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Procedures to file Income Tax Appeals

Income Tax appeals against the orders served by ITAT can be made by either of the parties before the specific High Courts of judicature (the third level of appellate authority). However, an appeal before a High Court is generally admitted only if it includes a considerable question of law.

First Level of Appeal – Commissioner of Income Tax (Appeals)

1. Appeal against the orders of assessing officer can be filed by taxpayers before the CIT (A), having an authority over the taxpayer. Filing of appeal can be done in the prescribed form number 35 before a CIT (A) along with the proof of payment of recommended appeal fee and original copy of the notice of demand served by the assessing officer under section 156 and a copy of the order.

2. Orders which can be appealed before The CIT (A)

Appeal can be filed by taxpayers before a CIT (Appeals) against the following orders issued by a variety of Income tax authorities :

(a) An order issued against the taxpayer in the case where the taxpayer refuses the responsibility to be assessed according to Income Tax Act

(b) Intimation served under section 143(1)/ (1B), where adjustments have been done in income offered to tax for the return of income

(c) An Intimation served under section 200A (1) where adjustments are done in the filed statement

(d) An Assessment order issued under section 143(3) except for in the case of an order passed following the directions of the Dispute Resolution Panel

(e) An assessment order issued under section 144

(f) An order of Assessment, Re-assessment or Re-computation served after reopening the assessment under section 147 apart from an order issued according to the directions of the Dispute Resolution Panel

(g) An order referred to in section 150

(h) An order of assessment or reassessment passed under section 153A or under section 158BC in the case of search

(i) An Assessment or reassessment order issued under section 92CD (3)

(j) A Rectification order served under section 154 or under section 155

(k) An order issued under section 163 considering the taxpayer as means of non-resident

(l) An Order passed under section 170(2)/(3) assessing the successor of the business regarding income made by the predecessor

(m) An order issued under section 171 recording the decision about partition of a Hindu Undivided Family.

(n) An order issued under section 201(1)/ 206 C(6A) considering individual accountable for deduction of tax at source as assessee-in-default because of failure to deduct tax at source or to collect tax at source or to make payment of the same to the credit of the Government.

(o) An order settling on refund served under section 237.

(p) An order imposing penalty under section(s) 221/ or 271 or 271A or 271AAA or 271F or 271FB or 272A or 272AA or 272B or 272BB or 275(1A) or 158BFA (2) or 271B or 271BB or 271C or 271CA or 271D or 271E or 271AAB.

(q) An order enforcing a penalty under Chapter XXI.

3. Form of Appeal

Appeal before the CIT (Appeals) should be filed in approved Form number 35, in duplicate. This form should be used for e-filing of appeal also.

4. Who Can Sign and Verify Form No. 35?

The grounds of appeal, the form of appeal and the form of verification are to be signed and checked by the individual approved to sign the return of income under section 140 as applicable to the taxpayer.

5. Documents to be submitted with Form Number 35 (Photocopy)

(A) 1 certified copy of order, appealed against.

(B) Notice of demand in original form.

(C) Photocopy of challans of fees (details of the challan (i.e., date of payment of fee, BSR code, amount of fee) and serial number are needed to be offered for e-filing of appeal.

6. Payment of Accepted Tax liability must be made before Filing Appeal

An appeal will be admitted by Commissioner (Appeals) only, if tax according to the returned income has been paid before filing of appeal. Where return of income has not been filed, the appeal can only be acknowledged only if payable advance tax has been paid.

7. Appeal Fees

An appeal filed without payment of essential appeal fee can be rejected at admission stage itself. The prescribed fees must be paid for filing appeal before the Commissioner (Appeals) differs with the total income computed by the Assessing Officer as under :

Serial Number Total Income calculated by Assessing Officer Appeal Fee
1 Less than Rs. 1,00,000/- Rs. 250/-
2 More than Rs.1,00,000/-but less than Rs.2,00,000/- Rs. 500/-
3 More than Rs. 2,00,000/- Rs. 1,000/-

Where the subject of appeal associated to any other matter, fee of Rs 250 should be paid. An application for demand is to be filed along with a fee of Rs. 500.

