Litigation management when in an appeal by revenue an identical question of law is pending before jurisdictional High Court or Supreme Court.

Section 158AA of the Act provides that where the Commissioner or Principal Commissioner is of the opinion that any question of law arising in the case of an assessee (relevant case) is identical with a question of law arising in his case for another assessment year (other case) which is pending in appeal before the Supreme Court against an order of High Court which was in favour of assessee, he may direct the Assessing Officer to make an application to the Appellate Tribunal stating that an appeal on the question of law in the relevant case may be filed when the decision on the question of law becomes final in the other case, subject to the acceptance of the same by the assessee.

 2. If such a principle could be applied to cases where a question of law is common and where a decision of the jurisdictional High Court, on the same question of law is available, the filing of appeal in such cases can be avoided to reduce the amount of litigation.

3. Therefore, to provide a procedure when an appeal by revenue is pending on an identical question of law, it is proposed to insert a new section 158AB in the Act, to provide that where the collegium is of the opinion that any question of law arising in the case of an assessee for any assessment year (“relevant case”) is identical with a question of law already raised in his case or in the case of any other assessee for an assessment year, which is pending before the jurisdictional High Court under section 260A or the Supreme Court in an appeal under section 261 or in a special leave petition under article 136 of the Constitution, against the order of the Appellate Tribunal or the jurisdictional High Court, as the case may be, in favour of such assessee (“other case”), it may, decide and intimate the Commissioner or Principal Commissioner not to file any appeal, at this stage, to the Appellate Tribunal under sub-section (2) of section 253 or to the High Court under sub-section (2) of section 260A against the order of the Commissioner (appeals) or the Appellate Tribunal, as the case may be.

4. Further, the Commissioner or Principal Commissioner shall, on receipt of a communication from the collegium, direct the Assessing Officer to make an application to the Appellate Tribunal or jurisdictional High Court, as the case may be, in the prescribed form within sixty days from the date of receipt of the order of the Commissioner (Appeals) or within one hundred and twenty days from the date of receipt of the order of the Appellate Tribunal, as the case may be, stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the other case. The Commissioner or Principal Commissioner shall direct the Assessing Officer to make such an application only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case, and in case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed in accordance with the provisions contained in sub-section (2) of section 253 or in sub-section (2) of section 260A.

5. Furthermore, where the order of the Commissioner (Appeals) or the order of the Appellate Tribunal, as the case may be, in the relevant case is not in conformity with the final decision on the question of law in the other case as and when such order is received, the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal or the jurisdictional High Court, as the case may be, against such order.

6. It is also proposed that for the purposes of the proposed section, “collegium” shall comprise of two or more Chief Commissioners or Principal Commissioners or Commissioners of Income-tax, as specified by the Board in this regard.

7. In order to illustrate the point, it may be supposed that a question of law (Q1)A1 has arisen in case of an assessee (A1) and the A1 has received a favourable decision on Q1A1 from the Commissioner (Appeals). Further, in case of another assessee (A2), where Department’s appeal on identical question of law (Q1)A2 is pending before the jurisdictional High Court or the Supreme Court and the collegium is of the opinion that Q1A1 and Q1A2 are identical questions of law. Then in this situation, provisions of proposed section 158AB can be invoked by Revenue to defer filing of appeal for decision on Q1A1 to the higher appellate authority in ITAT till a decision on Q1A2 is communicated to Assessing Officer having jurisdiction over the assessee, A1. Such a decision on deferment will be subject to acceptance by the assessee A1 that question of law in his case Q1A1 is identical to Q1A2 in the case of the assessee A2.

8. With the introduction of section 158AB, a sunset clause is proposed to be inserted in sub-section (1) of section 158AA to provide that no direction shall be given under the said sub-section on or after 1st April, 2022.

This amendment will take effect from 1st April, 2022.

[Clauses 51 and 52]

 

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Full Text:

Budget 2022-23 + FINANCE Bill, 2022

Deferment of Revenue Appeals on identical legal questions - procedure to postpone filing pending final decision with assessee consent. The proposed section 158AB allows a collegium of senior tax commissioners to advise non-filing of a revenue appeal where an identical question of law is pending in another case; the Commissioner must then direct the Assessing Officer to apply in prescribed form to defer filing of the appeal until the other case attains finality, provided the assessee accepts that the questions are identical, and may later direct an appeal if the final decision is not consistent with the relevant case.