The Income-tax Act, 1961 stood repealed on 1 April 2026 — but Section 536, the repeal-and-savings clause, keeps large parts of it alive for pending and old-year matters. Here’s exactly what a litigation practitioner needs to know before drafting the next appeal, revision, or rectification.
Section 536 — The Bridge Between Two Acts
The Income-tax Act, 1961 stands repealed with effect from 1 April 2026 under Section 536(1) of the Income-tax Act, 2025. Read in isolation, that single line would suggest every proceeding, right, and pending matter under the old Act simply ceased to exist. That isn’t what happens — and it’s precisely the mistake to avoid when advising a client or drafting a pleading during this transition.
Section 536(2) contains 22 separate savings clauses that keep specific categories of old-Act matters alive despite the repeal — pending assessments, appeals, revisions, rectifications, penalty proceedings, recovery actions, carried-forward losses, MAT/AMT credit, and more. Sub-section (4) then adds Section 6 of the General Clauses Act, 1897 as a catch-all safety net for anything the 22 clauses might not expressly cover.
Key principle: the repeal operates prospectively, not retrospectively. Old tax years, accrued rights, and pending proceedings continue to be governed by the 1961 Act. New income earned from 1 April 2026 onward, and new proceedings arising from it, are governed by the 2025 Act. The dividing line is the tax year the matter relates to — not the date on which a notice, application, or order happens to be issued.
The Governing Test: Which Act Applies?
Before drafting anything — a reply to a notice, an appeal memo, a rectification application, a revision petition — ask this question first, in this order:
Which tax year does the matter relate to?
If the underlying tax year began before 1 April 2026 (i.e., any Assessment Year up to and including AY 2026-27), the 1961 Act governs — regardless of when the notice, order, or proceeding is actually initiated.
Was the proceeding already pending on 1 April 2026?
Any assessment, appeal, reference, revision, or rectification pending before any income-tax authority, the Appellate Tribunal, or any court on the commencement date continues to be disposed of exactly as if the 2025 Act had never been enacted.
Does a specific savings clause cover this scenario?
Check the 22 clauses under Section 536(2) for the specific fact pattern — penalty, recovery, search assessment, carried-forward loss, MAT credit, expired limitation, and so on each have their own clause with their own conditions.
If nothing specific fits, fall back on Section 6, General Clauses Act
Section 536(4) preserves the general rule that a repeal does not extinguish accrued rights, pending actions, or liabilities unless the new Act expressly says so — a useful residual argument where a fact pattern falls between the specific clauses.
The one-line rule to remember
Old years + old rights + old proceedings are governed by the old law. New income + new tax years are governed by the new law. Once you’ve correctly classified a matter under this rule, the applicable terminology, section numbers, and procedure follow automatically.
Appeals — What Survives
Appeals pending before any authority, Tribunal, or court continue under the old Act
Any appeal, application, reference, or revision pending on 1 April 2026 before an income-tax authority, the Appellate Tribunal, a High Court, or the Supreme Court is continued and disposed of exactly as though the 2025 Act had not been enacted. There is no requirement — and no mechanism — to re-file or re-argue such an appeal under the new Act’s provisions.
New appeals for old tax years still run under the old Act
Even where an appeal is filed for the first time after 1 April 2026, if it relates to a tax year that began before that date, the 1961 Act’s provisions — including its appeal machinery — continue to apply to that proceeding.
What isn’t yet settled from secondary sources
The precise new-Act section numbers corresponding to the old first-appeal (CIT(A)) and second-appeal (ITAT) provisions are not consistently reported across practitioner publications at the time of writing. Rather than risk citing an incorrect new-Act section in a memo of appeal, confirm the current mapping against the First Schedule of the Income-tax Act, 2025 before finalising any pleading for a Tax Year 2026-27 matter.
Revisions — What Survives
Revision petitions for old years, and pending revisions, both continue under the old Act
Revision applications — whether under the Commissioner’s suo motu revisionary power or on an assessee’s application — are explicitly listed among the proceedings preserved by the savings clause. A revision petition concerning a pre-transition tax year continues to be governed by the old Act’s revisionary provision, whether it was already pending on 1 April 2026 or is filed for the first time afterward.
For reference, the old Section 263 (Commissioner’s revision power) is commonly reported as corresponding to a renumbered provision under the 2025 Act for matters that do fall under the new framework — relevant once you’re dealing with a genuine Tax Year 2026-27 revision rather than an old-Act one.
Rectifications — What Survives
Rectification applications take the terminology and procedure of the order they relate to
A rectification application concerning a mistake apparent from the record in an old-Act order continues to be governed by the old Act — including its limitation period for rectification — regardless of when the rectification application itself happens to be filed.
| Proceeding | Old Section (1961 Act) | New Section (2025 Act)* | Applies to Pre-2026 Years? |
|---|---|---|---|
| Return of income | 139 | 263(1) | Old Act governs |
| Intimation after processing | 143(1) | 263(6) | Old Act governs |
| Scrutiny notice | 143(2) | 263(9) | Old Act governs |
| Reassessment notice | 148 | 267 | Old Act governs |
| Rectification of mistake | 154 | 295 | Old Act governs |
| Notice of demand | 156 | 292 | Old Act governs |
| Revision by Commissioner | 263 | 279 | Old Act governs |
| Penalty for under-reporting | 270A | 303 | Old Act governs |
*New-section figures as commonly reported by tax practitioner publications tracking the transition — verify against the First Schedule before citing in a filing. The “Applies to Pre-2026 Years?” column reflects the governing rule regardless of which section number is eventually confirmed: if the underlying tax year predates 1 April 2026, the old section and procedure govern.
