Section 369 of the Income-tax Act, 2025 — Tax to be Paid Irrespective of Appeal (No Automatic Stay of Demand)

In plain language

What Section 369 actually says

Section 369 of the Income-tax Act, 2025 lays down a short but powerful rule: merely filing an appeal to the High Court or the Supreme Court does not put your tax on hold. The statutory language is: "Irrespective of the fact that an appeal has been preferred to the High Court or the Supreme Court, tax shall be payable as per the assessment made in the case." In plain words, the assessed tax stays due and collectible even while your appeal is being fought in the higher courts.

This provision is the 2025 Act's re-enactment of Section 265 of the Income-tax Act, 1961 ("Tax to be paid notwithstanding reference, etc."), carried forward with the same principle. It sits in Chapter XVIII (Appeals, Revisions and Alternate Dispute Resolutions) and comes into effect from 1 April 2026.

Who it applies to

• Any taxpayer — individual, HUF, firm, LLP or company — who has an appeal pending before the High Court (Section 365) or the Supreme Court (Section 367).
• It also covers the situation where the Department itself has appealed; the assessed amount does not become uncollectible just because litigation is on.
• It does not deal with first-level appeals before the Joint Commissioner (Appeals) or Commissioner (Appeals), or the Income Tax Appellate Tribunal — those stages are governed by their own recovery and stay provisions.

The key idea: no automatic stay

Filing an appeal is not the same as getting a stay. Section 369 makes clear that the appeal, by itself, gives you no protection from recovery. If you want the demand held in abeyance, you must separately apply for a stay — either to the Assessing Officer, to the appellate authority, or to the court hearing the appeal. The court retains inherent power to grant a stay, but the section itself grants none.

• Demand remains enforceable: The Assessing Officer can continue recovery action (attachment, garnishee notices, etc.) unless a stay is granted.
• Interest keeps running: Unpaid tax attracts interest under the Act's recovery provisions until it is paid.
• Refund if you win: If the High Court or Supreme Court decides in your favour, the assessment is amended and any excess tax paid is refunded to you, usually with interest.

How it interacts with related sections

• Section 365 / 367: Create the right to appeal to the High Court and Supreme Court — Section 369 simply says that right does not freeze the tax.
• Notice of demand and default provisions: The demand raised on assessment continues to operate; a stay application is the recognised route to avoid being treated as an assessee in default.
• Amendment of assessment after appeal: Once the court rules, the assessment is revised and tax is refunded or recovered based on the final decision.

Practical implications for taxpayers

• Budget for the tax even while you litigate. Assume the money is payable now; do not treat an admitted appeal as a licence to hold back.
• Move a stay application early. A well-drafted stay petition, often supported by paying a part of the disputed demand (commonly around 20% in practice at earlier stages), improves your chances of holding recovery.
• Weigh interest cost. If you lose, you pay interest on the withheld amount. If your case is strong and you have surplus funds, paying under protest can save interest, since you get a refund with interest if you succeed.