COMMISSIONER/JOINT COMMISSIONER OF INCOME TAX (CIT)/JCIT (Appeals)
An appeal is a means through which a judgment or order made by a lower authority can be contested before a higher authority. This process involves lodging a formal complaint with a superior body regarding the decisions of an administrative or appellate authority. It’s not uncommon for an assessee to feel wronged by a ruling issued by the Assessing Officer, or AO, who plays a crucial role in the tax system. The AO's primary responsibility is to ensure that the assessee accurately reports their income and calculates their tax obligations accordingly. Additionally, the AO holds the authority to probe cases of potential tax evasion, create tax demands, and impose penalties when necessary.
In situations where the assessee is dissatisfied with an AO's decision, they can file an appeal with the Commissioner of Income Tax (Appeals) or the Joint Commissioner (Appeals). If the verdict from these authorities doesn't resolve the issue, the assessee can escalate the matter to the Income Tax Appellate Tribunal (ITAT).
[Note: It's noteworthy that the Finance Act 2023 introduced a new income tax authority, the Joint Commissioner (Appeals) [JCIT (Appeals)], as per the amendment in section 246. This role addresses a particular category of cases related to smaller disputes. This scheme is geared towards individuals or groups specified under section 246 of the Income-tax Act. To support the operations of the JCIT (Appeals), the Central Board of Direct Taxes (CBDT) has initiated the e-Appeals Scheme, 2023. This scheme outlines the procedures to follow, the scope of applications, and other provisions designed to facilitate the process.]
According to the Scheme, individuals are not required to appear personally or through an authorized representative for proceedings under it. However, they have the option to request a personal hearing, which can occur via video conferencing or video telephony.
The Income-tax Act of 1961 (referred to as the Act) offers various avenues for taxpayers to contest orders issued by the AO after the assessment process. Understanding the concepts behind the appeals that aggrieved assessees can submit to the first appellate authority within the income tax appeals hierarchy, specifically the Commissioner of Income Tax (Appeals) or the Joint Commissioner (Appeals) (collectively known as CIT(A)/JCIT(A)), is essential.
Appealable Order – Section 246A
Section 246A of the Act outlines the various orders that Income-tax Authorities can issue, against which a dissatisfied assessee has the right to appeal to the first appellate authority, namely the CIT(A)/JCIT(A). Below are some notable orders that can be appealed:
Intimation issued under Section 143(1)/(1B), particularly when there are adjustments to the income declared in the return.
Assessment order under Section 143(3), unless it follows directives from the Dispute Resolution Panel.
An assessment order issued under Section 144, reflecting a Best Judgement Assessment.
Orders related to Assessment, Re-assessment, or Re-computation issued after reopening under Section 147, excluding those that follow directions from the Dispute Resolution Panel.
Assessment or re-assessment orders under Section 153A or Section 158BC, particularly in the context of search or seizure.
Rectification orders issued under Section 154 or Section 155.
Orders made under Section 163 that assign the taxpayer as the agent of a non-resident.
Time Limit for Presenting a CIT/JCIT (Appeals)
According to Section 249(2) of the Act, an appeal must be filed within 30 days from the relevant date:
For appeals regarding any assessment or penalty, the countdown starts from the date when the notice of demand related to the assessment or penalty order is served.
In other cases, it begins from the date the intimation of the order you wish to appeal against is delivered.
Please note, there are exceptions: If there are genuine reasons for delay in filing the appeal, the CIT(A)/JCIT(A) may condone the delay. To do so, the appellant needs to apply for condonation of delay, explaining the reasons along with supporting evidence and an affidavit confirming the request.
Fees for Filing the CIT/JCIT (Appeals)
Appeal filing fees depends upon the total income determined by the AO in the assessment order which is as follows –
Income determined by AO
Fees (Rs.)
