Income Tax Appeal Filing in India

WHEN APPEAL CAN BE FILED BEFORE COMMISSIONER (APPEALS), APPEALABLE ORDERS: Appeal can be filed before Commissioner (Appeals), when a tax payer is adversely affected by Orders as under passed by various Income tax authorities:

1.Order against tax payer where the tax payer denies liability to be assessed under Income Tax Act

2.Intimation issued under Section 143(1) making adjustments to the returned income

3.Scrutiny assessment order u/s 143(3) or an ex-parte assessment order u/s 144, to object to income determined or loss assessed or tax determined or status under which assessed

4.Order u/s 115WE/115WF/115WG assessing fringe benefits

5.Re-assessment order passed after reopening the assessment u/s 147/150

6.Search assessment order u/s 153A or 158BC

7.Rectification Order u/s 154/155

8.Order u/ s 163 treating the taxpayer as agent of a non-resident

9.Order passed u/s 170(2)/(3) assessing the successor to the business in respect of income earned by the predecessor

10.Order u/s 171 recording finding about partition of Hindu undivided family(HUF)

11.Order u/s 115VP(3) refusing approval to opt for tonnage-tax scheme by qualifying shipping companies

12.Order u/s 201(1)/206C(6A) deeming person responsible for deduction of tax at source as assessee in default on failure to deduct/ collect tax at source or to pay the same to the Government

13.Order determining refund u/s 237

14.Order imposing penalty u/s 221/271 /271A/271AAA/ 271F/271FB/272A/272AA/272BB/275(1A)/158BFA(2)/271B/ 271BB/271C/271CA/271D/271E

FORM OF APPEAL AND HOW TO FILL THE SAME: Every appeal to the Commissioner (Appeals) is to be filed in Form No. 35. In this form, details such as name and address of the tax payer, Permanent Account Number (PAN), assessment year, details of the order against which appeal is filed etc. are to be filled in.

E- Form is used in these day for filing appeal , no Physical documents are accepted in the department.

Against the column “Relief claimed in appeal”, amount of reductions sought in income or any other relief sought in appeal is to be mentioned. In the column “Statement of Facts”, relevant facts in respect of each subject matter of appeal are to be mentioned in brief. Nature of business or profession, account books maintained etc. may also be mentioned in this column. Against column “Grounds of appeal”, points on which relief is sought in appeal are to be mentioned in narrative form. For example, in an appeal against addition to the returned income by applying a gross profit rate on estimated turnover, the ground of appeal may be, “the Ld. Assessing Officer was not justified in rejecting the results as per regular books of account and in estimating the income by applying an adhoc rate of gross profit.”

PAYMENT OF ACCEPTED TAX LIABILITY MUST BEFORE FILING APPEAL:

An appeal will be admitted by Commissioner (Appeals) only if tax as per the returned income, where return of income is filed, or advance tax payable, where no return of income is filed has been paid prior to filing of appeal. In the latter situation i.e. where return of income is not filed, tax payer can apply to the Commissioner (Appeals) for exemption from such condition for good and sufficient reasons.

APPEAL FEES:

Fees to be paid before filing appeal to the Commissioner (Appeals) depends upon total income determined by the Assessing Officer. Fees as under are to be paid and proof of payment of fee is to be attached with Form No. 35: Sr.no

Total Income determined by the Assessing Officer Appeal Fees

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 matter of appeal relates to any other matter, fee of Rs. 250/- is to be paid. Appeal fee can be paid in any branch of authorised bank/ State Bank of India/Reserve bank of India along-with challan. Epayment can also be made. Assessee Company need to pay 20 % of the disputed demand before hearing the appeal matter in the office of CIT

TIME LIMIT FOR FILING AN APPEAL

Appeal is to be filed within 30 days of the date of service of notice of demand relating to assessment or penalty order or the date of service of order sought to be appealed against, as the case may be. The Commissioner (Appeals) may admit an appeal after the expiration of period of 30 days, if he is satisfied that there was sufficient cause for not presenting the appeal within the period of 30 days. Application for condoning the delay citing out reasons for the delay along with necessary evidences should be filed with Form No. 35 at the time of filing of appeal. Commissioner (Appeals) can condone the delay in filing the appeal in genuine cases with a view to dispense substantive justice.

