Income Tax

Income Tax Appeal Filing Procedure: Detailed Overview

The Income Tax Act 1961 comprises provisions and procedures for filing Income Tax appeals before concerned authorities. The taxpayers’ dispute cannot go unheard as the condition of appeal under the Income Tax Act provides proper adjudication of such disputes. The tax laws provide a structured appeal process that must be duly followed. This article will give a detailed overview of the Income Tax Appeal filing procedure.

Introduction to Income Tax Appeal Filing Procedure

An assessing officer determines the liability of the income tax. In case a taxpayer is not satisfied or is aggrieved by the decision or action of the assessing officer, then such taxpayer can file an appeal before the Commissioner of Income Tax (Appeals). Thereafter the appeal can be filed before the Income Tax Appellate Tribunal (ITAT)^[1].

Where any substantial question of law is involved, an appeal can be filed before the country’s High Court and the Apex Court. In the next segment, we will glance through the different appellate procedures at different levels of the appellate authority.

Income Tax Appeal Filing Procedure: Appeal to Commissioner of Income-tax (Appeals)

An assessee or a deductor or a collector who is aggrieved by any of the following orders can file an appeal to the Commissioner of Income-tax (Appeals) –

• An order passed by the Joint Commissioner under Section 115VP (3) (ii) or order against the assessee where such assessee denies the liability to be assessed or an intimation under sub-section 1 or 1B of Section 143 or Section 200A (1) or Section 206CB (1), where the assessee/deductor/collector objects to the adjustments made or order of assessment under Section 143 (3) except the order pursuant to the directions of the Dispute Resolution Panel or an order referred to under Section 144BA (12) or Section 144;
• Assessment order under Section 115WE (3) or Section 115WF;
• Assessment or reassessment order under Section 115WG;
• Assessment, reassessment, or recomputation order under Section 147;
• Assessment or reassessment order under Section 153A;
• Order under Section 92CD (3);
• Order under Section 154 or Section 155 enhancing the assessment or reducing refund or order not allowing the assessee’s claim under either of the aforesaid sections;
• Order under Section 163;
• Order under Section 170 (2) or (3);
• Order under Section 171;
• Order under Section 185 (b) of (1) or (2) or (3) or (5);
• Order cancelling firm’s registration under Section 186 (1) or (2);
• Order under Section 201;
• Order under Section 206C (6A);
• Order under Section 237 or Order under Section 239A;
• Order imposing penalty under Sections 221, 271, 271A, 271AAA, 271AAB, 271F, 271FB, 272AA or 272BB;
• Order imposing or enhancing penalty under Section 275 (1A);
• Assessment Order made by an Assessing Officer under Section 158BC (c);
• Order imposing penalty under Section 158BFA (2), Section 271B, or Section 271BB;
• Order imposing penalty under Section 271C, 271CA, 271D, or 271E;
• Order imposing penalty under Section 272A;
• Order imposing penalty under Section 272AA;
• Order imposing penalty under Chapter XXI.

It may be noted that the income tax appeal filing procedure should be complied with within 30 days of the following date-

• The date of the tax payment where the appeal pertains to tax deducted under Section 195(1);
• The date of service of the demand notice pertaining to the assessment/penalty;
• In other cases, the date when intimation of the order sought to be challenged is served.

The Commissioner of Income-tax (Appeals) can admit the appeal after the expiry of the prescribed period if he is shown sufficient cause for not appealing within the said period.

In order to initiate the income tax appeal filing procedure, Form No. 35 has to be filed before the Commissioner of Income Tax (Appeals). Also, the appeal form, the grounds for appeal, and the verification form should be signed and verified by the concerned person who is authorized to sign the return of income under Section 140.

In form no. 35, the details such as the taxpayer’s name and address should be mentioned. Also, details of PAN, assessment year, etc., are to be filled in.

Once the commissioner of the income tax receives the aforesaid form, he shall fix the date and place for hearing the appeal by serving a notice to the taxpayer and the assessing officer. Before passing an order, the commissioner of income tax shall make any other inquiries as he feels fit. The commissioner may direct the assessing officer to conduct further inquiry and direct such an officer to report to him.

Documents

The following documents should be attached:

• Form No. 35- in duplicate;
• Copy of the Order that is challenged;
• Notice of demand;
• Copy of challans of fees.

Income Tax Appeal Filing Procedure: Appeal to Income Tax Appellate Tribunal

The income tax appellate tribunal is the next appellate authority in the hierarchy after the Commissioner of Income Tax. It functions under the Ministry of Law. An appeal before the income tax appellate authority may be filed by the taxpayer or the assessing officer. Various benches of the ITAT have been constituted all over India, comprising judicial and accountant members.

