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uNIVERSITY Income Tax Appeal
uNIVERSITY Income Tax Appeal
154]
OLM NBVJ
APPEAL
By virtue of Article 227 of the Constitution, the Tribunal is under the superintendence of the High Court and thus
subordinating to the High Court and is bound to follow the judgment of the High Court in the State in which it
functions and of the Supreme Court under Article 141.
AT WHAT STAGE- The Tribunal is a second appellate forum under the Act, the first appeal being to the
Commissioner of Income Tax (Appeals) – CIT (A). The Disputes before it come mainly by way of second appeal
from orders of the Commissioners of Income Tax (Appeals) – CIT (A).
Direct first appeals before the Tribunal are against orders of Commissioner under Section 263 and orders of
Assessing Officer (AO) pursuant to directions of Dispute Resolution Panel (DRP) under section 144C of the Act.
The litigation before the Tribunal also includes miscellaneous applications for recall or rectification of orders, stay
petitions etc.
Appeals to Tribunal mainly relate to cases of
1. Excessive assessments,
2. Search and seizure,
3. Disallowances and additions,
4. Interests and
5. Levying of penalties under Chapter VIA of the Income Tax Act.
HOW MANY CASES HAVE BEEN DECIDED- Its excellence lies in the fact out of about 50,000 cases decided
annually by it, about 45,000 become final then and there. Only about 5,000 cases go to the High Court for further
adjudication.
The Tribunal in its 79th year [1941 – 2020] of existence has earned ample price for the independence of its
decisions.
It says ‘In any appeal by any assessee, where the memorandum of appeal is signed by his authorised
representative, the assessee shall append to the memorandum a document authorising the representative to
appear for him and if the representative is a relative of the assessee, the document shall state what is his
relationship with the assessee, or if he is a person regularly employed by the assessee, the document shall state
the capacity in which he is at the time of employed.
Section 288 of the Income Tax Act, 1961 prescribes for person qualified and disqualified as an authorised
representative.
Section 288 permits an assessee to be represented before the Tribunal or any income-tax authority in the
connection with any proceeding under the Act, by an authorised representative.
However, the right to appear through an authorised representative does not extend to cases where the
assessee is required U/s. 131 to attend personally for examination on oath or affirmation.
The position and obligation of accountants representing assessees in proceedings under this Act are similar to
those of advocates representing parties before a court of law.
Where the appeal is not disposed of within the period of stay, the Appellate Tribunal may grant further stay,
however, the total stay period cannot be exceed 365 days.
Fees to be paid by the Tax payer for filing Appeal before ITAT
The fees on appeal before the Tribunal has to be levied on the basis of income as computed by the Assessing
Officer and not on income as computed after effect to appellate order of Commissioner of Income Tax(Appeals).
Where the subject matter of appeal relates to any other matter, fee of Rs. 500 is to be paid. An application for
stay of demand is to be accompanied by fee of Rs. 500.
The Tribunal will be launching the said e-Filing portal for the benefit of tax payers and the income tax
department, shortly.
Filing of additional evidence before the ITAT by parties to the appeal is not permitted. In other words, additional
evidence of any kind, either oral or documentary cannot be filed before the ITAT. However, if the Tribunal
requires production of any document, examination of any witness or filing of any affidavit to enable it to pass
orders, it may allow such document to be produced, witness to be examined, affidavit to be filed and such
evidence to be adduced.
The memorandum of cross objection is to be filed within a period of 30 days of 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. The ITAT may accept a memorandum of cross objection even after the period of 30 days if it is
satisfied that there was sufficient cause for not submitting the same within the prescribed time.
Person who is competent to sign Form 36 (i.e., form of appeal) has to sign and verify the memorandum of cross
objections.The ITAT will dispose of the memorandum of cross objections like an appeal in Form 36.
Members
As a rule, the Benches will consist of two members – a Judicial Member and an Accountant Member, exceptions
of being of Single Member Bench (SMB) or a Special Bench.
The combine of two experts is supplementing each other to deal with the complicated issues of law and
accounts arising in tax matters.
