FILING FIRST APPEAL UNDER INCOME TAX ACT, 1961

[DR.MARIAPPAN GOVINDARAJAN]

Appeal

Appeals focus on providing a structured judicial review of assessment orders, allowing both factual and legal challenges.  The first appeal under the Income Tax Act, 1961 (‘Act’ for short) can be filed under Part a of Chapter XX of the Act.   The appeal can be filed by the aggrieved assessee.  There is no provision for filing appeal against the order of Assessing Officer by the Revenue.  The Revenue can only file revision under section 264 of the Act.  There are two first appellate authorities – Joint Commissioner (Appeals) and Commissioner (Appeals).

Appeal before Joint Commissioner (Appeals)

Section 246(1) of the Income Tax Act, 1961 provides for filing appeal by the assessee before the Joint Commissioner (Appeals).  The first appeal may be filed by an assessee against the following orders issued by the Assessing Officer, below the rank of Joint Commissioner-

• Section 143(1) – intimation – where the assessee objects to the making of adjustments;
• Section 143 (3) – any order of assessment;
• Section 144 - where the assessee objects-

• to the amount of income assessed, or
• to the amount of tax determined, or
• to the amount of loss computed, or
•  to the status under

which he is assessed;

• Section 147 - an order of assessment, reassessment or recomputation – income escaping assessment;
• Section 200A -  an order being an intimation – processing of Statement of tax deducted at source and other documents;
• Section – 201 – order – penalty payable when tax is in default;
• Section 206C – an order being an intimation – collection of tax at source;
• Section 206CB – an order of being an intimation – processing of Statement of Tax collected at source and other documents;
• Sections 271 to 275 – Chapter XXI – an order imposing penalty;
• Section 154 – Rectification of mistakes or Section 155 – other amendments.

Appeal before Commissioner (Appeals)

Section 246A (1) provides that any assessee or any deductor or any collector aggrieved by any of the following orders may appeal to the Commissioner (Appeals)-

• An order passed by Joint Commissioner (Appeals) under-

• Section 115VP (3)(ii) – order of Joint Commissioner on the option of tonnage scheme;
• Section 143 (1) or (1B) – scrutiny assessment;
• Section 200A (1) - an order being an intimation – processing of Statement of tax deducted at source and other documents;
• Section 206 CB (1) an order of being an intimation – processing of Statement of Tax collected at source and other documents;
• Section 143(3) – any order of assessment;
• Section 144BA (12) – getting approval of Principal Commissioner/Commissioner for passing assessment or re-assessment order;
• Section 144 – best judgment assessment;

• Section 115WE (3) – assessment of fringe benefits; or Section 115WF- Best Judgement for fringe benefits;
• Section 115WG – order of fringe benefit escaping assessment.

Limitation for filing appeal

The appeal, in relation to assessment or penalty, shall be filed within 30 days from the date on which intimation of the order sought to be appealed against is served.  If the appeal is filed under section 248 of the Act, denying liability to deduct tax in certain case, the appeal shall be filed within 30 days from the date of payment of tax.  In other cases, the appeal is to be filed within 30 days from the date of receipt of the order against which the appeal is going to be filed. 

Delay condonation

The Joint Commissioner (Appeals) or the Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.  An application for condonation of delay is to be filed along with the appeal specifying the reasons for delay in filing the appeal beyond the limitation period.  If the delay condonation application is refused the assessee is having right to file appeal against such refusal order.  The following may be the reasons for delay condonation-

• Sufficient cause for not presenting the appeal;
• Technical faults;
• Ill health of the assessee;
• No mala fide intention in filing appeal belatedly;
• Lack of proper knowledge about the provisions of Act;
• Knowing the assessment order lately;
• Absence of due guidance by the consultant.

Form

The First appeal shall be filed in Form 35.  In the case of a person who is required to furnish return of income electronically under of rule 12 (3), -

• by furnishing the form electronically under digital signature, if the return of income is furnished under digital signature;
•  by furnishing the form electronically through electronic verification code in a case not covered above.

shall be verified by the person who is authorised to verify the return of income under section 140 of the Act, as applicable to the assessee.

Fees

The following is the fee structure for filing first appeal which depends upon the value computed-

• where the total income of the assessee as computed by the Assessing Officer in the case to which the appeal relates is Rs. 1 lakh or less – fees is Rs. 250/-;

• where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than Rs. 1 lakh but not more than Rs. 2 lakhs – fees is Rs. 500/-;
• where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than Rs. 2 lakhs – fee is Rs.1,000/-;
• where the subject matter does not cover under the above three categories – fees is Rs.250/-.

No appeal

No appeal could be filed in the following cases-

• where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
• where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him.

Joint Commissioner (Appeals) or the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the above provisions.

Grounds of appeal

There is no form specified in the Act or in the Rules.  The appeal shall be precise, comprehensive, clear and the paras shall be consecutively numbered.  The appeal shall be based on law as well as on merit.  Separate ground for each addition shall be taken.  Statement of facts shall not be mixed with the grounds of appeal.  The appellant is having right to add or alter or amend or withdraw any of the grounds of appeal before appeal or at the time of appeal proceedings. 

Transfer of cases

The Board or an income-tax authority so authorised by the Board in this regard, may transfer any appeal which is pending before a Joint Commissioner (Appeals) and any matter arising out of or connected with such appeal and which is so pending, to the Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before it was so transferred.  Before the transfer the appellant shall be given an opportunity of being reheard.

Hearing

The First Appellate Authority 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 Assessing Officer against whose order the appeal is preferred.  The following shall have the right to be heard at the hearing of the appeal-

• the appellant, either in person or by an authorised representative;
• the Assessing Officer, either in person or by a representative.

At the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the First Appellate Authority is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable.

Inquiry

The First Appellate Authority, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the First Appellate Authority. 

Powers of First Appellate Authority

The First Appellate Authority shall have the following powers-

•  he may confirm, reduce, enhance or annul the assessment;
•  in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;
• in any other case, he may pass such orders in the appeal as he thinks fit.

The Commissioner (Appeals) may set aside the assessment order and remand the matter back to the Assessing Officer.   In an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annual the assessment.

The First Appellate Authority 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.

Disposal of appeal

In every appeal, the First Appellate Authority, where it is possible, may hear and decide such appeal within a period of 1 year from the end of the financial year in which such appeal is filed before him or transferred to him or filed before as the case may be.  The order of the First Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.

Discussions to this article

[Ajay Ajmera]

Sir

Number of appeals pending before cit appeals since last 3-4 years. is there is any remedy for timely disposal of appeal