Any of the following orders can be appealed against before the Income Tax Appellate Tribunal:

• Order passed by the Deputy Commissioner (Appeals) before;
• Order of an assessing officer under Section 158BC (c) pertaining to the search initiated under Section 132 or books of account or any other documents or assets that are requisitioned under Section 132A before 1997 but after June 1995;
• Order of a Principal Commissioner or Commissioner under Section 12AA or Section 271 or under Section 80G (5) (vi) or Sections 263 or 271 or 272A or order made by him under Section 154 or an order by a Principal Chief Commissioner or Principal Director or Principal Director General or Director General or Chief Commissioner or Director under section 272A;
• Order made by AO under section 115VZC(1);
• Order made by an Assessing Officer under Sections 143(3) or 147 or 153A, or 153C relating to the directions of the DRP;
• Order made by an Assessing Officer under Sections 143(3) or 147 or 153A, or 153C, which is approved by the Principal Commissioner/Commissioner or an Order made under Section 154 or 155.

It may be noted that such income tax appeal filing procedure should be complied with within 60 days from the date when the order sought to be challenged was communicated to the assessee or Principal Commissioner or Commissioner or within 60 days from the date when the order sought to be challenged was passed by the assessing officer.

The appeal before the Income Tax Appellate Tribunal is filed through Form 36. If the assessee files such an appeal, the form should be signed and verified by the person who is authorized to sign the return of income under Section 140 of the Income Tax Act as applicable to such assessee.

Further, it is worth mentioning here that the paper book comprising the copies of the documents, statements, or any other papers on the file of the assessment orders or appellate orders that will be relied upon during the hearing of the appeal should be filed in duplicate. It should be duly indexed and paged before the date of the hearing.

The income tax appellate authority can admit any additional evidence that has not been produced before the Commissioner of income tax (Appeals), however, it shall not accept any additional evidence in case of rectification proceedings.

Documents

The following documents should be attached:

• Form 36- in triplicate;
• 2 copies of the order challenged, including one certified copy;
• 2 copies of the order of the assessing officer;
• 2 copies of grounds of appeal before the first appellate authority;
• 2 copies of the Statement of facts filed before the aforesaid authority;
• If a penalty order has been appealed against, then 2 copies of the relevant order of assessment will be required;
• If the order under section 143(3), read with section 144A, has been challenged, then 2 copies of the Joint Commissioner’s directions under section 144A will be required;
• If the order under section 143, read with section 147, has been challenged, then two copies of the original assessment order;
• Copy of challan for fee payment.

Cross-objections can be filed through Form 36A within 30 days of obtaining the notice that the opposite party has filed an appeal.

Appeal to High Court and Supreme Court

High Court-

• The income tax appeal filing procedure can be initiated before the High Court by an Assessee, Principal Chief Commissioner, Principal Commissioner, or Chief Commissioner or Commissioner.
• As stated at the beginning of the article, any order passed in the appeal by the appellate tribunal can be appealed before the High Court only if the High Court believes that the subject case involves a substantial question of law.
• Such an appeal should be filed before the High Court within 120 days from when the Tribunal’s Order is obtained by the assessee, Principal Chief Commissioner, Principal Commissioner, or Chief Commissioner or Commissioner. It may be noted that the High Court may still admit an appeal post the aforesaid period if the Court is satisfied that there was enough reason for such delay.
• Such an appeal will be in the form of a memorandum of appeal, delineating the substantial question of law involved in the appeal. If the High Court believes there is a substantial question of law, it shall formulate the question.
• The appeal shall be heard only on the question to be formulated however, the Court can also hear such appeal on any other substantial question of law that has not been formulated. The High Court can determine an issue that hasn’t been determined by the Tribunal or has been determined incorrectly.
• The appellate bench constitutes a minimum of 2 Judges of the High Court, and a decision is formulated in accordance with the majority opinion of the bench.

Supreme Court

An appeal can be made Apex Court from the High Court on a reference made under Section 256 against the order passed under Section 254 before October 1998 or an appeal filed before the High Court relating to the order passed under Section 254 or after such date where the High Court certifies to be an appropriate case for appeal to the Supreme Court.

Transition of Income Tax Appeal Filing Procedure

Until the year 2020, the process followed under the first appeal required the physical presence of the appellant before the jurisdictional Commissioner of Income Tax (Appeals) for a hearing. This process was time-consuming as it took 2 years to dispose of the appeal. In 2020, the faceless appeal scheme was introduced whereby the appeal hearing could be done online. However, the taxpayers challenged this scheme because it was against the principles of natural justice. Therefore, an amended scheme was introduced in late 2021, providing the right to online hearings.

Conclusion

The Income Tax Appeal filing procedure should be complied with to successfully file an appeal with the concerned authority. It provides an arena for the taxpayers to have their concerns heard. With adequate information and knowledge of the Income Tax Appeal filing procedure, one can raise their issues before the appropriate authority. From the Commissioner of Income-tax (Appeals) to the Apex Court, the Income Tax Act provides sufficient opportunity to aggrieved taxpayers. However, the issue pertaining to the duration of the hearing and disposal of the appeal is still concerning. There needs to be a mechanism to ensure speedy yet accurate justice delivery to the aggrieved.

Read Our Article: How to File an Income Tax Appeal with ITAT?