APPEALS, REVISIONS AND ALTERNATE DISPUTE RESOLUTIONS 2025 & INCOME TAX RULE ,2026
A. TRANSITIONAL ISSUES REGARDING APPEALS
Q7.1 What are the key provisions contained in the Chapter on Appeals, Revision and Dispute Resolution Committee (DRC) under the Income-tax Act, 2025?
Ans: The Chapter on Appeals, Revision and Alternate Dispute Resolution under the Income-tax Act, 2025 comprehensively consolidates the entire remedial framework of the Act. It covers first appeals before the Joint Commissioner (Appeals) and Commissioner (Appeals) (Sections 356–360), appeals to the Appellate Tribunal (Sections 361–364), further appeals to the High Court and Supreme Court (Sections 365–368), and general provisions relating to limitation, monetary limits and effect of appeals. It also incorporates revisionary powers of the Competent Authority (Sections 377–378), the Dispute Resolution Committee mechanism (Section 379), the Advance Ruling framework (Board for Advance Rulings), and the structured mechanism for avoiding repetitive litigation through Sections 375 and 376.
Q7.2 Is there any change in appellate hierarchy under Income-tax Act, 2025 vis-avis Income-tax Act, 1961? Is there any change in the powers of the appellate authorities or the procedure for deciding the appeal?
Ans: No, there is no structural change in the appellate hierarchy under the Income-tax Act, 2025. The architecture of appellate remedies remains intact and continues in the same sequential manner:
Assessing Officer → JCIT(A)/CIT(A) → ITAT → High Court → Supreme Court The powers of appellate authorities — including power to confirm, reduce, enhance or annul assessment, admit additional grounds, call for remand report, rectify mistakes, grant stay subject to conditions, etc. has remain materially unchanged. The procedural framework also remains unchanged.
Q7.3 Is there any change in the limitation period for filing appeal in the new Income-tax Act, 2025 vis a vis the Income-tax Act, 1961?
Ans: The limitation period for filing appeal in Income-tax Act, 2025 as against Incometax Act, 1961 has remains unchanged.
Q7.4 If an appeal is pending before the CIT(A) as on 01.04.2026, will it be decided under the Income-tax Act, 1961 or the Income-tax Act, 2025? Do I need to file a new appeal?
Ans: Section 536(2)(e) of the new Act expressly states that any proceeding pending before any income-tax authority, Appellate Tribunal or Court shall continue and be disposed of as if this Act had not been enacted. Accordingly, the pending appeal shall continue and be disposed of in accordance with the provisions of the Income-tax Act, 1961. No new appeal needs to be filed.
Q7.5 If an appeal is filed after 1 April 2026 in respect of Assessment Year 2026–27 or any earlier assessment year, will it be governed by the Income-tax Act, 1961 or the Income-tax Act, 2025?
Ans: Section 536(2)(c) provides that proceedings initiated on or after 1 April 2026 in respect of a tax year beginning before 1 April 2026 shall be carried out in accordance with the provisions of the repealed Act. Accordingly, even if an appeal is filed after the commencement of the Income-tax Act, 2025, where it relates to Assessment Year 2026–27 or any earlier assessment year, such appeal shall be governed by and disposed of under the provisions of the Income-tax Act, 1961.
Q7.6 Can expired limitation for filing an appeal under the Income-tax Act, 1961 be revived under the Income-tax Act, 2025?
Ans: No. Section 536(2)(k) of the Income-tax Act, 2025 expressly provides that where the time for filing an appeal, revision, or reference had already expired before the commencement of the new Act, such right cannot be revived merely because the new Act prescribes a different or extended limitation period. However, the procedural remedy of condonation of delay may still be available under the old Act where the appellant establishes that, despite due diligence, the appeal could not be filed within time. If the delay is attributable to gross negligence or no sufficient cause is shown, the application for condonation is liable to be rejected.
Q7.7 If rectification of an appellate order passed for Assessment Year 2024–25 by the Commissioner (Appeals) is sought after 1 April 2026, under which Act will such rectification be governed?
Ans: Rectification will lie under the corresponding provision of the Income-tax Act, 1961. Rectification is a continuation of the original appellate proceeding. By virtue of section 536(2)(c) and (e), proceedings relating to a tax year beginning before 01.04.2026 must continue under the Income-tax Act, 1961 framework, including rectification and limitation.
Q7.8 If an appeal for AY 2025–26 is pending as on 01.04.2026, can such appeal be transferred from JCIT(A) to CIT(A) or vice versa?
Ans: Yes. Such appeals can be transferred from JCIT(A) to CIT(A) or vice versa, as provided under section 246(2) and 246(3) of the Income Tax Act, 1961. The corresponding provisions in the new Act are section 356(3)(a) and section 356(3)(b).
Q 7.9 If a case is remanded back by ITAT on or after 01.04.2026 for AY 2023-24, the remand proceedings will be governed by Income-tax Act, 1961 or Income-tax Act, 2025?
