Section 375 Procedure when assessee claims identical question of law is pending before High Court or Supreme Court.

Income-tax Act, 2025

At a Glance

Clause 375 of the Income Tax Bill, 2025 (Old Version) prescribes a procedure permitting an assessee to declare that a question of law arising in one tax-year is identical to a question pending before a High Court or the Supreme Court in another tax-year; if accepted, the Assessing Officer or appellate authority may apply the eventual decision in the pending matter and the assessee waives raising that question on further appeal. This measure is aimed at avoiding repetitive appeals and conserving adjudicatory resources; it affects taxpayers, revenue officers and appellate authorities. Effective date: Not stated in the document.

Background & Scope

Statutory hooks: Clause 375 sits within Part B - "Special provisions for avoiding repetitive appeals" - of the Income Tax Bill, 2025. It interacts expressly with certain provisions of the Income-tax Act, 1961 by reference to sections governing appeals and references to High Courts and the Supreme Court (sections 256, 260A, 257, 261 of the 1961 Act) and with proposed domestic appellate provisions (sections 365, 367 of the Bill). The clause covers situations in which an assessee contends that a "question of law" in a pending proceeding for one tax year (the relevant case) is identical to a question pending in another tax year (the other case), and where the other case is pending before the High Court or Supreme Court under specified routes. Definitions provided within the clause include "appellate authority", "case" and "subsequent appeal before a higher forum".

Statutory Provision Mode

Text & Scope

Clause 375 applies "Irrespective of anything contained in this Act" - signalling an overriding, special-procedure character. Key elements/ingredients:

• An assessee must claim that (a) a question of law in his case for a tax year (referred to as the relevant case) is identical with a question of law in his case for another tax year (the other case); and (b) that question of law in the other case is pending before specified fora: High Court (reference under s.256 or appeal under s.260A of the Income-tax Act, 1961), Supreme Court (reference under s.257 or appeal under s.261 of the 1961 Act), High Court on appeal u/s 365, Supreme Court on appeal u/s 367, or in a Special Leave Petition under Article 136 against the order of the Appellate Tribunal or jurisdictional High Court.
• The assessee may furnish a declaration to the Assessing Officer or the appellate authority, "in such form and manner, as prescribed", undertaking that if the authority applies the final decision in the other case to the relevant case, the assessee will not raise the question of law in any appeal or subsequent appeal before a higher forum.
• Where a declaration is furnished to an appellate authority, that authority must call for a report from the Assessing Officer on the correctness of the assessee's claim and must allow the Assessing Officer an opportunity to be heard if requested.
• The Assessing Officer or the appellate authority may admit or reject the claim by a written order; such order is final and not subject to appeal or revision.
• If admitted, the authority may dispose of the relevant case without awaiting the final decision in the other case; when the decision in the other case becomes final, it shall be applied to the relevant case and the earlier order amended if necessary.
• Definitions: "appellate authority" means Joint Commissioner (Appeals), Commissioner (Appeals) or the Appellate Tribunal; "case" covers proceedings for assessment of total income or imposition of penalty/fine; "subsequent appeal before a higher forum" is defined as the specified appeals u/ss 365/367 or SLP under Article 136.

Interpretation

The clause frames an administrative mechanism to prevent multiplicity of litigation by enabling the parties and revenue authorities to treat a pending higher-court decision as determinative for materially identical legal questions across tax years. The overriding phrase "Irrespective of anything contained in this Act" signals that the procedure is to be applied even if other procedural provisions might suggest otherwise. Interpretation is directed by the clause's objective language: identity of the question of law between tax years and the pendency of the other case before the enumerated higher fora are threshold requirements. The clause mandates a report and hearing where the declaration is made to an appellate authority; this denotes procedural safeguards and invites a fact-sensitive assessment by the Assessing Officer/appellate authority regarding identity and correctness of the claim.

Exceptions/Provisos

No express exceptions or provisos beyond the admission/rejection mechanism are included. The clause contemplates finality of the order under sub-section (3) - "shall be final and shall not be called in question in any proceeding by way of appeal or revision under this Act." There is no textual carve-out for interests of third parties, no express time-limit for filing the declaration, and no express provision about consequences where the other case's decision is adverse to the assessee (beyond the amendment power in sub-section (6)).

