Income Tax Appellate Tribunal(ITAT) came into existence to reduce the traffic of cases in the High Courts in India. The Income Tax Appellate Tribunal hears income tax appeals from taxpayers against orders passed by the Income Tax Authorities. The Income Tax Appellate Tribunal was established in January 1941 and has 63 benches across India.
Income Tax Appellate Tribunal (ITAT) is a quasi-judicial authority to file appeals against the orders of income tax authorities. A tax appeal can be filed by a taxpayer who does not agree with the assessment order or any other order, passed by an income-tax authority. An appeal before the ITAT is generally filed by the taxpayer to contest any order passed by the Commissioner of Income-tax(Appeals). Similarly, an income-tax department can also file an appeal against any order passed by the Commissioner of Income-tax(Appeals) before the ITAT
What is Income Tax Appellate Tribunal?
(ITAT) The income tax Appellate Tribunal is a quasi judicial body that hears income tax appeals from Taxpayers, who do not agree with any order passed by the Income Tax Authority. ITAT also, hears appeals from the Income Tax Authorities against the order passed by the subordinate Income Tax Authorities.
It was set up in January 1941 and specialized in dealing with matters relating to direct taxes. The ITAT functions under the regulation of the jurisdictional High Court and is assistant to the High Court. The ITAT is also the final fact-finding authority, and its decisions are final on factual matters.
The ITAT consists of different benches for different regions, each having an accountant member and a judicial member. The President of the ITAT constitutes a bench from among the members of the ITAT. In some cases, a special bench with three or more members may be constituted to dispose of income tax appeals.
What are the Functions of ITAT?
The primary function of the Income Tax Appellate Tribunal is to hear income tax appeals from taxpayers and the income tax authorities; it is the second forum after the Commissioner of Income Tax.
The orders passed by the ITAT are final unless a substantial question of law arises for determination by the High Court. The ITAT is headed by a President, who is appointed by the Central Government. The ITAT aims to provide speedy and inexpensive justice to taxpayers and the revenue department.
What are the powers of the ITAT?
- Power to restore the appeal: The ITAT can recall any order passed by it if it is satisfied that it was passed under a mistake of fact or law or in ignorance of any material fact.
- Power to recall the Order: The ITAT can recall the order if it is believed that there was enough cause for the non-appearance of the appellant or his authorized representative.
- Power of Remand: The ITAT can remand a case to the income tax authority for fresh adjudication or further inquiry if it considers it necessary or expedient for the ends of justice.
- Power to restore ex-parte order: The ITAT can restore an ex-parte order passed by it, if it is believed that there was sufficient cause for the absence of the party when the order was passed.
- Power of Rectification: The ITAT can rectify any mistake apparent from the record in any order passed by it, either on its own motion or on an application made by any party.
- Power to punish for contempt: The Income Tax Appellate Tribunal has the power to punish for contempt of its orders under the Contempt of Courts Act 1971.
Which are the Appealable Orders?
- The orders passed by the Assessing Officer.
- Any Penalty order passed by the Commissioner
- The orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)]
- The orders passed by the Assessing Officer as per the directions of the Dispute Resolution Panel(DRP)
- Any orders passed by the jurisdictional Commissioner.
- Application for a stay on recovery of demands of tax.
- Any other Applications for recall of orders.
Monetary Limits Applicable to the Filing of Appeals
The Central Board of Direct Taxes (CBDT) can issue orders, instructions or directions to the income-tax authorities. The CBDT can also fix the monetary limits to regulate the filing of appeal or application or reference to the ITAT, jurisdictional High Court or Supreme Court. The CBDT vide instruction no. 17/2019 dated 8 August 2019 has fixed the monetary limit for filing appeals by the income tax department before the ITAT, High Courts or Supreme Courts which as follows:
- Before the ITAT – Rs.50 lakh.
- Before the High Court – Rs.1 crore.
- Before the Supreme Court – Rs.2 crore.
The monetary limits are for the tax effect in a particular case. ‘Tax effect’ refers to the difference between the tax on the assessed income and tax on the income without the assessment adjustments, which is also called the returned income. An Assessing Officer should determine the tax effect for each assessment year for a taxpayer. Though the above are the monetary limits for filing appeals, one should check the merits of the case before submitting a request.
How to file an appeal before the ITAT?