Ans. If the ITAT remands a case on or after 01.04.2026 in respect of AY 2023–24, the remand proceedings will continue to be governed by the Income-tax Act, 1961. Section 536(2)(c) and (e) of the Income-tax Act, 2025 expressly provide that proceedings relating to tax years beginning before 01.04.2026 shall be continued and disposed of under the repealed Act as if the new Act had not been enacted. A remand by the ITAT is only a continuation of the original assessment proceedings and does not create a fresh cause under the new law. Therefore, the Assessing Officer must pass the order giving effect, strictly in accordance with the procedural and substantive provisions of the Income-tax Act, 1961.
Q7.10 In respect of AY 2024–25, which Act would govern the filing of an appeal against an assessment order received on 30.03.2025, and what would be the applicable limitation period?
Ans. As the assessment order pertains for Assessment Year 2024–25, the appeal would be governed by the Income-tax Act, 1961 and can be filed even after the commencement of the new Act. The appeal must be filed within the limitation period prescribed under the 1961 Act i.e. 30 days from the date of receipt of the order.
Q7.11 What happens to appeals that are pending before Courts, Tribunal or Commissioner (Appeals) when the new Act comes into force?
Ans: Such appeals continue under the old Act and shall be disposed in accordance with the provisions of the old Act. For instance, if a taxpayer has an appeal pending before the Income Tax Appellate Tribunal regarding AY 2021–22, that appeal will be decided
by applying the provisions of the old Act and not the new Act.
B. PROVISIONS FOR AVOIDING REPETITIVE APPEALS
Q7.12 What were the statutory mechanisms under the Income-tax Act, 1961 for avoiding repetitive appeals on identical questions of law, and how have they been reorganised under the Income-tax Act, 2025?
Ans: Under the Income-tax Act, 1961, avoidance of repetitive litigation was governed by two separate provisions, namely section 158A and section 158AB. Section 158A provided an assessee-driven mechanism whereby the assessee could declare that an identical question of law was pending before the High Court or Supreme Court and agree to abide by its final decision. Section 158AB, on the other hand, enabled a
departmental collegium to defer filing of appeal where the same question of law was already pending before a high court or Supreme Court. Under the Income-tax Act, 2025, these two mechanisms have been reorganised as sections 375 and 376 respectively, thereby streamlining but not altering the earlier framework.
Q7.13 Has the trigger condition for invoking the mechanism changed under the Income-tax Act, 2025 as compared to the Income-tax Act, 1961?
Ans: No, the essential trigger condition remains the same under both enactments. Under sections 158A and 158AB of the Income Tax Act, 1961, the mechanism could be invoked only where an identical question of law arose in the case and the same question was pending before the High Court or the Supreme Court. Sections 375 and 376 of the Income-tax Act, 2025 retain this foundational requirement of identity of the legal issue and its pendency before a higher judicial forum i.e. High Court and Supreme Court. The Income-tax Act, 2025 further provides that such pendency may relate to proceedings under either the Income Tax Act, 1961 or the Income Tax Act, 2025, thereby ensuring continuity across the statutory transition.
Q7.14 At what stage could sections 158A & 158AB be invoked under the Incometax Act, 1961, and has the stage of operation changed under the Income-tax Act,2025?
Ans: Under the Income-tax Act, 1961, section 158A could be invoked during assessment or appellate proceedings when the matter was pending before the Assessing Officer or appellate authority, whereas section 158AB operated at the stage of deciding whether the Department should file a further appeal against an order of the Commissioner (Appeals) or the Tribunal. The Income-tax Act, 2025 maintains an identical structural position by providing in section 375 an assessee-driven mechanism applicable at the assessment or appellate stage, and in section 376 a collegium-based mechanism applicable at the stage of filing further appeal. Thus, the stages of invocation remain consistent with the earlier law.
Q7.15 Is assessee acceptance required under both Acts for deferrment of appeal?
Ans: Yes, the principle of assessee acceptance continues under both enactments. Under section 158A of the Income Tax Act, 1961, the mechanism itself was based on a declaration by the assessee agreeing to abide by the final decision on the identical question of law, and section 158AB also required acceptance of the identity of the question before deferral of appeal. Similarly, under the Income-tax Act, 2025, section 375 is founded on an assessee’s declaration, and section 376 requires concurrence regarding the identity of the legal issue before appeal is deferred. Therefore, there is no substantive change in this respect.
C. DISPUTE RESOLUTION COMMITTEE AND ADVANCE RULING
Q7.16 Has the Dispute Resolution Committee (DRC) framework been substantially changed under the Income-tax Act, 2025?
Ans: No substantive structural change has been made in the Dispute Resolution Committee (DRC) framework. Section 379 of the Income Tax Act 2025 substantially reenacts Section 245MA of the Income-tax Act, 1961. The objective, eligibility criteria, monetary thresholds (variation lower than Rs 10 lakh; returned income lower than Rs 50 lakh), and power to grant penalty waiver and prosecution immunity remain materially the same. The categories of excluded persons also remain the same. The changes are primarily in placement, drafting clarity, and section renumbering.
Q7.17 What are the powers of the Dispute Resolution Committee (DRC) under the Income Tax Act 2025?