Less than or equal to Rs. 1 lakh
250
More than Rs. 1 lakh but less than Rs. 2 lakhs
500
More than Rs. 2 lakhs
1,000
Any other case (e.g.: Appeal against penalty orders)
250
Pre-deposit of tax for filing an appeal
The appellant must pay the tax as determined in their filed income return prior to submitting an appeal. In cases where no income return has been filed, the appellant is required to pay an amount equivalent to the advance tax due.
However, there is an exception: The CIT(A) or JCIT(A) may grant an exemption from this tax payment if the appellant provides a valid reason for the non-payment before appealing.
Documents to be Submitted for CIT/JCIT (Appeals)
Form No. 35: This is the required form for submitting an appeal to the CIT(A)/JCIT(A), including the statement of facts and grounds of appeal. Please prepare and submit this in duplicate. Note that e-filing is compulsory for individuals mandated to e-file their income tax returns starting from March 1, 2016.
Include one certified copy of the order you are appealing against.
Attach the original notice of demand.
If you are e-filing your appeal, please provide a copy of the fee challans. Include detailed information such as the BSR code, payment date, serial number, and the amount paid.
Procedure in Appeal
Upon receiving Form No. 35, the CIT(A) or JCIT(A) will schedule a hearing date for the appeal and notify both the appellant and the Assessing Officer (AO) accordingly.
The CIT(A) or JCIT(A) reserves the right to adjourn the appeal hearing as necessary.
If satisfied that an omitted ground of appeal was not excluded wilfully or unreasonably, the CIT(A) or JCIT(A) may permit the appellant to address that specific ground.
The appellant may also submit additional evidence under Rule 46A. According to Rule 46A of the Act, this additional evidence can be presented before the CIT(A) or JCIT(A) only under the following conditions:
The Assessing Officer declined to admit evidence that should have been accepted.
The appellant had a valid reason preventing them from presenting evidence requested by the Assessing Officer.
The appellant was unable to produce evidence relevant to any appeal ground due to a valid reason.
The Assessing Officer issued the contested order without providing the appellant sufficient opportunity to present relevant evidence.
Prior to deciding on any appeal, the CIT(A) or JCIT(A) may conduct further inquiries deemed necessary or instruct the AO to carry out additional investigations and report the findings back to the CIT(A) or JCIT(A).
The determination made by the Commissioner of Income Tax (Appeals) will be final.
The CIT(A)/JCIT(A) will address the appeal by issuing an order that clearly outlines the decision on each specific ground of appeal, providing reasons for each conclusion reached.
The CIT(A)/JCIT(A) will make determinations in various ways depending on the circumstances, which are further detailed below:
Reason for Appeal
Disposition of Appeal
Appeal against assessment order passed by the AO (including assessment in respect of which proceedings before the Settlement Commission abates).
CIT(A)/JCIT(A) may confirm, reduce, enhance or annul the assessment.
Appeal against penalty order.
CIT(A)/JCIT(A) may confirm, reduce or enhance the penalty.
Before making any changes to an assessment or imposing a penalty, the CIT(A)/JCIT(A) must grant the assessee a fair opportunity to present their case against the proposed changes. Additionally, while resolving an appeal, the CIT(A)/JCIT(A) has the authority to address and make decisions on any issues that arise from the assessment proceedings, even if those issues were not previously raised by the assessee.
Disposal of Appeal
The CIT(A)/JCIT(A) should aim to resolve the appeal within one year from the end of the financial year in which the appeal was submitted. The corresponding order should be issued within 15 days following the final hearing.
Faceless Appeal
In recent years, the tax department has rolled out an e-appeal scheme aimed at enhancing transparency, efficiency, and accountability while minimizing corruption. This initiative includes several key features:
- The scheme reduces direct interactions between the CIT(A)/JCIT(A) and the appellant during the appellate proceedings, relying more on technology. However, if the appellant requests it, the CIT(A)/JCIT(A) must still offer a personal hearing.
