Form 118 Under the Income Tax Act 2025: Deferment of Appeal Filing Before High Court and ITAT
Overview of the Deferment Mechanism
The Income Tax Act, 2025 introduces a structured framework that permits the Income-tax Department to defer filing appeals when a legally identical question is already being adjudicated before a higher judicial forum. Form 118, prescribed under the Income-tax Rules, 2026, operationalises this mechanism by providing a formal application process for deferment before either the High Court or the Income-tax Appellate Tribunal (ITAT).
This instrument serves a dual purpose — it prevents redundant litigation from clogging appellate forums and ensures that the law is applied consistently once a conclusive judicial pronouncement is delivered on the pending question.
The deferment mechanism under
Section 376of the Income Tax Act, 2025 is a deliberate policy tool designed to reduce repetitive appellate proceedings across the judicial system.
Statutory Reference Table
Before diving into the operational details, it is useful to understand how Form 118 maps to the older legislative framework:
| Particulars | Under Old Law | Under New Law |
|---|---|---|
| Form Name (Rules) | Form 8A (I.T. Rules, 1962) | Form 118 (Income-tax Rules, 2026) |
| Corresponding Section | Section 158AB (I.T. Act, 1961) | Section 376 (Income Tax Act, 2025) |
| Corresponding Rule | Rule 16 (I.T. Rules, 1962) | Rule 195 (Income-tax Rules, 2026) |
This cross-referencing is critical for practitioners navigating the transition between the two statutory regimes, particularly where proceedings may have been initiated under the older framework but are now governed by the Income Tax Act, 2025.
What Is Form 118?
Form 118 is a formal application submitted to defer the filing of an appeal — either before the High Court or before the ITAT — in circumstances where a question of law arising in a particular case is identical to a question of law that is already pending before the High Court or the Supreme Court in a separate case.
The rationale is straightforward: if the legal issue has already been raised and is awaiting a final ruling in another matter, filing a fresh appeal on the same question multiplies litigation without adding any jurisprudential value. By deferring the appeal under Section 376 of the Income Tax Act, 2025, the Department preserves its right to file the appeal later, contingent upon the outcome of the pending case.
Key Terminology
Two important expressions used in Form 118 carry specific meanings as defined under Section 376 of the Income Tax Act, 2025:
- Relevant Case: The case in which the appeal is proposed to be deferred.
- Other Case: The case in which an identical question of law is already sub judice before the High Court or the Supreme Court.
Understanding this distinction is fundamental to appreciating the scope and application of this form.
Who Files Form 118 and Under What Authority?
Form 118 is filed by the Assessing Officer, but not on independent initiative. The Assessing Officer acts pursuant to specific directions issued by the Principal Commissioner of Income-tax (PCIT) or Commissioner of Income-tax (CIT). These directions, in turn, flow from a decision communicated by a collegium constituted for this purpose.
Role of the Collegium
A collegium comprising two or more officers drawn from the ranks of Chief CITs, Principal CITs, or CITs is constituted to examine whether:
- A question of law arising in the relevant case is identical to a question of law pending in another case; and
- That pending question is before the High Court or the Supreme Court.