Processing of Tax Returns of Sitting Judges Under New Tax Regime Kept in Abeyance Pending Adjudication

Issue

Facts

• Writ Petition & Interim Order: The assessee, Delhi Tax Bar Association, filed a writ petition against the Income-tax Department, following which an interim order (paragraph 17) was passed directing that returns filed by High Court and Supreme Court Judges under the new tax regime (Section 115BAC of the Income-tax Act, 1961 / Section 202 of the Income-tax Act, 2025) should not be processed.
• Department’s Application: The Income-tax Department moved an application seeking modification of paragraph 17 of the interim order.
• Technical Limitation: The Department stated that tax return processing is fully automated/electronic, and the CPC software cannot automatically identify or isolate returns belonging to sitting Judges; without modification, the processing of all taxpayers’ returns across the country would have to be halted.

Decision

• Mechanism for CPC Identification: The Court directed that Private Secretaries of the Hon’ble Judges email relevant identification details of the Judges to the CPC by 18-08-2026, and the Department was ordered not to process returns for which such intimations are received.
• Procedure for New/Revised Returns: If any Judge proposes to file a new or revised return under the new tax regime, their Private Secretary must send the relevant details to the CPC within 12 hours of filing.
• Status of Demands and Refunds: If any returns of Judges have already been processed and tax demands were raised, those demands must be kept in abeyance pending final adjudication of the writ petition. Any refundable amount found due will not be refunded, and if already refunded, it will remain subject to the final outcome of the writ petition.

Key Takeaways

• Operational Balancing: Courts recognize the operational constraints of fully automated electronic tax-processing systems (CPC) and will adapt procedural directions to avoid stalling nationwide return processing while preserving subject-matter disputes.
• Interim Abeyance Protection: Where the statutory applicability of tax regimes to specific high offices (e.g., Judicial Officers under judicial service conditions) is sub-judice, tax demands and refunds arising from processed returns will be stayed or held in abeyance to prevent procedural prejudice.
• Targeted Intimation Procedure: Direct administrative protocols—such as real-time email notifications by secretarial staff to IT department systems—can be implemented to manually flag and isolate sensitive or sub-judice electronic tax returns.