8. Whether entire amount of tax and interest as calculated by the assessing officer need to be paid before filing the appeal

The appeal is not responsible to be discarded if complete amount of tax and interest calculated by the assessing officer has not been paid by the taxpayer. Though, Liability of the taxpayer includes paying interest under section 220 on the demand as stated in the notice of demand will be applicable up to the clearance of appeal by the last appellate authority.

9. Time Period within which Appeal can be filed before Commissioner (Appeals)

Appeal before a CIT (A) must be filed within 30 days of the date of service of notice of demand related to assessment or penalty order or within 30 days of the date of service of any other order demanded to be appealed against, as the situation may be.

10. Appeal Filing Procedure - E-Filing of Appeal before the CIT (A)

All taxpayers who need to e-file the Income Tax Return (ITR) according to Rule 12 of the Income Tax Rules are also compulsorily required to e-file appeal under Rule 45. They need to use Form 35 which is available on the e-filing website of the Income Tax Department.

11. Appeal procedure in the office of CIT (appeals) following receipt of appeal

(i) On receiving Form no. 35, the office of the Commissioner of Income-tax (Appeals) checks the appeal documents and the proof of payment of appeal fee and others.

(ii) Where the appeal has been acknowledged, the commissioner of Income tax (Appeals) will send a copy of the appeal memo to the associated assessing officer and forward a copy of the reasons of appeal and statement of facts therewith.

(iii) The Commissioner of Income tax (appeals) makes a decision about the date and place to hear the appeal by serving notice to the tax payer. A copy of the notice is sent to the Assessing Officer, against whose order appeal is chosen or to whom the authority over the appellant has been later got shifted.

(iv) Throughout the hearing process before the CIT (Appeals), the tax payer reserves a right to be heard either personally or through an approved representative. Though, where an approved representative must appear before the CIT (Appeals), a written authorization accordingly signed by the official signatory on a stamp paper is to be brought before the CIT (Appeals), at the time of hearing.

(v) Before showing any appeal, Commissioner (Appeals) may perform further enquiry himself or through the Assessing Officer. If such proceedings are accomplished through the Assessing officer, the same are usually referred to as remand proceedings.

(vi) Filing of Additional Evidence - During the proceedings of appeal, the tax payer is not allowed to make any evidence, whether oral or documentary excluding what was already brought before the Assessing Officer.

Before taking into consideration the additional evidence filed, Commissioner (Appeals) is needed to offer a copy of the appellant's application for admittance of additional proof and a copy of the additional proofs to offer a realistic chance to the Assessing Officer to comment whether such additional proofs can be acknowledged or not.

(vii) During the proceeding of appellate, when the CIT (Appeals) finishes off the hearing, he must record the date on the note-sheet with the remarks- 'Case heard'. After this, the Commissioner (Appeals) issues an appeal order under section 250, which is to be in writing, by which he deals with each ground of the appeal with grounds, either individually or after clubbing grounds with similar propositions together.

12. Scope of Appeal Order and Authorities of Commissioner of Income Tax (Appeals) :

For assessment and penalty, Commissioner (Appeals) may verify, reduce, annul or increase it. Before enhancing any assessment or penalty, CIT (Appeals) must deliver reasonable chance to the tax payer by serving show cause notice offering such enhancement.

13. Dispute Resolution Panel

There is an alternative dispute resolution system for foreign companies or scenarios concerning transfer pricing adjustments or international taxation subjects, in the type of a Dispute Resolution Panel (DRP), to which filing of an application can be done by the taxpayer while receiving a draft assessment order.

II. Second Level of Appeal - Income Tax Appellate Tribunal

1. Appeal against an order of Commissioner (Appeals) goes with the Income Tax Appellate Tribunal (ITAT). Appeal to the ITAT is to be filed by any of the distressed party either by the taxpayer or by the Assessing Officer.

