Appeals and Adjudication under Income Tax Act

Objectives & Agenda :

To know when an appeal can be made before a Commissioner, High Court and Supreme Court. To gain knowledge regarding the pre-requisites for filing an appeal. To understand the provisions relating to the fines, penalties and the time limit in an appeal. To gain insight regarding the procedure followed during an appeal.

1. Appeals and Adjudication under Income Tax Act CA. Jugal Gala

2. Credits and Acknowledgments Anand N Krishna Thirumal V

3. Legends used in the Presentation AO Assessing Officer CIT Commissioner of Income Tax CIT(A) Commissioner of Income Tax (Appeals) CCIT Chief Commissioner of Income Tax DCIT(A) Deputy Commissioner of Income Tax (Appeals) DSC Digital Signature Certificate EVC Electronic verification Code ITAT Income Tax Appellate Tribunal PCIT Principal Commissioner of Income Tax

4. Presentation Schema

5. Introduction An appeal is a process by which a judgment/order of a subordinate court is challenged before its superior court It implies a complaint to a higher authority against the order or judgement of an administrative authority or appellate authority At times it may happen that the taxpayer is aggrieved by an order issued the AO In such cases the assessee can file an appeal against the order of the AO before the CIT(A) and before ITAT if aggrieved by orde r of CIT(A) and so on

6. Appeals to Commissioner of Income Tax (Appeals)

7. Orders Appealable before CIT(A) – Sec 246A Any assessee or any deductor or any collector aggrieved by any of the following order may appeal to the Commissioner (Appeals)

8. Contd.

9. Transfer to CIT(A) The appellant may demand that the previous proceeding or any part thereof be reopened or that he be re-heard before proceeding further with the appeal or matter Explanation: “Appointed day" means the day appointed by the Central Government by notification in the Official Gazette

10. Appeal Denying Liability to Deduct Tax – Sec 248 Appeal shall be presented within 30 days from the date of payment of tax

11. Form of Appeal and Limitation – Sec 249 Every appeal made to CIT(A) shall be in Form – 35 and shall be accompanied a fee as under: Total income of the assessee as computed by the AO in the case to which the appeal relates Prescribed Fee Less than Rs. 1,00,000 Rs. 250 Exceeds Rs. 1,00,000 but less than Rs. 2,00,000 Rs. 500 Exceeds Rs. 2,00,000 Rs. 1,000 Where the subject matter of an appeal is not covered above Rs. 250 The appeal shall be presented within 30 days from: Form 35 must be filed electronically using DSC or Electronic verification Code (EVC) and shall be verified by person authorised to verify return of income under Sec 140 However, the date on which the order was received is to be excluded while calculating the number of days where the appeal relates to any assessment or penalty, the date of service of the notice of demand in any other case, the date on which intimation of the order sought to be appealed against is served ( intimation shall be in manner prescribed in Sec 282) Where application for Immunity from imposition of penalty is made under Sec 270AA, and is rejected, the time taken shall be excluded CIT(A) may admit an appeal after the expiration of period if he is satisfied that the appellant had sufficient cause

12. Mode of Service of Notice – Sec 282 The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred may be delivered or transmitted to the person Explanation: The expressions "electronic mail" and "electronic mail message“ means a message or information created or transmitted or received on a computer , computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message

13. Conditions for an Appeal CIT(A) may, for any good and sufficient reason to be recorded in writing, exempt the assessee from the operation of the provisions of this clause

14. Procedure in Appeal The CIT(A) shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the AO

15. Production of additional evidence – Rule 46A No evidence shall be admitted unless the DCIT(A) or CIT(A) records in writing the reasons for its admission The DCIT(A) or CIT(A) shall not take into account any evidence produced as above unless the AO has been allowed a reasonable opportunity to: Examine the evidence or document or to cross-examine the witness produced by the appellant Produce any evidence or document or any witness in rebuttal (counter-argument) of the additional evidence produced by the appellant OR Nothing contained in this rule shall affect the power of the DCIT(A) or CIT(A): to direct the production of any document, or the examination of any witness , to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty whether on his own motion or on the request of the AO

16. Powers of CIT(A) In disposing of an appeal, the CIT(A) shall have the following powers: Appeal against an order of assessment Confirm, reduce, enhance or annul the assessment Appeal against an order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA after taking into consideration all the material and other information produced by the assessee before , or the results of the inquiry held by the Settlement Commission and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment Confirm or cancel such order or vary it so as either to enhance or to reduce the penalty In any other case Pass such orders in the appeal as he thinks fit The CIT(A) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction Explanation: In disposing of an appeal, the CIT(A) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the CIT(A) by the appellant Appeal against an order imposing a penalty