APPEAL PROCEDURE:

On receipt of Form no. 35, Commissioner of Income-tax (Appeals) fixes date and place for hearing the appeal by issuing notice to the tax payer and the Assessing Officer, against whose order appeal is preferred. The tax payer has a right to be heard either personally or through an Authorized Representative. In these day reply submitted to the CIT (A) in form of Paper Book. Detail of sample format of Indexing of Paper Book as follows: Sr.no Particulars Page No

1 Notice of Assessment u/s 143

2 Reply filed against the notice

3 Letter of adjournment filed with AO

4 Reply filed with AO ( In respective addition made)

5 Case laws

6 Assessment Order

Format of Paper Book in Sequence as case Progress in the office of Assessing Officer , main idea for this submission is to submit all the documents before CIT in Proper Sequence. The Commissioner (Appeals) would hear the appeal and may adjourn it from time to time till the hearing is over. During hearing, Commissioner (Appeals) may allow the tax payer to go into additional grounds of appeal, i.e. grounds not specified in the appeal memo, i.e. Form no. 35, on being satisfied that omission of those grounds from the form of appeal was not willful or unreasonable

FILING OF ADDITIONAL EVIDENCE: During appeal proceedings, the tax payer is not entitled to produce any evidence, whether oral or documentary other than what was already produced before the Assessing Officer. Commissioner (Appeals) would admit additional evidence filed only in following situations: 1.where the Assessing Officer has refused to admit evidence which ought to have been admitted; or

2.where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to be produced by the Assessing Officer; or

3.where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or

4.where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.

Normally, additional evidences are to be accompanied with an application stating the reasons for their admission, after which the Commissioner (Appeals) may admit the same after recording reasons in writing for its admission. Before taking into account the additional evidence filed, Commissioner (Appeals) is to provide reasonable opportunity to the Assessing Officer. For examining the additional evidence or the witness as well as to produce evidences to rebut additional evidences filed by the tax payer. Before disposing of any appeal, Commissioner (Appeals) may carry out further enquiry himself or through the Assessing Officer. If such proceedings are conducted through the Assessing officer, the same are generally referred to as remand proceedings. After submission of assessee, CIT may pursue the remand proceedings issue a notice to the assessing officer regarding the Objections file by the assessee Company, in reply Assessing officer submit its reply.

After receiving the Remand Report from CIT – (APPEAL), assessee Company will submit its Re- Joinder; this submission is known as final submission from assessee Company.

APPEAL DECISION: After the hearing is concluded, Commissioner (Appeals) passes order in writing, disposing of the appeal and stating the decision on each ground of appeal with reasons. In case of assessment and penalty, Commissioner (Appeals) may confirm, reduce or enhance it. Before enhancing any assessment or penalty, Commissioner of Income-tax (Appeals) has to provide reasonable opportunity to the tax payer for showing cause against such enhancement. While disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which order appealed against was passed, even if such matter was not raised by the tax payer.   

 APPEAL BEFORE INCOME TAX APPELLATE TRIBUNAL Appeal against an order of Commissioner (Appeals) lies with the Income Tax Appellate Tribunal (ITAT). Both tax payer and the Assessing Officer can file appeal before the Appellate Tribunal. Several Benches of the Appellate Tribunal comprising judicial and accountant members have been constituted all over India.

ORDERS AGAINST WHICH APPEAL CAN BE FILED BEFORE APPELLATE TRIBUNAL: Tax payer can file appeal before the Income Tax Appellate Tribunal against the following orders:

1.Order by Commissioner(Appeals) u/s 250/154/271/ 271A/272A

2.Order by Assessing Officer u/s 158BC(c) in respect of search action initiated during 30.6.1995 to 1.1.1997

3.Order by Assessing Officer u/ s 115 VZC excluding the tax payer from tonnage tax scheme

4.Order by Commissioner u/s 12AA on registration application by a charitable or religious trust

5.Order by the Commissioner u/s 80G(5)(vi) regarding approval of a charitable trust for donations made after 31.3.92

6.Order by Commissioner u/s 263 revising Assessing Officer’s order considered prejudicial to the interest of revenue

7.Order by Commissioner u/s 154 to rectify an order u/s 263

8.Penalty order passed by Commissioners u/s 271 or section 272A

9.Penalty order passed by Chief Commissioner/ Director General/Director u/s 272A

10.Order passed by Assessing Officer u/s 143(3)/147 in pursuance of direction of Dispute Resolution Panel (DRP) and rectification order passed u/s 154 in respect of such order. The Commissioner can also direct the Assessing Officer to file appeal against order of Commissioner (Appeals) before the Appellate Tribunal.

TIME LIMIT FOR FILING APPEAL BEFORE ITAT: Appeal is to be filed before the Appellate Tribunal within 60 days of the date on which order appealed against is communicated to the taxpayer or the Commissioner, as the case may be. FORM OF APPEAL: An appeal to the ITAT is to be made in Form No. 36 which is to be filed in triplicate and is to be accompanied by two copies of order appealed against (at least one out of which should be a certified copy), two copies of relevant order of the Assessing Officer, two copies of grounds of appeal before the first appellate authority i.e. Commissioner (Appeals) and two copies of statement of facts, if any, filed before the said first appellate authority. In case of appeal against order levying penalty, 2 copies of relevant assessment order are also to be filed. In case of appeal against order u/s 143(3) r.w.s. 144A, two copies of directions of Additional Commissioner/Joint Commissioner u/s 144A are also to be filed and in case of appeal against order u/s 143(3) r.w.s. 147, two copies of original assessment order, if any are also to be filed. In case of appeal against penalty u/s 271(1)(C)/158BFA(2), the relevant assessment orders’ copies are also to be filed..