- It promotes better resource utilization through economies of scale and specialized functions.
- It narrows the time frame for resolving litigation matters.
Under this scheme, the entire assessment procedure is managed by the National Faceless Appeal Centre (NFAC), which directly assigns appeals to a CIT(A)/JCIT(A) from the appeal unit. The NFAC acts as the central communication hub between the Assessing Officer, the appellant, and the Appeal Units, ensuring that all exchanges occur exclusively through electronic means. All orders issued by the CIT(A)/JCIT(A) will be digitally signed before being sent to the NFAC for delivery to the appellant.
Appellants can request to present their cases during personal hearings. If the CIT(A)/JCIT(A) finds it appropriate, they will schedule a date and time for the hearing through the NFAC. Such hearings will take place via video conferencing, following the procedures set by the Central Board of Direct Taxes (CBDT).
Overall, the introduction of the Faceless Appeal Scheme has significantly reformed the litigation process, making the appeal procedure more streamlined, reliable, and efficient.
Income Tax Appellate Tribunal-ITAT
The Income Tax Appellate Tribunal (ITAT) is a quasi-judicial entity established by the Central Government to handle appeals related to the Income Tax Act of 1961. Operating under the Ministry of Law and Justice, the ITAT has various benches dedicated to specific regional jurisdictions. The President of the ITAT is responsible for forming these benches, which comprise both an accountant member and a judicial member.
In certain cases, where the total income, as computed by the Assessing Officer, is below Rs. 50 lakh, either the President or any ITAT member may decide on the appeal directly. Additionally, if needed, a special bench can be formed with three or more members to address appeals, ensuring the inclusion of at least one accountant and one judicial member. Importantly, the ITAT serves as the ultimate fact-finding authority, and its decisions regarding factual matters are deemed final.
The Income Tax Appellate Tribunal (ITAT) addresses appeals related to orders from income tax authorities. It acts as the second level of appeal after the Commissioner of Income Tax (Appeals). Operating under the oversight of the relevant High Court, the ITAT is subordinate to it and must adhere to the legal precedents set by that High Court. Essentially, it is obligated to follow the law established by the High Court in cases it reviews on appeal. Additionally, the ITAT is also required to consider the precedents established by the Supreme Court of India.
Appealable Orders
The following orders are appealable before the ITAT:
Orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)].
Orders passed by the jurisdictional Commissioner.
Orders passed by the Assessing Officer as per the directions of the Dispute Resolution Panel.
Orders passed by the Assessing Officer.
Penalty order passed by the Commissioner.
Application for stay of tax demands.
Other miscellaneous applications for recall of orders.
Monetary Limits Applicable to the Filing of Appeals
The Central Board of Direct Taxes (CBDT) has the authority to issue orders, instructions, and directives to income-tax authorities. It also has the power to establish monetary limits for the filing of appeals or applications to the Income Tax Appellate Tribunal (ITAT), the relevant High Courts, or the Supreme Court. According to CBDT Circular No. 09/2024, dated 17 September 2024, the CBDT has set specific monetary limits for the income tax department when filing appeals before the ITAT, High Courts, or Supreme Courts, as detailed below:
Before the ITAT – Rs. 60 Lakhs
Before the High Court – Rs. 2 Crores
Before the Supreme Court (SLPs and Appeals) – Rs. 5 Crores
Procedure to File an Appeal before the ITAT
To file an appeal with the Income Tax Appellate Tribunal (ITAT), you will need to complete Form No. 36 and submit it in triplicate. Your submission should be organized into a paper book that includes the following documents:
Two copies of the order you are appealing against, including one certified copy.
Two copies of the Assessing Officer's order.
Two copies of the Grounds of Appeal you previously submitted to the first appellate authority, the CIT(A).
Two copies of the Statement of Facts provided to the CIT(A).
Two copies of the assessment order if your appeal concerns a penalty order.