- Prepare a form of appeal in Form No. 36 and a form of memorandum of cross-objections in Form No. 36A. You can download these forms from the ITAT website or obtain them from the ITAT registry.
- Pay the prescribed fee for filing the appeal. The fee depends on the amount of tax disputed and whether you are an individual or a company. You can pay the fee by demand draft or online through the ITAT website.
- Submit four copies of the memorandum of appeal, statement of facts, fee receipt, and other relevant documents to the ITAT registry within 60 days from the date of receipt of the order appealed against. You must also serve a copy of the appeal and documents to the respondent, i.e., the Commissioner of Income Tax (Appeals) whose order is challenged.
- After verifying your appeal, the ITAT will assign a number to it and notify you of the date and place of the hearing. The status of the appeal can be checked online through ITAT website.
- Appear Before the ITAT on the hearing date and present your case. You can either represent yourself or engage a chartered accountant, an advocate, or any other authorized representative to argue on your behalf.
- After hearing both sides, the ITAT will pass an order disposing of your appeal. The order will be communicated to you and the respondent within four months from the end of the month in which the appeal was heard.
Appeal Filing Fees- A person filing an appeal with the ITAT should pay the following appeal filing fee. The fee is dependent on the income assessed by the Assessing Officer. The income does not include the effect of the order passed by the CIT(A).
- Total income assessed is less than Rs 1 lakh – Rs.500
- Total income estimated is more than Rs 1 lakh but less than Rs.2 lakh – Rs.1,500
- Total income assessed is more than Rs 2 lakh – 1% of the total income assessed not exceeding Rs.10,000
In case the appeal relates to any other matter, the filing fee is Rs.500. And, in the case of an application for a stay of demand, the appeal filing fee is Rs.500. The ITAT fixes and notifies both the parties about the date and place for the hearing of the appeal. The respondent also receives a copy of the memorandum to the appeal along with the notice. The respondent may receive a notice of appeal before the memorandum.
Time Available for Filing an Appeal- The time allowed to file an appeal is 60 days from the date of communication of the order, which is the subject matter of the appeal.
Filing Memorandum of Cross-Objections- The respondent to an appeal should file a memorandum of cross-objections with the ITAT within 30 days of receiving notice from the ITAT. The form prescribed for filing cross-objections in Form No. 36A. There is no fee to file the cross-objections. The ITAT may accept a delayed submission of Form No. 36A depending on the facts and circumstances of the appeal.
Representation Before the ITAT- The appellant and respondent can seek representation from an authorised person to appear for the hearing before the ITAT. Section 288 of the Income Tax Act, 1961 prescribes the persons who can act as an authorised representative. However, a taxpayer cannot seek representation in cases of a personal examination on oath.
Presentation of Evidence- None of the parties is eligible to file additional evidence before the ITAT. In a case, the ITAT requires any document or affidavit or seeks to examine any witnesses, and the ITAT may allow for the production of documents, examination of persons, or other evidence.
Orders by the ITAT- The bench of the ITAT hears the matter of the appeal and passes the order deciding the appeal. In a case where one or more of the parties fail to appear on the dates fixed for hearing, the ITAT can dispose of the appeal ex-parte. In case the other party/parties appear after the disposal and satisfy the ITAT with reasons for non-appearance, the ITAT may set aside its earlier ex-parte order.
In general, a bench consisting of an accountant member and one judicial member passes the order of the ITAT. However, in specific cases of importance, the President of the ITAT may constitute a special bench consisting of three or more members, with at least one accountant member and one judicial member. In case the members differ in the decision on any point under consideration, the decision of the majority prevails. In case the members of the bench are divided in opinion, the President hears and decides the appeal.
FAQs
What is the appeal fee for filing an appeal before the Income Tax Appellate Tribunal?
- Total income assessed is less than Rs.1 lakh – Rs.500
- Total income estimated is more than Rs.1 lakh but less than Rs.2 lakh – Rs.1,500
- Total income assessed is more than Rs.2 lakh – 1% of the total income assessed not exceeding Rs.10,000
- In case the appeal relates to any other matter, the filing fee is Rs.500.
- Application for stay of demand, the appeal filing fee is Rs.500.
What is the time limit for filing an appeal?
The time limit for filing an income tax appeal is 60 days from the order communication date.