2. Orders against Appeal that can be filed before ITAT

Any Tax payer can do filing of appeal before the Income Tax Appellate Tribunal against the following orders :

(i) An order issued by a Commissioner (Appeals) according to section 154, section 250, section 270A,section 271, section 271A or section 272A or

(ii) An order served by an Assessing Officer under clause (c) of section 158BC, regarding search started under section 132 or books of account, other documents or any assets demand under section 132A, started after the 30th day of June, 1995, but before the 1st day of January, 1997 or

(iii) an order by Assessing Officer u/ s 115 VZC apart from the tax payer from tonnage tax system; or an order issued by a Principal Commissioner or a Commissioner under section 12AA on an application for registration filed by a charitable or religious or trust or

(iv) An order issued by a Principal Commissioner or a Commissioner under Section 80G(5)(vi) regarding approval of a charitable trust for donations made after 31.3.92 or

(v) An order served by a Principal Commissioner or a Commissioner under section 263 revising an Assessing Officer's order that is deemed prejudicial to the interest of income or an order under section 154 modifying the order under section 263 or

(vi) An order issued by a Principal Commissioner or a Commissioner under section 270A or under section 271 or

(vii) An order served by a Chief Commissioner or Principal Chief Commissioner or a Principal Director General or Principal Director or Director General or a Director under section 272A or

(viii) An order issued by an Assessing Officer under sub-section (3) of section 143 or section 147 or section 153A or section 153C following the directions of the Dispute Resolution Panel or an order issued under section 154 for modification of such order

(ix) An order served by an Assessing Officer under sub-section (3) of section 143 or section 147 or section 153A or section 153C with the consent of the Principal Commissioner or Commissioner, as mentioned in sub-section (12) of section 144BA or an order issued under section 154 or section 155 modifying such order

(x) An order issued by the recommended authority under sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, that is related for filing of application by an educational institute or a hospital (other than those that are completely or considerably financed by the Government or whose aggregate annual receipt do not surpass Rs. 1 Crore for the reason of allowance of exemption under section 10(23C) (vi) or section 10(23C) (via), correspondingly.

3. Time limit for filing appeal before ITAT :

Appeal before the ITAT should be filed within a period of 60 days of the date on which order appealed against is communed to the taxpayer or the Commissioner as the situation may arise.

4. Type of Appeal

An appeal to ITAT should be filed in Form No. 36. An appeal against the order of the DRP must be made in Form No. 36B (Annexure-2).

5. Check List of Documents shall be filed - the below mentioned Documents should be filed in all cases:

The Order appealed against (2 copies, including 1 certified copy)

Form No. 36 (in triplicate)

The reasons of appeal taken before the Commissioner of Income-Tax (Appeals) (2 copies)

The Order of the Assessing Officer (2 copies)

A copy of challan for paying fee

The Statement of facts filed before the Commissioner of Income-Tax (Appeals) (2 copies)

6. Who can Sign Form No.36 or 36B?

The form of appeal, the grounds of appeal and the form of verification must be signed and checked by the individual approved for signing the return of income under section 140, as follows :

(i) In the case of appeal by the individual taxpayer, by the individual taxpayer himself or by an individual accordingly approved by him who is having an applicable authority of attorney.

(ii) In the case of a Hindu Undivided Family by the Karta of the family or if Karta is not present in India or cannot sign, by any other adult member of such family.

(iii) In the case of a company by the Managing Director or if Managing Director is not there or where there is not any Managing Director, by any director of the company.

(iv) In the case of a firm, by the Managing Partner or if Managing Partner is not present or where there is not any Managing Partner, by any partner.

(v) For a LLP, by the Designated Partner or if Designated Partner is not present or where there is not any nominated Partner, by any partner.

(vi) For a Local Authority, by the Principal Officer thereof.

(vii) In the case of a Political Party, by the Chief Executive Officer of the party.

(viii) For any other Association, by the associated Principal Officer or by any member of the Association.