Penalty, Recovery & Search Cases
Three further categories deserve specific attention in litigation practice, since they involve some of the highest-stakes proceedings:
Penalty proceedings for old years, initiated any time
Penalty proceedings relating to any tax year beginning before 1 April 2026 may be initiated — and the penalty imposed — under the old Act’s penalty provisions, as though the new Act had not been enacted, even if the initiation happens well after the repeal date.
Recovery of old dues continues under the new Act’s machinery
Any sum payable under the old Act may be recovered using the new Act’s recovery machinery, without prejudice to any recovery action already commenced under the old Act — old demands are not extinguished by the repeal.
Search and seizure cases run entirely under the old Act, start to finish
Where a search was initiated or a requisition made under the old Act’s search provisions before 1 April 2026, the entire chain of connected proceedings — block assessment, penalty, and appeals — continues under the 1961 Act, with no interface from the new Act at any stage.
The Limitation Trap — Clause (k)
This is the single most important savings clause for a litigation practice to internalise, because it cuts against the taxpayer rather than in their favour.
Expired time limits are not revived by the new Act
Under Section 536(2)(k), where the period for filing an application, appeal, reference, or revision under the old Act had already expired before 1 April 2026, the new Act cannot be relied upon to revive that lapsed right — even if the new Act happens to prescribe a longer limitation period for the equivalent proceeding.
In practice, this closes off an argument some clients will inevitably ask about: “the new Act gives more time to appeal — can we use that instead, since we missed the old deadline?” The answer, based on this clause, is no. If the limitation period under the 1961 Act had already run out before the repeal, that door stays closed regardless of what the 2025 Act now permits for fresh proceedings. This is worth flagging to clients proactively, before they assume a longer new-Act limitation period offers them a second chance on an old, lapsed matter.
Drafting Checklist for Practitioners
Anchor to the tax year, not the filing date
Before choosing terminology or section numbers, fix the tax year the underlying order or notice relates to. That single fact — not today’s date — determines which Act governs the entire pleading.
Keep pleadings internally consistent
An appeal memo, revision petition, or rectification application concerning an old-Act matter should use old-Act terminology and section numbers throughout — mixing “Tax Year” language into an old-Act pleading (or vice versa) reads as careless drafting.
Check limitation against the old Act first
For any matter relating to a pre-2026 tax year, compute limitation strictly under the old Act’s provision. Do not assume a longer new-Act period applies — Clause (k) forecloses that argument for already-expired deadlines.
Cite Section 536 directly where relevant
When opposing counsel or a bench questions why old-Act provisions are being invoked post-repeal, cite the specific sub-clause of Section 536(2) that preserves the proceeding — this is far stronger than a general submission that “the old law should still apply.”
Don’t overlook carried-forward benefits
MAT/AMT credit, brought-forward business and capital losses, and multi-year deductions (preliminary expenses, R&D, infrastructure) from old years carry forward into the new Act’s framework — relevant when computing a client’s current-year position even in an otherwise new-Act matter.
Keep Section 6, General Clauses Act, in reserve
Where a fact pattern doesn’t cleanly fit any of the 22 specific clauses, Section 536(4)’s incorporation of Section 6 of the General Clauses Act, 1897 is a legitimate fallback argument that a right or pending action survives the repeal by default.
Common Questions
Does a pending ITAT appeal need to be re-filed under the new Act?
No. Any appeal pending before the Tribunal on 1 April 2026 continues to be heard and disposed of under the old Act, as though the new Act had never been enacted. No re-filing or procedural restart is required.
Can a search initiated in January 2026 result in a block assessment argued under the new Act’s provisions?
No. Where the search itself was initiated before 1 April 2026, the entire chain of connected proceedings — assessment, penalty, and any appeal — is governed by the old Act’s search-assessment framework from start to finish, regardless of how far the proceedings extend beyond the repeal date.
If a client missed their old appeal deadline in February 2026, can they now appeal using the new Act’s longer limitation period?
No. Section 536(2)(k) specifically prevents an expired old-Act deadline from being revived merely because the new Act happens to prescribe a longer period for the equivalent proceeding.
Does MAT credit accumulated under the old Act survive into the new Act?
Yes. MAT/AMT credit carried forward under the old Act’s provisions is preserved and becomes available for utilisation under the corresponding credit mechanism in the new Act.
What happens if a specific fact pattern isn’t covered by any of the 22 savings clauses?
Section 536(4) incorporates Section 6 of the General Clauses Act, 1897, which generally prevents a repeal from extinguishing accrued rights, pending actions, or liabilities unless the repealing Act expressly says so — a residual protection for situations the enumerated clauses don’t specifically address.