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Read About the Procedure for Appeal Under The Income Tax Act

The Constitution of India provides a guarantee of fundamental rights to every Indian citizen with the Procedure for Appeal for redressal of grievances. The right to appeal for the redressal of grievances is available under all the prevailing laws & acts within India.

Under the Income Tax Act, 1961^[1], if any assessee is aggrieved by order of the Assessing Officer, he/she can file an appeal against such order before the Commissioner of Income Tax (Appeal).

Appealable Order

Section 246A of the Income Tax Act specifies the list of orders against which an appeal can be filed by an aggrieved assessee. The Commissioner of Income Tax (Appeal) is the first appellate authority for bringing a grievance pertaining to a matter of Income Tax. Following are the orders which are eligible to raise an appeal against :

• When an assessee denies the liability assessed under the Income Tax Act and an order is passed against such taxpayer.
• Notice is issued under Section 143(1) or (1B) in case the income shown in Income Tax Return has been adjusted.
• Notice is issued under section 200A(1) in case the adjustments have been established in a filed statement.
• Assessment of Order passed under section 143(3) except the order has been passed under Dispute Resolution Panel.
• The assessment order passed under Section 144.
• Order of assessment, reassessment or re-computation passed after re-opening of the assessment as per Section 147 except the case when an order has been passed under Dispute Resolution Panel.
• An order issued under Section 150.
• During the search or seizure, any order passed under Section 153A or Section 158C.
• Rectification order passed under section 154 or section 155.
• The order passed under section 163 treating the taxpayer as an agent of an NRI.
• While taxation of a successor for the income incurred by the predecessor, any order passed under section 170(2) or section 170(3).
• The order passed under section 171 for recording the partition of HUF
• The order passed under section 115VP(3) by Joint Commissioner who refuses to opt for the tonnage-tax scheme to qualifying shipping scheme.
• The order passed under section 201(1) or section 206C(6A) for the following defaults:
• No deduction of TDS/Non-Collection of TDS
• Non-payment of credit of TDS to the government
• The refund order passed under section 237.
• Penalty imposed under:
• Section 221
• Section 271/ 271A/ 271AAA/ 271F/ 271FB/ 271B/ 271BB/ 271C/ 271CA/ 271D/ 271E/ 271AAB
• Section 272A/272AA/272B/272BB
• Section 275(1A)
• Section 158B

Procedure to file an Appeal to the Commissioner of Income Tax (Appeal)

Following is the step by step procedure to file the first appeal before the Commissioner of Income Tax (Appeal):

• Taxpayer has to file an online application in Form 35.
• Commissioner will fix the date and venue for hearing after the receipt of an application.
• The notice will be issued indicating the date & place of the hearing. Such notice will be issued to both the aggrieved party who files an appeal and to the Assessing Officer, against whose order an appeal is being filed.
• During the proceeding of an appeal, the taxpayer or Assessing Officer can appear either personally or through an authorized representative.
• Commissioner would hear an appeal and can adjourn the hearing from time to time as per the suitability of the case.
• Before passing the final order, Commissioner can enquire into the matter further, or he may even direct the Assessing Officer to make such further inquiry and report the same to him.
• During the hearing, the Commissioner, if he thinks it proper and fit, can allow the taxpayer to go into additional grounds of appeal. Additional grounds of appeals are those appeals that have not been mentioned by the aggrieved party in application Form 35.
• Such additional grounds will only be accepted by the Commissioner in case the omission of such ground was unintentional and unreasonable.

Additional Evidence

During the process of the proceeding of hearing, Commissioner will permit only those evidence which was produced by the assessee before Assessing Officer. The additional evidence(s) will be accepted only under the following circumstances:

• In case the Assessing Officer refuses to accept the evidence which was required to be admitted.
• Where the appellant was called upon to present such evidence, but he was prevented due to sufficient cause from producing the same to the Assessing Officer

Process of producing Additional Evidence

• The taxpayer has to make an application to the Commissioner for accepting the additional evidence.
• Upon receipt of such an application, the Commissioner will admit the additional evidence after recording the reason in writing.
• Before taking into consideration such additional evidence, the Commissioner has to provide a reasonable opportunity to the Assessing Officer for an examination of such additional evidence.

Documentation

The aggrieved taxpayer has to submit the following documents before the Commissioner for filing an appeal:

• Form 35
• Income Tax Assessment Order against which an appeal is being filed.
• Original Demand Notice.
• Challan Copy.

Authorized signatory for Form 35

The signing of the form is different for different categories of applicants:

• Taxpayer: Form has to be signed by the taxpayer or his authorized representative.
• HUF: Form has to be signed by the Karta or the eldest member of HUF
• Company: Form has to be signed by an MD or any director of the Company.
• Foreign Company: form has to be signed by a representative of the Company.
• Partnership Firm: Form has to be signed by the Managing partner or any other partner not being a minor.
• LLP: Form has to be signed by a designated partner.
• Local Authority: Form has to be signed by the Principal Officer.
• Political Party: Form has to be signed by the CEO of such party

Fees for Appeal

Following is the fee structure to be paid along with an application to file an appeal before the Commissioner of Income Tax (Appeals):

• Income determined by assessing Officer is up to INR 1 Lakhs:  Appeal fee is INR 250
• Income determined by assessing Officer is more than INR 1 Lakhs but up to INR 2 Lakhs: Appeal fee is INR 500
• Income determined by assessing Officer exceeds INR 2 Lakhs:  Appeal fee is INR 1000
• Any other case: Appeal Fee is INR 250

Decision and Disposal of an Appeal

After hearing both the parties, the Commissioner of Income-Tax (Appeals) will pass his order. This order is given in writing. Order is passed for the disposition of the appeal and will state the decision on each ground of appeal along with the reason(s) to reach the decision.

• If the appeal is against assessment order: Commissioner will pass the necessary orders such as confirming, reducing, enhancing, or annulling the assessment order.
• If the appeal is against the penalty: Commissioner may reduce, confirm, or enhance the order.

If the Commissioner enhances any penalty or assessment, a reasonable opportunity of being heard should be given to the taxpayer.

Stages of an Appeal

An assessee aggrieved by any order of under the Income Tax Act has every right to appeal against such order. There are four stages of appeal under the Income Tax Act, 1961:

1. First Appeal: Any person aggrieved by order of Assessing Officer can file an appeal to the Commissioner of Income Tax (Appeals) under section 246A. Such appeal has to be filed online in form 35 within 30 days of order.

• Second Appeal: The second appeal can be filed to Appellate Tribunal against the order of the Commissioner under section 253 in form 36 within 30 days of such order passed.

• Third Appeal: The third appeal is filed to the High Court against the orders of the Appellate Tribunal as per Section 260A.

Final Appeal: Final appeal can be made to the Supreme Court against the orders of the High Court under Section 261.