Commissioners, as specified by the Board.

Step-by-step flow for the Department deferring an appeal under Section 376

1. 1

   Is the collegium of the opinion that a question of law in the relevant case is identical to one in another case?

   The other case may be the same assessee's case for another tax year or any other assessee's case. It must be pending in a forum listed in Section 376(1)(b), against an order of the Appellate Tribunal or the jurisdictional High Court that is in favour of the assessee. The collegium is two or more Chief Commissioners, Principal Commissioners or Commissioners, as specified by the Board (Section 376(7)).

   • No: Section 376 does not apply; the Department decides on appeal in the normal way.
   • Yes: The collegium may tell the Principal Commissioner or Commissioner not to appeal at this stage. Go to the next step.
2. 2

   Has the assessee accepted that the question in the other case is identical?

   • No: Under Section 376(4)(b), the Assessing Officer is directed to proceed with the appeal under section 362(2) or section 365(2)(b).
   • Yes: Under Section 376(4)(a), the Assessing Officer is directed to make an application under Section 376(2). Go to the next step.
3. 3

   File the application within 120 days

   The application, in the prescribed form, goes to the Appellate Tribunal or the jurisdictional High Court. It states that an appeal on the question may be filed when the decision in the other case becomes final. It must be filed within one hundred and twenty days from receipt of the order of the Joint Commissioner (Appeals), Commissioner (Appeals) or Appellate Tribunal (Section 376(3)).

4. 4

   When the other case is finally decided, is the order in the relevant case in line with that decision?

   • Yes: No appeal is needed.
   • No: The Principal Commissioner or Commissioner may direct the Assessing Officer to appeal under Section 376(5). Go to the next step.
5. 5

   File the appeal within the time in Section 376(6)

   Sixty days to the Appellate Tribunal, or one hundred and twenty days to the High Court, from the date the High Court or Supreme Court order in the other case is communicated to the Principal Commissioner or Commissioner having jurisdiction over the relevant case, as per the procedure specified by the Board.

Practical checklist

Glossary

Collegium

Two or more Chief Commissioners, Principal Commissioners or Commissioners specified by the Board for this section.

Relevant case

The case in which the Department is considering whether to defer its appeal on the identical question.

Frequently asked questions