If the members of the Bench differ in on any point, decision is by majority. If members are equally divided in their
opinion, the points of difference are stated by each member and case is referred by the President of the Tribunal
for hearing such points by one or more of the other members of Tribunal.
The Bench normally pronounces its orders in open court. Where orders are not pronounced in the court, list of
such orders showing results of appeal and signed by members is put on the notice board of the Bench.
The paper book duly indexed and page numbered is to be filed at least a day before (but it is advisable at least
a week before) the hearing of the appeal along with proof of service of copy of the same on the other side at
least a week before.
The Bench may in appropriate cases condone the delay and admit the paper book. Each paper in the paper
book is to be certified as true copy by the party filing the same.
The Tribunal fixes the date for the hearing the appeal and notifies the parties specifying date and place of
hearing of the Appeal. A copy of memorandum of appeal is sent to the respondent either before or along with
such notice.
The appeal is heard on the date fixed and on other dates to which it may be adjourned.
If the appellant does not appear in person or through an authorised representative when appeal is called on for
hearing, the Tribunal may dispose of the appeal on merits hearing the respondent.
However, where after disposal of appeal ex-parte, the appellant appears afterwards and satisfies the Tribunal
that there was a sufficient cause for non-appearance, the Tribunal can set aside the ex-parte order and restore
the appeal.
Section 268A – Filing of appeal or application for reference by Income-Tax Authority – is inserted by the Finance
Act, 2008 with retrospective effect from 01.04.1999. By sub-section (1) the Board is authorised to issue orders,
instructions or directions to other income-tax authorities, fixing monetary limits for the purpose of regulating filing
of appeal or application for reference by any income-tax authority to the Tribunal, the High Court and the
Supreme Court.
A Board’s circular or instruction No. 17/2019, dated 08.08.2019 wherein monetary limits for filing departmental
appeals (income -tax matters) before Appellate Tribunal, High Courts and Special Leave Petition (SLPs) before
the Supreme Court has been increased recently.
Keeping in view the monetary limits and conditions specified below.
It is clarified that an appeal should not be filed merely because the “tax effect” in a case exceeds the monetary
limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.
For this purpose, ‘tax effect’ means the difference between the tax on the total income assessed and the tax
that would have been chargeable had such total income been reduced by the amount to income in respect of the
issues against which appeal is intended to be filed.
The Assessing officer shall calculate the tax effect separately for every assessment year in respect of the
disputed issues in the case of every assessee.
If, in the case of an Assessee, the disputed issues arise in more than one assessment year, appeal can be field
in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the
monetary limit specified above.
However, the Principal Commissioner or Commissioner can revise the order passed by the Assessing Officer only if
he considers that the order passed is prejudicial to the interests of the revenue.
For removal of doubts, it is provided that the Principal Commissioner or Commissioner can revise the following
orders also:
(a) an order of assessment made by the Assistant Commissioner/Deputy Commissioner or the Income-tax
Officer on the basis of
directions issued by Joint Commissioner under section 144A.
(b) an order made by the Joint Commissioner in exercise of the powers or in the performance of the
functions of Assessing Officer conferred on him under the orders or directions issued by CBDT or
Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or
Principal Commissioner or Commissioner authorised by CBDT under section 120.
When will the order of the Assessing Officer be deemed to be erroneous in so far as it is prejudicial to the interest
of the revenue?
Since the interpretation of expression "erroneous in so far as it is prejudicial to the interests of the revenue" has
been a contentious one, the Finance Act, 2015 has inserted the following Explanation 2 to section 263(1)
w.e.f. 1.6.2015 in order to provide clarity on the issue.
Explanation 2.— For the purposes of this section, it is hereby declared that an order passed by the Assessing
Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion
of the Principal Commissioner or Commissioner,—
(a) the order is passed without making inquiries or verification which should have been made:
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under
section 119: or
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered
by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.
