In a major push to streamline tax litigation and enhance revenue realisation, the Income Tax Department has rolled out an aggressive plan to dispose of a record number of pending tax appeals, according to an action plan reviewed by CNBC-TV18.
Facing a potential revenue shortfall of ?1 lakh crore following recent tweaks in income tax slabs under the new regime announced in the Union Budget, the government aims to recover lost ground by clearing long-pending tax disputes, sources familiar with the discussions of the central action plan said.
The Central Board of Direct Taxes (CBDT), through its Central Action Plan (CAP) 2025-26, has directed its field formations to adopt an "all hands on deck" approach to dispose of over 2 lakh appeals—a move that could unlock as much as ?10 lakh crore in disputed tax demand.
As per official data, the pendency of appeals at the first appellate stage has been a longstanding concern. However, for the first time in years, the number of pending appeals has decreased, from 5.49 lakh in April 2024 to 5.38 lakh in April 2025.
In the fiscal year 2024–25, the department achieved a record disposal of 1.72 lakh appeals, representing a 155% jump over the previous year.
The tax department claims that this milestone was reached despite significant manpower shortages, particularly at the level of the Commissioner of Income Tax (Appeals) and Joint Commissioner of Income Tax (Appeals), under the new faceless system.
Sources further told CNBC-TV18 that the department’s immediate priority is the compulsory disposal of the top 1,500 high-value appeals, which alone account for a substantial portion of the disputed tax demand. The target could rise to 2,000 appeals, depending on how quickly officer vacancies are filled.
The action plan also removes any embargo on disposing of appeals filed during the current year, broadening the scope of resolution. Officers have been explicitly instructed to focus on clearing both legacy cases and newly filed appeals, especially those where taxpayers are actively engaging with the process.
Significantly, the tax department has highlighted that the disposal of appeals has been designated a Key Responsibility Area (KRA) for field officers, tying performance metrics directly to litigation reduction.
What is the central action plan?
Simply put, the central action plan is described as a comprehensive roadmap for enhancing the efficiency, transparency, and effectiveness of India’s direct tax system. In addition to faster appeal disposal, it aims to optimise revenue collection, improve taxpayer services, and strengthen compliance through a streamlined, faceless framework.
Divided into 21 chapters, the action plan stitches together a broad policy vision for the income tax department to achieve revenue targets, proposals to widen the tax base, and focuses on litigation management, demand management, and much more.
Expert speak
Tax experts have lauded the move. Amit Maheshwari, Tax Partner at AKM Global, called the increased focus “a welcome step.”
Maheshwari said, “The CBDT’s increased focus on reducing pending appeals at the CIT(A) level is a welcome step for taxpayers, especially for those whose appeals were stuck for a long time at the CIT(A) level. With a record number of appeals disposed of last year and an even more ambitious target ahead, this plan promises faster resolution of disputes and greater transparency. It reflects the government’s commitment to easing the burden on honest taxpayers and streamlining the tax administration system. Much of the faster disposal of appeals can be attributed to the introduction of the parallel authority of the Joint Commissioner of Income Tax (Appeals). However, CBDT has cited the shortage of manpower at the CIT(A) level in the Action Plan, and hence, field officers need to ensure that appeals are properly examined and disposed of efficiently.”
Similarly, Sandeep Bhalla, Partner at Dhruva Advisors, said the CBDT’s strategy should be two-pronged: faster disposal of appeals, as is being done now, and accountability for officers issuing frivolous orders.
“This is a welcome step by CBDT. The stringent CAP for CIT(A) will go a long way in mitigating litigation. There are a whole lot of high-value appeals pending before the faceless CIT(A), which need to be addressed on a war footing. CBDT could evolve a two-pronged strategy for reducing litigation, where one could be quicker disposal of appeals, which is rightly addressed through the current CAP, and the other could be through fixing accountability for officers passing frivolous orders. The second step would go a long way in improving the image of the department and doing business in India,” said Bhalla.
To be seen is whether this approach actually yields more revenue realisation and faster disposal of pending litigation.
“The decision to proactively close around two lakh cases at the appellate level marks a welcome shift toward administrative efficiency and responsible revenue management. In a litigation-heavy tax environment like India’s, early resolution of disputes not only improves revenue realisation for the exchequer, particularly critical at a time when revised tax slabs may narrow the immediate tax base, but also signals a maturing legal framework. Swift dispute closure reduces uncertainty for businesses, allowing them to deploy capital more effectively and invest in growth. Importantly, this also eases the burden on the judiciary and paves the way for a more streamlined and trust-based tax administration. Such policy measures are essential for reinforcing India’s image as a predictable and investor-friendly jurisdiction,” said Abhishek A Rastogi, Founder, Rastogi Chambers.
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