Chapter XVIII - Appeals, Revisions and Alternate Dispute Resolutions
Section 385
Section 385: appellate authority not to proceed in certain cases
Section 385 prevents an income-tax authority or the Appellate Tribunal from proceeding to decide an issue covered by a resident applicant's application under Section 383(1).
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Need advice on Section 385?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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).
Introduction
The restriction is issue-specific: it concerns the issue for which the resident applicant made an application under Section 383(1). The text names income-tax authorities and the Appellate Tribunal.
Key takeaways
Resident applicant
The statutory trigger is an application under Section 383(1) made by an applicant who is a resident.
Same issue
The authority or Tribunal must not proceed to decide the issue covered by that application.
What Section 385 says
"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)."
When this provision applies
Identify the resident applicant and the precise question stated in the Section 383(1) application. Compare that question with the issue the income-tax authority or Appellate Tribunal proposes to decide; a shared transaction label is not a substitute for an issue comparison.
Check the advance-ruling application record and the applicable applicant category under Section 380. Section 385 should not be presented as a facility for every person to stop any proceeding simply by sending an informal request for advice.
Limits and procedural safeguards
The statutory restriction concerns deciding the covered issue. It does not say that every unrelated issue, tax year or obligation involving the applicant is automatically suspended.
Filing the application does not decide the tax question in the applicant’s favour. Keep subsequent admission, rejection, withdrawal and ruling records and assess their effect through the applicable framework; Section 385 states no universal end date for every procedural situation.
Step-by-step review
1. Obtain the filed application, acknowledgement and exact question on which a ruling is sought.
2. Confirm the resident-applicant condition and identify the corresponding issue in the other proceeding.
3. Place the application and issue comparison before the relevant authority or Tribunal.
4. Track the Board’s subsequent orders and obtain advice on the effect on the overlapping issue.
Hypothetical example
Hypothetical illustration: a qualifying resident applicant asks for an advance ruling on a particular transaction’s tax treatment while an assessment also contains an unrelated depreciation dispute. The Section 385 analysis concerns the same issue identified in the application. It should not be described as an automatic suspension of the unrelated depreciation issue.
Records to prepare
Application, acknowledgement, resident status and applicable applicant category.
A comparison of the exact ruling question with the pending issue.
Orders and communications recording subsequent procedural developments.
Official amended Act source
Step-by-step flow for applying Section 385
- 1
Has an application been made under section 383(1)?
- No: Section 385 does not apply.
- Yes: Go to the next step.
- 2
Is the applicant a resident?
Section 385 covers only an application made by an applicant who is a resident.
- No: Section 385 does not apply.
- Yes: Go to the next step.
- 3
Identify the issue for which the application was made
The bar applies to that issue only, not to everything in the applicant's case.
- 4
Is an income-tax authority or the Appellate Tribunal about to decide that issue?
- Yes: It must not proceed to decide that issue.
- No, it is another issue: That issue can be decided in the normal way.
Practical checklist
Do
- Identify the exact issue put in the resident applicant’s section 383(1) application.
- Compare that issue with the issue before the income-tax authority or Appellate Tribunal.
- Application, acknowledgement, resident status and applicable applicant category.
- A comparison of the exact ruling question with the pending issue.
- Orders and communications recording subsequent procedural developments.
Avoid
- Do not extend the bar automatically to unrelated issues or to an application outside the resident-applicant wording.
Illustrative example
Worked example: assessment running alongside an advance ruling application
Hypothetical facts (illustration only, not a real taxpayer): A resident company makes an application under section 383(1) on one issue: how a particular receipt is to be treated in computing its total income. Its assessment for the same tax year is in progress before the Assessing Officer, who is also looking at an unrelated expense claim.
Resident applicant
The company is a resident and has applied under section 383(1), so Section 385 applies.
Issue covered
The Assessing Officer must not proceed to decide how the receipt is treated, because that is the issue in the application.
Other issues
The unrelated expense claim is not part of the application, so Section 385 does not stop the Assessing Officer from dealing with it.
Merits
Section 385 only stops the authority from deciding; the answer on the receipt comes through the advance ruling process.
Outcome
- The Assessing Officer leaves the receipt issue undecided under Section 385.
- If the company were a non-resident, Section 385 would not apply.
Glossary
- Overlapping issue
- The issue in another proceeding that is also the subject of the resident applicant’s Section 383(1) application.
Frequently asked questions
Does Section 385 stop proceedings on every issue involving the applicant?
No. The text refers to the issue for which the Section 383(1) application was made.
Which decision makers are named?
Income-tax authorities and the Appellate Tribunal.
Does an advance-ruling application decide the merits of the tax issue?
No. Section 385 restricts the overlapping decision process; it does not itself answer the tax question.
Is an informal request for tax advice enough to invoke this section?
The statutory trigger is an application by a resident applicant under Section 383(1), not an informal advice request.
Need help applying this provision to your situation?
Talk to our tax team about advance ruling proceedingsLast updated 10 October 2026