The Central Board of Direct Taxes (CBDT) has directed representatives and counsels of departments appearing before ITAT and other High Courts to seek adjournments in tax litigations affected by the proposed amendments brought forth by Finance Bill 2026. The guidance pertains to cases on interpretative or procedural matters that are likely to be clarified or amended, so as to avoid further litigation and conflict between judicial decisions over the same.
Sections Covered Under the CBDT Direction
Litigation is covered in respect of the following provisions of the Income Tax Act, 1961:
- Section 92CA – Time limits for passing orders by the Transfer Pricing Officer (TPO)
- Section 144C – Time limits for completion of assessment pursuant to Dispute Resolution Panel (DRP) directions
- Sections 153 and 153B – Limitation periods for completion of assessment
- Proposed Sections 147A and 292BA – Procedural safeguards, process and validation of proceedings, with the Document Identification Number (DIN) also relevant.
Departmental counsels are advised to seek adjournments until the proposed amendments are finally brought into law.
Key Amendments Proposed in Finance Bill 2026
Clarification of Time Limits Post-DRP Proceedings:
The Finance Bill 2026 seeks to provide clear and precise time constraints on completion of assessments required after DRP directions. This action is anticipated to clear long-standing ambiguities that have seen courts litigate over limitation issues repeatedly.
Rationalisation of TPO Order Timelines:
Proposals in Section 92CA seek to clarify the time frame within which TPO orders are required to be completed. This is expected to sharply reduce transfer pricing disputes arising from technical time-bar arguments.
Relief on DIN-Related Defects:
If proper compliance exists, it is proposed in this bill to put in place a safeguard that ensures an assessment will not be invalid on non-quoting or defective quoting of the Document Identification Number (DIN).
Other Notable Proposals under Finance Bill 2026
- Extended timelines for filing returns: Original and revised returns may be filed up to 12 months from the end of the relevant assessment year.
- Automation of TDS certificates: Introduction of system-generated electronic TDS certificates, which remove duplication and manual delays.
- Penalty rationalisation: Reduction in multiple penalties for the same default and provision of immunity for genuine and technical errors.
Impact on Taxpayers and Professionals
Such proposed reforms should contribute not only to procedural certainty, but also to less onerous compliance and lower risk of litigation for taxpayers. With respect to transfer pricing documentation, assessment timelines, TDS/TCS compliance, and DIN issues, a more streamlined and technology-enabled approach is anticipated.
Through adjournments in these cases, CBDT has indicated a shift in policy towards litigation management and certainty in tax administration, whereby courts will be able to deal with disputes once the law becomes final.
The Finance Bill 2026 is an important move to simplify tax systems, reduce technical disputes, and encourage voluntary compliance. The direction by the CBDT to seek adjournments supports the approach to avoid frivolous litigation during the transitional period.
