Lok Sabha Question No. 2582 (UNSTARRED), answered on 2026-03-09
Subject: Lengthy Procedures of Resolving Income Tax Disputes
Ministry: FINANCE
Asked by: Shri Anil Yeshwant Desai

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK SABHA

## UNSTARRED QUESTION NO. 2582

TO BE ANSWERED ON MONDAY, MARCH 09,2026/ PHALGUNA 18, 1947 (SAKA)

## LENGTHY PROCEDURES OF RESOLVING INCOME TAX DISPUTES

## 2582: SHRI ANIL YESHWANT DESAI

Will the Minister of Finance be pleased to state:

- (a)  whether it is a fact that there are several lengthy procedures are still involved in resolving dispute regarding income tax charged from the taxpayers, if so, the details thereof;
- (b)  whether the Government is considering making any changes in its dispute resolve mechanism, if so the details thereof; and
- (c)  the  number  of  cases are  involved  in  the  court  of  law  in  respect  of  payment  of Income Tax during last three years?

## ANSWER

## THE MINISTER OF STATE IN THE FINANCE

## (SHRI PANKAJ CHAUDHARY)

- (a) The  procedures  for  resolving  disputes  are  not  lengthy  and  have  been  further simplified  over  the  years  and  some  of  the  steps  taken  by  the  Income-tax Department in recent years to simplify dispute resolution are as follows:
- i. Faceless Appeals Scheme, 2021 has been introduced to provide convenience to the taxpayers.
- ii. Adoption of Advance Pricing Agreements ('APA') provides for determining the Arm's  Length  Price  ('ALP')  in  advance,  in  relation to an  international transaction.
- iii. MAP  (Mutual  Agreement  Procedure)  is  an  alternate  tax  dispute  resolution mechanism available to the taxpayers under the DTAAs for resolving disputes giving rise to double taxation or taxation not in accordance with DTAAs.
- iv. The Direct Tax Vivad se Vishwas Scheme, 2024 was introduced as a one-time dispute  resolution  measure  aimed  at  settling  pending  income-tax  litigation, facilitating  timely  revenue  collection  for  the  Government,  and  providing certainty and relief to taxpayers.
- v. The  monetary  limits  for  filing  appeals  by  the  Department  before  appellate forums  are  revised  periodically  to  ensure  that  litigation  is  pursued  in  cases involving substantial tax effect. The recent revision was done vide Circular No. 9/2024 dated 17 th  September, 2024.
- (b) In order to improve the dispute resolution mechanism, following measures have been taken vide Finance Bill, 2026.
- i. Extending the scope of Immunity to cases in which penalty has been imposed for misreporting of income:

Section 270AA provides for immunity from penalty and prosecution for cases of under-reporting of income where assessee makes the payment of all tax and interest  as  per  the  assessment  or  reassessment  order  within  the  period specified in the demand notice and no appeal is filed against such assessment or reassessment order. However, such immunity was only available where the income was omitted or understated was not in the nature of misreporting of income.

Vide Finance Bill, 2026, it has been proposed to increase the scope of immunity so that taxpayers can seek immunity even when under-reporting arises due to misreporting. This broadens the scope of dispute resolution to include a wider range  of  assessment  cases  that  involve  errors  or  discrepancies  in  the taxpayer's submissions, not just simple under-reporting.  It has been further proposed that such immunity can be provided by payment of additional income tax amounting to 100 % of the tax payable on the misreported income in lieu of the penalty.

- ii. Increase in scope of the Updated Return

Vide Finance Bill, 2026, scope of filing the updated return has been increased to allow filing of updated return in response to notice of reassessment issued under  section  148  of  the  Act.  Accordingly,  where  updated  return  is  filed  in response  to  the  reassessment  notice  and  aggregate  of  tax  and  interest alongwith  additional  income-tax  is  paid  on  such  issue,  such  issue  will  be resolved by filing the updated return.

The amendment proposed by the Finance Bill, 2026 to extend and liberalise the scope of filing an updated return under section 139(8A) of the Income-tax Act, 1961  significantly strengthens the framework  of alternate dispute resolution within the direct tax regime.

- iii. Imposition of penalty as part of Assessment Order:

Vide Finance Bill, 2026, it has been proposed to impose the penalty alongwith assessment order. The said procedure will be applicable from 1 st  April, 2027.

It will substantially reduce the compliance burden on the taxpayers as separate litigation  of  assessment  and  penalty  will  be  clubbed  together  in  a  single litigation.

- (c) The number of cases involved in the court of law in respect of payment of Income Tax during last three years are given below:

| FY       | Authority     | Pendency of appeals at the end of the year   |
|----------|---------------|----------------------------------------------|
| 2022- 23 | High Court    | 32,521                                       |
|          | Supreme Court | 4,330                                        |
| 2023- 24 | High Court    | 38,099                                       |
|          | Supreme Court | 5,916                                        |
| 2024- 25 | High Court    | 34,486                                       |
|          | Supreme Court | 6,338                                        |

Source: Research and Statistics Wing, o/o Pr. Director General of Income-tax (Admin & TPS) vide OM F.No. H-1101/1/2022-JDIT-(DRS)/214 dated 27.11.2025

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