Section 366 of the Income-tax Act, 2025 — Case Before High Court to Be Heard by Not Less Than Two Judges

In plain language

What Section 366 says in plain English

Section 366 of the Income-tax Act, 2025 lays down a simple but important rule about how an income-tax appeal is heard once it reaches a High Court. It says that any such case must be decided by a bench of not less than two Judges — never by a single Judge sitting alone. This is the 2025 Act's re-enactment of the old Section 260B of the Income-tax Act, 1961, carried forward almost word-for-word.

• Sub-section (1) — Minimum bench of two: When an appeal is filed before the High Court under Section 365 (Appeal to High Court), it "shall be heard by a bench of not less than two Judges" and decided according to the opinion of those Judges or the majority of them.
• Sub-section (2) — When Judges disagree: If the two (or more) Judges cannot form a majority, they must state the specific point of law on which they differ. That point alone is then referred to one or more other Judges of the same High Court, and it is decided by the majority of all the Judges who have heard the case — including the ones who heard it first.

Who this applies to

Section 366 is a procedural safeguard, not a charging or exemption provision, so it does not deal with any rupee amount of tax. It applies whenever a tax dispute climbs to the High Court stage, which typically means:

• Taxpayers (individuals, HUFs, firms, LLPs, companies, trusts) who appeal an order of the Income-tax Appellate Tribunal (ITAT) to the High Court on a substantial question of law.
• The Income-tax Department / Principal Commissioner or Commissioner, who may equally appeal a Tribunal order to the High Court.
• The High Court itself, which is directed to constitute a bench of at least two Judges to hear the matter.

Key conditions and features

• Minimum two Judges — no single-Judge disposal. A Division Bench (two Judges) is the floor; a larger bench is permitted but never fewer.
• Decision by majority. The verdict follows the opinion of the Judges, or the majority where they are more than two.
• Tie-breaker for split verdicts. If a two-Judge bench splits 1-1, the disputed point of law goes to a third (or more) Judge; the final answer follows the majority counting all Judges who heard it.
• Only on income-tax appeals. The rule governs appeals under the income-tax appellate chapter, not the High Court's general writ or constitutional jurisdiction.

How it fits with the surrounding sections

Section 366 sits inside Chapter XVIII (Appeals, Revisions and Alternate Dispute Resolution) of the 2025 Act and is best read alongside its neighbours:

• Section 365 — Appeal to High Court creates the right of appeal itself (available only on a substantial question of law from a Tribunal order). Section 366 then tells the Court how to constitute the bench that hears that appeal.
• Section 367 — Appeal to Supreme Court is the next rung: if a High Court, on its own motion or on application, certifies the case as fit, the matter can travel to the Supreme Court.

Practical implications for taxpayers

• Better quality, less arbitrariness. Two judicial minds reduce the risk of an idiosyncratic single-Judge ruling and promote consistent interpretation of tax law.
• Expect a Division Bench. When you or the Department file under Section 365, the matter is listed before a two-Judge bench — this is why income-tax appeals are cause-listed before Division Benches, not single Judges.
• Split verdicts add time. A 1-1 disagreement means the point of law is re-heard by another Judge, so a split can lengthen the process — but it produces a clear, authoritative answer.