17. Documents Required for Appeal

18. Appeals to Income Tax Appellate Tribunal (ITAT)

19. Appellate Tribunal A judicial member shall be a person who has for at least 10 years held a judicial office in the territory of India or who has been a member of the Indian Legal Service and has held a post in Grade II of that Service or any equivalent or higher post for at least 3 years or who has been an advocate for at least 10 years Explanation: In computing the period during which a person has held judicial office in the territory of India, there shall be included any period, after he has held any judicial office, during which the person has been an advocate or has held the office of a member of a Tribunal or any post, under the Union or a State, requiring special knowledge of law Explanation: In computing the period during which a person has been an advocate, there shall be included any period during which the person has held judicial office or the office of a member of a Tribunal or any post, under the Union or a State, requiring special knowledge of law after he became an advocate The Central Government shall constitute an Appellate Tribunal consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal

20. Contd.. The Central Government shall appoint any of the below persons to be the President a person who is a sitting or retired Judge of a High Court and who has completed not less than 7 years of service as a Judge in a High Court or one of the Vice-Presidents of the Appellate Tribunal An accountant member shall be a person who has for at least 10 years been in the practice of accountancy as a CA, or as a registered accountant under any law formerly in force or partly as a registered accountant and partly as a CA, or who has been a member of the Indian Income-tax Service, Group A and has held the post of Additional Commissioner of Income-tax or any equivalent or higher post for at least 3 years The Central Government may appoint one or more members of the Appellate Tribunal to be the Vice-President The Vice-President shall exercise such of the powers and perform such of the functions of the President as may be delegated to him by the President by a general or special order in writing

21. Orders Appealable before ITAT – Sec 253 Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal

22. Appeals to ITAT Every appeal shall be filed within 60 days from the date on which the order sought to be appealed against is communicated to the assessee or to the PCIT or CIT The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period, if it is satisfied that there was sufficient cause for not presenting it within that period

23. Form of Appeal – Sec 253 Every appeal made to ITAT shall be in Form – 36 (Rule 47) and shall be verified in the prescribed manner and shall be accompanied a fee as under: Total income of the assessee as computed by the AO in the case to which the appeal relates Prescribed Fee Less than Rs. 1,00,000 Rs. 500 Exceeds Rs. 1,00,000 but less than Rs. 2,00,000 Rs. 1,500 Exceeds Rs. 2,00,000 1% of the assessed income or Rs. 10,000 (whichever is lower) Where the subject matter of an appeal is not covered above * Rs. 500 * An application for stay of demand shall be accompanied by a fee of Rs. 500 A memorandum of cross-objections to the Appellate Tribunal shall be made in Form No. 36A

24. Powers of ITAT

25. Contd.. The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit at any time within 6 months from the end of the month in which the order was passed to amend its order for rectifying any mistake apparent from record when brought to its notice by the assessee or the AO An amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made unless the Tribunal has given notice to the assessee of its intention to do so and has allowe d the assessee a reasonable opportunity of being heard Any application filed by the assessee in this regard shall be accompanied by a fee of Rs. 50 The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal The Tribunal shall send a copy of any orders passed under this section to the assessee and to the PCIT or CIT

26. Procedure of Appeal The powers and functions of the Tribunal may be exercised and discharged by Benches constituted by the President of the Tribunal from among the members thereof Subject to the provisions contained below, a Bench shall consist of 1 judicial member and 1 accountant member

27. Contd. The Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions , including the places at which the Benches shall hold their sittings ITAT is the final fact finding authority

28. Documents Required for Appeal

29. Appeals to High Court

30. Appeal to High Court – Sec 260A The PCIT or CCIT or CIT or an assessee aggrieved by any order passed by the Tribunal may file an appeal to the High Court and such appeal under this shall be filed within 120 days from the date on which the order appealed against is received by the assessee or the PCIT or CCIT or CIT in the form of a memorandum of appeal precisely stating therein the substantial question of law involved The High Court may admit an appeal after the expiry of the period of 120 days , if it is satisfied that there was sufficient cause for not filing the same within that period Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question An appeal shall lie to the High Court from every order passed in appeal by the Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law Nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question - Sec 260A(4) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit The High Court may determine any issue which has not been determined by the Appellate Tribunal or has been wrongly determined by the Tribunal by reason of a decision on such question of law

31. Substantial Question of Law

32. Hearing Cases in High Court – Sec 260B

33. Documents Required for Appeal

34. Appeals to Supreme Court

35. Appeal to Supreme Court – Sec 261

36. Hearing before Supreme Court – Sec 262

37. Documents Required for Appeal

38. Effect of Order of High Court and Supreme Court – Sec 260

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