The Central Board of Direct Taxes (CBDT) has issued fresh instructions to senior income tax officials directing them to seek adjournments in pending cases before High Courts and Income Tax Appellate Tribunal (ITAT) benches where issues proposed to be clarified under the Finance Bill, 2026 are involved.
The move comes in the backdrop of proposed amendments to the Income Tax Act, 1961 aimed at resolving long-standing legal ambiguities arising from conflicting judicial interpretations.
In an official communication addressed to all Principal Chief Commissioners of Income Tax, the CBDT referred to the introduction of the Finance Bill, 2026 in the Lok Sabha on 1 February 2026 by the Union Finance Minister. As part of the rationalisation of direct tax provisions, the Finance Minister proposed a set of amendments described as “clarificatory in nature” to bring certainty to provisions that have been subject to differing judgments across courts.
The communication notes that several legal disputes have arisen due to divergent judicial views on specific procedural and compliance-related aspects under the Income Tax law. These include the time-limit for completing assessments after proceedings before the Dispute Resolution Panel (DRP), the time-limit for passing orders by the Transfer Pricing Officer (TPO), issues relating to the mandatory quoting of Document Identification Number (DIN), and the validity of reassessment notices issued by the jurisdictional Assessing Officer.
To address these issues, the Finance Bill, 2026 proposes amendments to Sections 92CA, 144C, 153 and 153B of the Income Tax Act, 1961. In addition, two new sections—Section 147A and Section 292BA—are proposed to be inserted to further clarify procedural aspects and remove interpretational uncertainties. According to the CBDT, these amendments are intended to provide legislative clarity and ensure uniform application of the law.
In light of the proposed changes, the CBDT has instructed that directions may be issued to Commissioners of Income Tax (Departmental Representatives), Senior Departmental Representatives and standing counsels representing the Income Tax Department before High Courts and ITAT benches. These officers and counsels have been advised to seek adjournments in appeals and writ petitions where the issues involved are directly related to the proposed amendments under the Finance Bill, 2026.
The instruction reflects a cautious approach by the tax administration, aimed at avoiding adverse judicial outcomes while Parliament considers the proposed clarificatory amendments. By seeking adjournments, the department intends to allow the legislative process to conclude so that pending disputes can be examined in light of the amended statutory provisions, once enacted.
The communication further states that the instruction has been issued with the approval of the Member (Administration & Judicial), CBDT, underscoring its official and binding nature for field formations and departmental representatives.
Tax professionals believe that the directive may lead to temporary pauses in litigation involving reassessment procedures, transfer pricing timelines, and DRP-related assessments. However, once the Finance Bill, 2026 is enacted, these clarifications are expected to play a significant role in shaping the outcome of several pending and future income tax disputes.
Overall, the CBDT’s move signals an attempt to bring legislative certainty and reduce prolonged litigation stemming from procedural ambiguities under the Income Tax Act.
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