7. Memorandum of Cross Objections

On filing the appeal to the ITAT by the taxpayer or by the Assessing Officer, the opposite party will be informed about filing of appeal and a chance for filing a memorandum of cross objection with the ITAT, within a period of 30 days since receipt of notice. The memorandum of cross objection is to be filed in Form No. 36A. There is no fee for filing the memorandum of cross objection.

8. Language to be used to Fill Form No. 36/36A

The documents to file appeal/cross objections before the ITAT are to be done in English language. Though, appeal documents can be produced in Hindi also in the Ahmedabad, Nagpur, Mumbai, Allahabad, Chandigarh, Amritsar, Delhi, Jabalpur, Indore, Jaipur and Patna benches of the Tribunal (Notification No. F. 186-Ad (AT)/71 dated 5.3.74).

9. Who Is Authorised to Receive the Appeal In ITAT?

An appeal before the ITAT should be filed with the Assistant Registrar or the Superintendent/ Assistant Superintendent/Clerk in the ITAT.

10. Condoning of Delay in Filing Appeal/ Memorandum of Objections

The Appellate Tribunal may acknowledge an appeal filing of memorandum of cross objections after 60 days or 30 days, like the case may be, if it is fulfilled that there was enough cause for not offering it within the recommended time.

11. Procedure Followed in the ITAT

Filing of Paper Book

The appellant or the respondent, as the situation may be, can submit a paper book in duplicate including documents or statements or other papers mentioned in the assessment or appellate order, which it may want to depend upon. The paper book properly indexed and page numbered should be filed at least 1 day before the hearing of the appeal with evidence of service of copy of the same on the other side at least 1 week before.

Hearing

The Appellate Tribunal fixes the date for hearing the appeal and informs the parties stating date and place of hearing of the appeal. A photocopy of memorandum of appeal is sent to the respondent either before or with such notice.

Filing of Additional Proof

The parties to the appeal are not allowed to take additional proof of any type, either oral or documentary before the Tribunal. Still, if the Tribunal needs production of any document, scrutiny of any witness or filing of any affidavit to allow it to pass orders, it may set aside such document to be offered, witness to be checked, affidavit to be filed and such proof to be filed.

Procedures before the ITAT to be Open to Public

Usually the proceedings in the Tribunal are public except for cases determined to be if not by the Tribunal by means of its judgment.

12 Orders of the ITAT

Usually appeals are heard by a bench including 1 judicial member and 1 accountant member. Appeals where total income calculated by the Assessing Officer does not surpass Rs. 5 lakh may be arranged by a single member bench. The bench usually states its orders in court. Where the orders are not stated in the court, list of such orders revealing results of appeal and signed by members is positioned on the notice board of the Bench.

13. Various Applications

The ITAT, at any time within 4 years from the date of order issued by it, can fix any error obvious from record, if the same is brought to its notice by the tax payer or the Assessing Officer. Fee of Rs 50 should be paid to file various applications.

14. Stay Petition

On application by the tax payer, the Appellate Tribunal can issue an order of stay of demand in any proceedings associated to an appeal filed before the Appellate Tribunal. The stay can be for a time of maximum 180 days and the Appellate Tribunal is likely to set out the appeal within the period of stay. Where the appeal is not clear out within the period of stay, the Appellate Tribunal may grant additional stay but the total stay period cannot surpass 365 days.

III. Third Level of Appeal before High Court

Appeal against Appellate Tribunal's order lies with the High Court, Where the High Court is convinced that the case includes a substantial question of law. Appeal to the High Court against Appellate Tribunal's order can be filed by the tax payer or the Chief Commissioner/ Commissioner within a period of 120 days of receipt of the order and in the type of memorandum of appeal, accurately mentioning the significant question of law included.

IV. Appeal before Supreme Court

Appeal against High Court's order regarding Appellate Tribunal's order lies with the Supreme Court in those cases, which are allowed for appeal to the Supreme Court. Special leave can also be approved by the Supreme Court under Article 136 of the constitution of India against the order of the High Court.



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