Two copies of the directives from the Joint Commissioner if your appeal involves an assessment order issued by the Joint Commissioner.
Two copies of the original assessment order in cases where you are appealing against a reassessment order under section 147.
A copy of the payment challan for the ITAT fee.
Two copies of any submissions, documents, and papers presented earlier during income tax proceedings or before the CIT(A).
Two copies of any additional documents or information you wish to submit.
Your paper book must be well-organized and properly indexed. It is advised to file the paper book at least one week prior to the scheduled hearing and to provide a copy to the respondent. The ITAT may accept late submissions based on the specific circumstances of your case.
Notably, the Union Budget 2021 introduced provisions for faceless proceedings before the ITAT, aimed at eliminating jurisdictional constraints. This initiative is expected to lower compliance costs for taxpayers and enhance the transparency of the appeal process. It will also facilitate a more balanced distribution of work among various benches, promoting more effective administration.
In line with this, the government issued a notification for the Faceless Assessment Scheme, 2021 on December 28, 2021. For further details, click on the link below to access the notification.
Appeal Filing Fees
When filing an appeal with the ITAT, it's essential to know the applicable fees, which are based on the income assessed by the Assessing Officer, excluding any impact from an order issued by the CIT(A). Here’s a breakdown of the filing fees:
For total income assessed up to Rs 1 lakh, the fee is Rs 500.
If total income is over Rs 1 lakh but up to Rs 2 lakh, the fee increases to Rs 1,500.
For total income assessed beyond Rs 2 lakh, the fee is 1% of the assessed total income, capped at Rs 10,000.
If the appeal pertains to any different issue, the filing fee will be Rs 500. In instances where a stay of demand is requested, the same filing fee of Rs 500 applies. The ITAT will schedule the hearing and notify both parties, while the respondent also receives the appeal memorandum along with the notice. Sometimes, the respondent might get a notice of appeal prior to the memorandum.
Timeframe for Filing an Appeal
You have 60 days from the date of the order's communication to file your appeal.
Filing a Memorandum of Cross-Objections
Respondents need to submit a memorandum of cross-objections to the ITAT within 30 days after receiving notice. This must be done using Form No. 36A, and there is no fee associated with filing cross-objections. The ITAT may allow for delayed submissions of Form No. 36A, based on the specific circumstances surrounding the appeal.
Representation Before the ITAT
Both the appellant and respondent have the option to have an authorized representative appear on their behalf at the ITAT hearing. Per Section 288 of the Income Tax Act, 1961, specific individuals are designated as authorized representatives. However, it's important to note that taxpayers cannot have representation in situations involving personal examinations under oath.
Presentation of Evidence
Neither party is allowed to submit additional evidence before the ITAT. If the ITAT requires any documents, affidavits, or witnesses for examination, it has the discretion to permit the introduction of such evidence.
Orders by the ITAT
The ITAT bench reviews the appeal and issues a decision accordingly. Should one or both parties fail to appear on the scheduled hearing dates, the ITAT may resolve the appeal ex-parte. If any party who missed the hearing later appears and provides satisfactory reasons for their absence, the ITAT may overturn its previous ex-parte decision.
Typically, an ITAT order is issued by a bench that includes an accountant member and a judicial member. In cases of particular significance, the President of the ITAT can establish a special bench comprising three or more members, ensuring there is at least one accountant and one judicial member. If there is a disagreement among the members on any point of deliberation, the majority opinion prevails. In instances of a split decision, the President will adjudicate the appeal.
Conclusion
The appeal process hinges on the unique facts and circumstances surrounding each appellant's case. It's crucial for the appellant to thoroughly examine the grounds for their appeal prior to submitting it. Having a clear grasp of the procedures involved in filing an appeal with the ITAT & CIT(A)/JCIT(A) and understanding the powers held by both the appellant and the ITAT & CIT/JCIT (Appeals) will greatly assist the appellant in navigating the complexities of the appeal process.
