The Income Tax Act, 2025 ensures legal continuity so taxpayers do not have to restart ongoing disputes when the new law comes into force on 1st April 2026. All appeals, revisions, and proceedings pending before authorities, CIT(A), ITAT, or courts will continue to be governed by the Income Tax Act, 1961 until their final disposal, ensuring no disruption in justice. Even fresh appeals filed after the new Act begins will follow the old law if they relate to assessment years prior to AY 2026–27. Search, seizure, and requisition proceedings initiated before the transition date will also continue under the old regime, preventing procedural conflicts. Revision powers remain intact under the new Act, with added safeguards such as a minimum 60-day window to pass orders to ensure fairness. Overall, while section numbering changes, the appellate structure and core principles remain stable, prioritizing continuity, procedural certainty, and taxpayer protection during the legislative transition.
Arjuna (Fictional Character): Krishna, taxpayers are often involved in long-running legal battles. Now that the Income Tax Act, 2025 is coming, what happens to all those pending appeals which were Filed under Income Tax Act, 1961? Do we have to start our fight from scratch?
Krishna (Fictional Character): Arjuna, the law is like a river; it flows forward but respects the path it has already travelled. The new Act ensures that your justice is not disrupted by the change in the statute.
Arjuna (Fictional Character): Krishna, if a taxpayer has an appeal pending before the CIT(A) or ITAT as of 1st April 2026, should it be filed again?
Krishna (Fictional Character): No, Arjuna. The new Act provides total continuity as follows:
- Any proceeding pending before an authority, Tribunal, or Court on 1st April 2026 will be disposed of as if the 2025 Act had not been enacted. The 1961 Act will continue to govern that specific litigation until its final resolution.
- Even for fresh appeals filed after 1st April 2026, if the matter relates to an Assessment Year prior to the Tax Year 2026-27, the taxpayer must follow the old Act’s procedures.
Arjuna (Fictional Character): Krishna, what happens if the Department initiates a search on a taxpayer just before the new Act starts?
Krishna (Fictional Character): Arjuna, the rules are determined by the start date of the action which are as follows:
- If a search under Section 132 or a requisition under Section 132A was initiated before 1st April 2026, all connected proceedings including the block assessment stay under the 1961 Act.
- Even if the final assessment order is passed long after the 2025 Act commences, the taxpayer is assessed based on the old Act’s provisions.
- Section 536(2)(v) of I.T. Act 2025 ensures that a taxpayer is not caught between two different sets of investigative rules mid-way.
Arjuna (Fictional Character): Krishna, can a taxpayer expect any relief in how revision orders are passed?
Krishna (Fictional Character): Arjuna, the power of revision (Section 377) remains the same, but better clarity has been provided for the taxpayers:
- An order must still be “erroneous and prejudicial to the interests of revenue” to be revised.
- To ensure fairness, if the time left to pass a revision order is less than 60 days (after excluding stay periods), the 2025 Act automatically extends it to 60 days to give the taxpayer a proper hearing.
Arjuna (Fictional Character): Krishna, what should taxpayers learn from this?
Krishna (Fictional Character): Arjuna, while the section numbers may change (like Section 263 becoming Section 377), the principles of justice do not. The Appellate Hierarchy from CIT(A) to the Supreme Court remains unchanged. Trust the transition, keep your records ready, and follow the timelines of the Act that governed your income year!
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