Section 376 of the Income-tax Act, 2025 — Deferring Departmental Appeals When an Identical Question of Law Is Pending Before the High Court or Supreme Court

In plain language

What Section 376 actually deals with (an important clarification)

Despite topic labels that sometimes read "appeal/reference to Supreme Court", Section 376 of the Income-tax Act, 2025 is not the provision that lets you appeal to the Supreme Court. The direct appeal to the Supreme Court is dealt with separately (Section 367), and appeals to the High Court by Section 365. Section 376 is a very different, procedural anti-litigation tool.

Section 376 lays down the procedure the Income-tax Department follows when an identical question of law is already pending before the jurisdictional High Court or the Supreme Court in another taxpayer's case. It carries forward the old Section 158AB of the Income-tax Act, 1961 into the new Act. Its twin, Section 375 (the old Section 158A), is the assessee-driven version of the same idea.

The plain-English idea

• The problem it solves: The same legal question (say, whether a particular receipt is taxable) often arises in hundreds of cases. If the Department files a fresh appeal in every single case while the "lead" case is already before the High Court or Supreme Court, it wastes time, money and clogs the courts.
• The solution: Section 376 lets the Department defer (postpone) filing its own appeal in the follow-on case, wait for the lead case to be finally decided, and then file only if needed.

Who it applies to

• Primarily the tax Department, not the taxpayer. It is a "collegium-based" mechanism operated by senior officers when they are deciding whether to file a further appeal to the Appellate Tribunal or the High Court against an order of the Joint Commissioner (Appeals), Commissioner (Appeals) or the Appellate Tribunal.
• The collegium is a body of two or more Chief Commissioners / Principal Commissioners / Commissioners, as specified by the CBDT.
• The taxpayer is indirectly affected because the Department's appeal in their case is paused until the lead case concludes.

Key conditions and how the machinery works

• Identical question of law: The question of law in the current case must be the same as one already pending before the jurisdictional High Court (in an appeal under Section 365) or the Supreme Court (under Section 367) in another case.
• Collegium decision: The collegium may decide, and inform the Principal Commissioner/Commissioner, not to file an appeal for the time being on that question of law.
• Application to the forum: The Principal Commissioner/Commissioner then directs the Assessing Officer to make an application to the Tribunal or High Court stating that an appeal on that question of law may be filed once the lead case becomes final. This must be done within 120 days of receiving the appellate order.
• Filing after finality: Once the lead case is finally decided, if the decision is against the Department's position (i.e., the earlier order needs to be challenged), the appeal must be filed within 60 days to the Appellate Tribunal or 120 days to the High Court, counted from the date the lead order is communicated.

How it interacts with related sections

• Section 375 — the mirror image: here the assessee declares an identical question is pending and agrees to abide by the final decision, so they need not litigate the point themselves.
• Section 365 (Appeal to High Court) and Section 367 (Appeal to Supreme Court) — the "lead" case that Section 376 waits on is pending under these very sections.
• Sections 356–357 (CIT(A)/JCIT(A)) and 361–362 (Appellate Tribunal) — Section 376 kicks in only after an order from these forums, at the "should we appeal further?" stage.

Practical implications for a normal taxpayer

• If your case has the same legal issue as a bigger pending case, the Department may not immediately drag you into a fresh appeal — reducing your immediate litigation cost and stress.
• But your matter is not closed: the Department has reserved the right to appeal once the lead case is decided, so keep records and expect a possible follow-up within the 60/120-day windows.
• There are no tax "rates" or rupee thresholds in Section 376 itself; the relevant numbers are procedural time limits. (Separately, the Department also observes CBDT monetary limits before filing appeals, but that is a policy, not part of Section 376.)