FEES TO BE PAID BY THE TAXPAYER FOR FILING APPEAL BEFORE THE ITAT: Form No. 36 is to be accompanied with fee as under, which depends upon total income computed by the Assessing Officer in the case to which appeal relates Sr.no Total Income as computed by Assessing Officer Fees

1 Less than Rs.1 lakh Rs. 500

2 More than Rs. 1 lakh but less than Rs. 2 lakh Rs. 1500

3 More than Rs. 2 lakh 1% of assessed income,

subject to maximum of Rs.10,000 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.

MEMORANDUM OF CROSS OBJECTIONS: The tax payer or the Assessing Officer on receipt of notice that an appeal has been filed before the Appellate Tribunal against order of Commissioner (Appeals) by the other party can, within 30 days of receipt of notice, file a memorandum of cross objections in Form No. 36A Such memorandum of cross objections can be filed even if no appeal is filed by the tax payer or the Assessing Officer himself. No fee is required to be paid for filing the memorandum of cross objections. The memorandum of cross objections is to be signed and verified by the person who was competent to sign Form 36. The memorandum of cross objections is disposed of by the ITAT like an appeal in Form 36.

CONDONATION OF DELAY IN FILING APPEAL/ MEMORANDUM OF OBJECTIONS: The Appellate Tribunal may admit an appeal or permit filing of memorandum of cross objections after the period of 60 days or 30 days, as the case may be, if it is satisfied that there was sufficient cause for not presenting it within the prescribed time

WITH WHOM THE APPEAL IS TO BE FILED: Normally appeal is to be filed with the Assistant Registrar or the Superintendent/ Assistant Superintendent/Clerk in the ITAT. 

PROCEDURE FOLLOWED IN THE ITAT: Filing of Paper Book: The appellant or the respondent, as the case may be, may submit a paper book in duplicate containing documents or statements or other papers referred to in the assessment, appellate order, which it may wish to rely upon. The paper book duly indexed and page numbered is to be filed at least a day 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. The Tribunal can also, on its own direct preparation of paper book in triplicate by and at the cost of appellant or the respondent as it may consider necessary for disposal of appeal. Each paper in the paper book is to be certified as true copy by the party filing the same. Additional evidence, if any, should not be part of the paper book and it should be filed separately.

Hearing of the Appeal The Appellate Tribunal fixes the date for 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 authorized representative when appeal is called on for hearing, the ITAT may dispose of the appeal on merits after hearing the respondent. However, where after disposal of appeal ex parte, the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for non appearance, the Tribunal can set aside the ex parte order and restore the appeal. Similar procedure is applicable where appeal is disposed in the absence of respondent.  Production of additional evidence before the Tribunal: The parties to the appeal are not entitled to produce additional evidence of any kind, either oral or documentary before the Tribunal. 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. Proceedings before the Tribunal to be open to public: Normally the proceedings in the Tribunal are public except in cases decided to be otherwise by the Tribunal as per its discretion.

ORDERS OF THE APPELLATE TRIBUNAL: Normally appeals are heard by a Bench comprising one judicial member and one accountant member. Appeals where total income computed by the Assessing Officer does not exceed Rs. 5 lakh may be disposed of by single member Bench. The President of ITAT is empowered to constitute Special Bench consisting of three or more than three members for disposal of any particular case, one of whom would necessarily be a judicial member and one an accountant member. If the members of the Bench differ in opinion 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 the case is referred by the President of the ITAT for hearing such points by one or more of other members of the ITAT. Such point or points is decided according to opinion of majority of the members of ITAT who heard the case, including those who first heard it. The Bench normally pronounces its orders in Court. Where the 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.

MISCELLANEOUS APPLICATIONS: The ITAT, at any time within four years from the date of order passed by it, can rectify any mistake apparent from record, if the same is brought to its notice by the tax payer or the Assessing Officer. A fee of Rs 50/- is to be paid for filing miscellaneous application.

APPEAL BEFORE HIGH COURT Appeal against Appellate Tribunal’s order lies with the High Court, Where the High Court is satisfied that the case involves 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 120 days of receipt of the order and in the form of memorandum of appeal, precisely stating the substantial question of law involved. If the High Court is satisfied that a substantial question is involved, it would formulate that question. High Court hears the appeal only on the question of law so formulated; however, the respondents can argue at the time of hearing that case does not involve such question of law. Appeal filed before High Court is heard by bench of not less than two Judges and decision is by majority. APPEAL BEFORE SUPREME COURT Appeal against High Court’s order in respect of Appellate Tribunal’s order lies with the Supreme Court in those cases, which are certified to be fit one for appeal to the Supreme Court. Special leave can also be granted by the Supreme Court under Art. 136 of the constitution of India against the order of the High Court.