Time limit for passing the revision order under section 263:
The Commissioner cannot revise the order of the Assessing Officer after the expiiy of 2 years from the end of the
financial year in which the order sought to be revised was passed. In computing the period of limitation of 2 years,
the following period shall be excluded:
(1) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129, and
(2) any period during which any proceeding under this section is stayed by an order or injunction of any court.
No time limit in the following cases:
An order of revision may be passed at any time in the case
which has been passed in consequence of,
any finding or direction contained in an order of the Appellate Tribunal.
National Tax Tribunal, the High Court or the Supreme Court under the Income-tax Act or order of Court under any
other law.
Commissioner's power of revision extends to matters not covered in appeal [Clause (c) of Explanation to section
263]:
Where an order passed by the Assessing Officer has been subject matter of any appeal,
it cannot be revised by the Commissioner.
However, in respect of such matters which have not been considered and decided in appeal, the Commissioner has
powers under section 263 for revision.
Step 1:
The Principal Commissioner or Commissioner can call for and examine the records of any proceeding under the Act.
For this purpose he does not need to show any reason.
Step 2:
He would see whether the order passed under the Act by the Assessing Officer is erroneous in as much as it is
prejudicial to the interest of the revenue. Up to this time, there is no question of the assessee appealing or making
any submission.
Step 3:
If after calling for and examining the records, the Principal Commissioner or Commissioner considers that the order
of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, then he has to give the
assessee an opportunity of being heard. The Principal Commissioner or Commissioner must disclose in his notice to
the assessee the grounds on which he desires to revise the order of the Assessing Officer. Further notice to show
cause must be served upon the assessee reasonably ahead of the date fixed for hearing.
Step 4:
The Principal Commissioner or Commissioner may, after giving the assessee an opportunity of being heard and after
making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of
the case justify. lie can enhance or modify the assessment. He has also power to cancel the assessment and direct
fresh assessment.
Revision of orders not covered by section 263, can be made by the Principal Commissioner or Commissioner either
on his own motion or on an application made by the assessee, provided orders have been passed by an authority
subordinate to him. The application made by the assessee shall be accompanied by a fee of Rs. 500. The Principal
Commissioner or Commissioner may call for the record of any proceeding under this Act on the basis of which such
order has been passed and may make such inquiry or cause such inquiry to be made. He may pass such orders
thereon as he thinks fit as are not prejudicial to the assessee. The Principal Commissioner or Commissioner, under
this section can cancel the assessment and direct the Assessing Officer to make a fresh assessment but such
direction shall not be prejudicial to the assessee.
The Principal Commissioner or Commissioner shall not revise any order under this section in the following cases:
(a) where the order has been made more than one year previously, the Principal Commissioner or
Commissioner shall not, on his own motion, revise such an order; or
(b) where the application for revision by the assessee has been made after one year from the date on which
the order in question was communicated to him or the date on which he otherwise came to know of it,
whichever is earlier.
However if the Principal Commissioner or Commissioner is satisfied that the assessee was prevented by
sufficient cause from making the application within the prescribed period he may admit an application
made after the expiry of that period.
Example: Assessing Officer has passed an order on 15.11.2018 which was received by the assessee on
19.11.2018. In this case CIT can make a revision order suo moto up to 15.11 .2019 whereas the assessee
can file application under section 264 up to 19.11.2019.
(c) where an appeal against the order lies to the Commissioner (Appeals) but it has not been made and the
time within which such appeal may be made has not expired; and the assessee has not waived his right
of appeal; or
(d) where the order has been made the subject of an appeal to the Commissioner (Appeals) i.e. where an
appeal has been filed to CIT (Appeal) on any issue relating to such order.
Time limit for passing the revision order under section 264:
On application made by the assessee under this section, the Principal Commissioner or Commissioner shall pass an
order within one year from the end of the financial year in which the application is made by the assessee. In
computing the period of limitation of one year, the following period shall be excluded:
(1) the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129,
and
(2) any period during which any proceeding under this section is stayed by an order or injunction of any
court.
However, an order of revision may be passed at any time in consequence of or to give effect to any finding or
direction contained in an order of the Appellate Tribunal, National Tax Tribunal, high Court or the Supreme Court.