No appeal by revenue on an identical question of law pending before jurisdictional High Court or Supreme Court- Finance Bill 2022 proposes
According to section 158AA of the Income Tax Act, if Commissioner or the Principal Commissioner is of the opinion that any question of law in case of the assessee is identical with a question of law arising in his case of any other assessment year which is pending in appeal before the Supreme Court against an order of the High Court which was in favor of assessee, he may direct the A.O. to make an application to the ITAT that an appeal on such question of law may be filed when the decision on such question becomes final in that other case.
In order to reduce the litigation burden before jurisdictional Hon’ble High Courts or Tribunals, a new section 158AB is proposed to be inserted. According to the newly proposed section, where collegium (2 or more Chief Commissioner or Principal Commissioners or Commissioners of Income Tax) is of the opinion that a question of law in relevant case is identical with the already raised question of law related to the same assessee in any other assessment year or any other assessee in any assessment year and the same is pending before jurisdictional High Court or Supreme Court in any appeal or SLP, such collegium may decide and intimate the Commissioner or Principal Commissioner not to file any appeal, at this stage, to the ITAT or the High Court against the orders of the CIT(A) or the ITAT, as the case may be.
On receipt of the communication from Collegium, the Commissioner or the Principal Commissioner shall direct the A.O. to file an application in prescribed form before ITAT or jurisdictional High Court within 60 days of receipt of the order of the CIT(A) or within 120 days of receipt of the order of the ITAT, as the case may be, that appeal on the question of law arising in the relevant case shall be filed once the pending identical question attains finality in such other case.
However, the Commissioner or Principal Commissioner shall direct the A.O. to file the application in the prescribed form only after obtaining acceptance from the assessee that the question of law in other case is identical to the relevant case. In case no acceptance is received from the assessee, the Commissioner or the Principal Commissioner shall direct the A.O. to proceed for appeal before the ITAT or jurisdictional High Court, as the case may be.
Furthermore, if the order of the CIT(A) or ITAT is not in conformity with the final decision on such identical question of law in that other case and when such order is received, the Commissioner or Principal Commissioner may direct the A.O. to appeal to the ITAT or the jurisdictional High Court, as the case may be.
The Memorandum to the Finance Bill 2022 has illustrated the above provision with the help of the following example:
Suppose a question of law (Q) has arisen in the case of an assessee (A) and A has received a favorable decision on a question (Q) from the CIT(A). However, in the case of the assessee (B), the department is in appeal before the High Court or Supreme Court on the identical question of law. In this situation, the provisions of newly proposed section 158AB can be invoked by revenue to defer the appeal on the question (Q) in case of the assessee (A) before ITAT till the decision on the similar question is communicated to the A.O. having jurisdiction over the assessee (A). It should be noted that such a deferment shall be subject to the acceptance of the assessee (A).
The newly proposed section 158AB shall be effective from 01-04-2022. The Finance Bill, therefore, proposes to provide a sunset clause to the existing provisions of section 158AA(1) to provide that no direction shall be given u/s 158AA(1) on or after 01-04-2022.
Disclaimer: The above article is based upon the proposals made by the Finance Bill, 2022, and is meant for educational purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article.
