Transitional Provisions: How Pending Assessments and Appeals Are Protected

For: Litigation and assessment teams, in-house counsel, and CAs handling matters that straddle the 1 April 2026 transition date.

Whenever a tax statute is repealed and replaced, the most immediate practical worry for taxpayers and practitioners with open matters is: does my pending assessment, appeal, or notice survive the change in law? The Income-tax Act, 2025 addresses this directly through transitional provisions, and Indian jurisprudence on statutory repeal and re-enactment provides a well-established backdrop for interpreting them.

1961 Act Position vs 2025 Act Position

The Core Rule

The CBDT’s own FAQs on the transition confirm that repeal of the 1961 Act “does not disturb anything relating to tax years before April 1, 2026” — an assessment completed for an earlier assessment year continues to be valid, and any proceedings pending for earlier years continue as per the relevant transitional provisions. In short: matters relating to periods before the cut-off date are governed, procedurally and substantively, by the 1961 Act even after that Act is formally off the books; only matters relating to Tax Year 2026-27 onwards fall under the new Act.

Judicial Precedents & Their Continued Relevance

Indian courts have developed a substantial body of jurisprudence on how repeal-and-re-enactment situations should be read, which remains directly relevant background for interpreting the 2025 Act’s transitional scheme:

•             State of Punjab v. Mohar Singh, AIR 1955 SC 84 — The Supreme Court held that whenever a statute is repealed, the consequences under Section 6 of the General Clauses Act follow unless a different intention appears from the new Act; where repeal is followed by fresh legislation on the same subject, courts must examine the new Act specifically to see whether it manifests an intention to destroy existing rights and liabilities, rather than assuming continuity or discontinuity by default. This is the foundational test that would apply if any ambiguity arose in reading the 2025 Act’s transitional provisions.

•             CIT v. Shah Sadiq & Sons — Addressed the question of whether rights that accrued under a repealed provision survive a repeal-and-reenactment, reinforcing that a self-contained repealing-and-saving provision in the new statute can determine the outcome independently of the General Clauses Act, where the new Act’s own transitional clause deals with the matter comprehensively (as the 2025 Act’s transitional provisions appear designed to do).

•             Fibre Boards (P) Ltd. v. CIT (2015) 10 SC 333 — Clarified the relationship between “omission” and “repeal” for the purposes of Section 6 of the General Clauses Act, holding that where a provision is effectively obliterated from the statute book, the substance of that obliteration — not merely the label used — determines whether savings principles apply.

•             General Finance Co. v. Assistant CIT — A Supreme Court decision under the Income-tax Act, 1961 itself, illustrating that the distinction between “omission” and “repeal” is not academic: it directly decided whether prosecution could continue after a provision was removed from the statute, and is a useful precedent for understanding the sensitivity of transitional drafting to precise wording.

•             Gammon India Ltd. v. Special Chief Secretary — Supports the proposition that where the legislative intention is to repeal and consolidate, courts will look past the specific words used (“repeal,” “omission,” “substitution”) to the substance of what the legislature intended, which is instructive for reading the 2025 Act’s own transitional chapter holistically rather than word-by-word.

Because the Income-tax Act, 2025 appears to include its own express transitional provisions covering continuation of pending proceedings, practitioners should treat those express provisions as the primary source — the general law on repeal and savings under the General Clauses Act operates as a backstop only to the extent the new Act’s own transitional scheme is silent or ambiguous on a particular point.

Practical Example

A company under reassessment proceedings for AY 2023-24, with the notice issued and hearings ongoing as of March 2026, should expect those proceedings to continue under the 1961 Act’s procedural and substantive provisions even after 1 April 2026 — the transition does not require the department to restart the matter under the new Act’s numbering or procedure. Conversely, a fresh assessment for Tax Year 2026-27 (income earned from 1 April 2026) is governed entirely by the 2025 Act from the outset — there is no partial application of the old Act to that year.

Points of Caution for Practitioners

•             Do not assume a pending matter automatically lapses or must be refiled merely because the governing Act has changed — verify the specific transitional provision that applies before advising a client either way.

•             When drafting submissions or appeals for matters spanning the transition date, cite the 1961 Act provisions for the substantive period in question, and reference the 2025 Act’s transitional clause (not the General Clauses Act alone) as the primary legal basis for continuity.

•             Where a transaction or assessment year straddles the two Acts in an unusual way (e.g., a search conducted before 1 April 2026 but appeal proceedings expected to run into FY 2026-27), seek a documented legal opinion rather than assuming default continuity — transition-year fact patterns are exactly where disputes are most likely to arise.

•             Keep client files clearly labelled by governing Act (1961 vs 2025) to avoid procedural errors, such as citing the wrong appellate forum or limitation period.

•             Monitor for any CBDT circular specifically clarifying edge cases in the transitional scheme, since new consolidating statutes commonly generate a wave of clarificatory guidance in their first one to two years.

Compliance Checklist

•             ☐ Audit all pending assessments, reassessments, and appeals to confirm which Act governs each, and document the basis.

•             ☐ Update litigation trackers to record both the old and new Act references for matters that may be cited in appellate forums after 1 April 2026.

•             ☐ Brief litigation counsel on the relevant Supreme Court precedents on repeal-and-savings, in case a transitional dispute arises.

•             ☐ Flag any matter with an unusual transition-date fact pattern for a dedicated written opinion before taking a compliance position.

Disclaimer: This article is intended for general informational and educational purposes only and does not constitute legal, tax, or professional advice. While reasonable care has been taken to ensure accuracy as of the date of publication, the Income Tax Act, 2025, the Income-tax Rules, 2026, and related notifications, circulars, and judicial precedents are subject to amendment, clarification, and interpretation. Readers should independently verify all section references, rates, thresholds, and case law citations against official government sources (incometax.gov.in, incometaxindia.gov.in) and should consult a qualified Chartered Accountant, tax advisor, or legal professional before acting or relying on this content for filings, compliance, or transaction decisions. The author(s) and publisher accept no liability for any loss arising from reliance on this content