Illustrations

• Example 1: A assesses for AY 2023-24 has a legal question on the taxability of a particular transaction. The same legal question in relation to AY 2020-21 is pending as a reference before the High Court under s.256 of the 1961 Act. A furnishes the declaration to the Commissioner (Appeals); if accepted, the Commissioner may dispose of A's AY 2023-24 proceedings consistent with the eventual High Court decision and A agrees not to raise that question in appeal. (Based solely on clause text.)
• Example 2: B has a penalty proceeding in the Assessing Officer for AY 2021-22 and a substantially identical legal question is the subject of a Special Leave Petition pending in the Supreme Court against the Tribunal's order for AY 2019-20. B files the declaration with the AO; if admitted, the AO can dispose of AY 2021-22 and later amend the order when the Supreme Court's decision in the other case becomes final. (Based solely on clause text.)

Interplay

Clause 375 expressly cross-refers to provisions of the Income-tax Act, 1961 (sections 256/260A/257/261) and to appellate sections within the Bill (ss.365/367) as loci where the "other case" may be pending. The clause anticipates application of an eventual final decision across tax years by mandating amendment of earlier orders "in conformity" with the final decision. The clause does not reference rules or notifications for procedural particulars beyond the delegated power to prescribe form and manner; detailed forms, time limits and formats are left to subordinate legislation ("as prescribed").

Differences Between the Two Provisions and Practical Impact

Comparison of Clause 375 of the Income Tax Bill, 2025 (Old Version) with Section 375 of the Income-tax Act, 2025) shows only minor drafting and stylistic differences; no substantive change in legal effect is discernible from the texts provided.

• Prescriptive language: The Bill (Clause 375(1)) uses "in such form and manner, as prescribed," whereas the enacted Section 375 uses "in such form and manner, as may be prescribed."
  • Practical impact: purely stylistic; the enacted version makes explicit the usual delegated-legislation formulation but produces no material change in procedure.
• References to internal cross-references: The Bill refers to "such case being hereafter in this section referred to as the relevant case" and "such case being hereafter in this section referred to as the other case." The enacted section uses "such case being herein referred to as the relevant case" and "such case being the other case."
  • Practical impact: terminological only; no substantive effect on scope or application.
• Sub-section wording: Clause 375(3)(b) in the Bill states "reject the claim if not so satisfied." The Act states "reject the claim if he or it is not so satisfied."
  • Practical impact: no legal difference - merely clarifies the subject (he or it) - no change to the decision-making power.
• Heading of definitions: Clause 375(7) begins "In this section,-" while Section 375(7) begins "For the purposes of this section,-".
  • Practical impact: drafting variation only.

Overall practical impact: The differences are textual and stylistic; they do not alter the substantive procedure, the rights or obligations of the assessee, or the powers of the Assessing Officer/appellate authorities as laid down in the Bill. The functional effect - enabling an assessee to furnish a declaration seeking application of a pending higher-court decision in another tax year and thereby avoid repetitive appeals - remains the same.

Practical Implications

• Compliance and risk areas: Taxpayers can strategically elect to trigger the clause by furnishing the prescribed declaration, but must ensure the question of law is truly identical across years - the clause requires an assessment of "identity", and mischaracterisation risks rejection. The finality of an order under sub-section (3) limits appellate challenges to the admission/rejection decision: that exclusion of review creates risk if the authority admits or rejects incorrectly; however the clause makes that decision unappealable under the Act.
• Record-keeping/evidence: The clause mandates a report from the Assessing Officer where a declaration is submitted to an appellate authority - implying the need for contemporaneous records documenting the identical nature of the legal question, pleadings/orders in the "other case", and timelines. Taxpayers should preserve correspondence and orders establishing pendency of the other case before the specified higher courts. (Procedural specifics such as timelines/forms are Not stated in the document.)

Key Takeaways

• Clause 375 provides an administrative mechanism to avoid repetitive appeals by allowing an assessee to bind himself not to raise an identical question of law if the authority agrees to apply the outcome of a pending higher-court case in another tax year.
• Admission of the claim requires the Assessing Officer or appellate authority to be satisfied of identity; that admission/rejection is final and not subject to appeal or revision under the Act.
• Where admitted, the authority may dispose of the relevant case without awaiting the higher-court decision; once the other case becomes final, the earlier order shall be amended in conformity.
• Definitions confine the mechanism to proceedings relating to assessment of total income or imposition of penalty/fine and to specified appellate fora.
• The clause leaves procedural particulars (forms, manner, timelines) to delegated prescription - those details are Not stated in the document.
• No express carve-outs for third-party interests or explicit guidance on consequences where the higher court decision is adverse are provided beyond the amendment power.

Full Text:

Section 375 Procedure when assessee claims identical question of law is pending before High Court or Supreme Court.