Ans: Under Section 379(2) of the Income-tax Act, 2025, it is expressly stated that the DRC may make modifications to the variations in the specified order, apart from granting penalty waiver or prosecution immunity. This clarifies DRC authority to modify tax variations in the specified order.
Q7.18 Do the DRC provisions operate differently during the transition period post 01.04.2026?
Ans: No. The Dispute Resolution Committee (DRC) provisions do not operate differently merely because of the transition after 01.04.2026. By virtue of the savings and transitional provisions of the Income-tax Act, 2025, proceedings relating to tax years prior to its commencement continue to be governed by the Income-tax Act, 1961. Accordingly, the availability and applicability of the DRC mechanism would depend on the Act governing the relevant tax year, and the transition does not create an independent or expanded right to invoke the DRC under the 2025 Act for matters preserved under the 1961 Act.
Q7.19 Where the Income Tax Act, 1961 and Income Tax, Act 2025 defines “specified order” to include a draft assessment order, can an assessee choose between Dispute Resolution Panel (DRP) and Dispute Resolution Committee (DRC)?
Ans: Yes — in principle, both mechanisms are available because a draft order under section 144C of the 1961 Act (section 275(1) of the 2025 Act) falls within the definition of a “specified order” for DRC purposes. However, the availability of DRC is subject to statutory eligibility conditions (such as monetary thresholds, nature of variation, absence of serious offences, etc.). Thus, while the definition permits overlap at the threshold stage, the two remedies are alternative and not concurrent, and the assessee cannot pursue both simultaneously.
Q7.20 Has the Income-tax Act, 2025 introduced any substantive or procedural change in the Advance Ruling mechanism compared to Chapter XIX-B of the Income-tax Act, 1961?
Ans: No substantive or procedural change has been introduced in the Advance Ruling framework under the Income-tax Act, 2025. The Income Tax Act essentially consolidates, renumbers, and streamlines the provisions earlier contained in Sections 245N to 245W of the Income Tax Act’1961 (as amended post-Finance Act, 2021)
Q7.21 If an advance ruling application was pending under the Income-tax Act, 1961 as on 01.04.2026, how will it be dealt with?
Ans: By virtue of section 536(2)(e) and (j), pending proceedings continue unaffected by repeal unless specifically altered. Therefore, a pending advance ruling application shall continue before the competent authority as constituted under the law then in force. The Income Tax Act’2025 does not disturb pending advance ruling proceedings.
D. REVISION OF ORDERS
Q7.22 If no revision under section 263 of the Income Tax Act, 1961 was initiated before repeal, can fresh revision be initiated after 01.04.2026 for a pre-2026 tax year?
Ans: Yes, provided limitation under section 263(2) of the Income-tax Act, 1961 has not expired. Section 536(2)(c) permits initiation of proceedings after 01.04.2026 for earlier tax years, but strictly under the procedure of the Income-tax Act, 1961. However, if limitation has already expired, it cannot be revived under the Income-tax Act, 2025.
Q7.23 Under the Income-tax Act, 2025, does the requirement that an order must be both “erroneous” and “prejudicial to the interests of revenue” continue to apply as the jurisdictional condition for revision of an order?
Ans: The fundamental jurisdictional requirement that the order of the Assessing Officer must be both erroneous and prejudicial to the interests of the revenue continues under section 377 of the Income-tax Act, 2025, just as it existed under section 263 of the Income-tax Act, 1961.
Q7.24 Has the limitation period for revision under Section 263 of the Income-tax Act, 1961 and Section 377 of the Income-tax Act, 2025 undergone any change?
Ans: No substantive changes are made in the outer limitation period. Under both Section 263 of the Income-tax Act, 1961 and Section 377(4) of the Income-tax Act, 2025, revision must be exercised within two years from the end of the financial year in which the order sought to be revised was passed. However, the Income-tax Act, 2025 refines and clarifies the computation mechanism. While the Income-tax Act, 1961 provided for exclusion of time during stay of proceedings or rehearing (under Section 129), the Income-tax Act, 2025 (Section 377(6)) expressly enumerates the periods to be excluded—such as time consumed in rehearing and period during which proceedings are stayed by a court. More importantly, Section 377(7) introduces an explicit 60-day minimum residual period rule, providing that if, after
excluding the relevant periods, the remaining time available for passing the revision order is less than 60 days, it shall automatically stand extended to 60 days.
Q7.25 If an application under section 264 of the Income-tax Act, 1961 is pending as on 01.04.2026, under which Act will it be disposed of — the Income-tax Act, 1961 or the Income-tax Act, 2025?
Ans: A revision application filed under section 264 of the Income-tax Act, 1961 and pending as on 01.04.2026 shall be disposed of under the provisions of the Income-tax Act, 1961. Section 536(2)(c) and (e) of the Income-tax Act, 2025 clearly provide that any proceeding pending on the date of commencement of the new Act, including revision proceedings, shall continue and be disposed of as if the new Act had not been enacted. A revision under section 264 is a statutory proceeding initiated under the repealed Act, and its rights, scope, limitation and powers are governed by that Act.