PROVISIONS RELATING TO FILING OF APPEALS
by
CA Sanjay R. Parikh
Appeals before CIT(A)
1)
What does one mean by the word “appeal” ?
“Appeal” according to Webster’s Dictionary, is “the removal of a cause or
suit from an inferior to a superior judge or court for reexamination or
review”. Wharton’s Law Lexicon expresses it as “the removal of a cause
from an inferior to a superior court for the purpose of testing the soundness
of the decision of the inferior court”. Law Dictionary by Sweet defines an
appeal as a proceeding taken to rectify an erroneous decision of a court by
submitting the question to a higher court, or court of appeal. Black’s Law
Dictionary defines “appeal” as a proceeding undertaken to have a decision
reconsidered by a higher authority; a submission of a lower court’s decision
to a higher court for review and possible reversal.
2)
Whether an assessee has an inherent right to file an appeal ?
The right to appeal is a statutory right and there is no inherent right to file
an appeal [Suraj Mall Mohta & Co. v. A. V. Visvanatha Sastri (1954) 26
ITR 1, 14 (SC) and Kunnathat Thathunni Moopil Nair v. State of Kerala
AIR 1961 SC 552, 559]. Accordingly, unless and until the statute
specifically provides for an appeal, an appeal would not lie. Section 246A
specifies the orders which can be appealed against before the
Commissioner of Income Tax (Appeals) and section 253 specifies the
orders which can be appealed against before the hon’ble Income Tax
Appellate Tribunal. However, if there is a right to appeal, the provisions
conferring such a right of appeal should be construed in a reasonable and
liberal manner [Mohan Lal Khemka v. CIT 81 ITR 89, 93 (All); CIT v.
Mahabir Parshad & Sons 125 ITR 165 (Del); CIT v. Grafik India: CIT v.
Syed Jaffer & Sons 194 ITR 645, 649 (SC)].
3)
Which are the orders which can be appealed against before the CIT(A) ?
As per section 246A, some of the common orders which can be appealed
against are as under :
a) an order where the assessee denies his liability to be assessed under
the Act;
b) an intimation u/s. 143(1);
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c) processing of TDS return u/s. 200A;
d) order u/s. 143(3) (except an order passed in pursuance of directions
of the Dispute Resolution Panel) or 144;
e) order denying tax determined;
f) order computing loss;
g) order whereby the status of an assessee is changed;
h) order u/s. 115WE(3) or 115WB – Fringe benefit tax
i) order u/s. 115WG – tonnage tax
j) order u/s. 147 or 150 reopening the assessment (except an order
passed in pursuance of directions of the Dispute Resolution Panel);
k) order u/s. 153A (new search proceedings);
l) an order of assessment or reassessment u/s. 92CD(3) i.e. an order to
give effect to advance pricing agreement;
m) order of rectification u/s. 154 or 155 (except where it is in respect of
an order giving effect to General Anti Avoidance Regulations
(GAAR));
n) order u/s. 163 treating the assesse an agent of a non-resident;
o) an order under sub-sections (2) and (3) of section 170 i.e. liability of
predecessor fastened on successor;;
p) an order u/s. 171 i.e assessment after partition of HUF;
q) an order u/s. 237 i.e. refunds;
r) an order under sub-section (6A) of section 206C i.e. liability in case
of person not collecting tax at source;
s) order of block assessment where search initiated or requisition made
on or after 1/1/1997;
t) order levying penalty u/s. 158BFA(2);
u) order u/s. 201
v) order of penalty u/s. 221, 271, 271A, 271B, 271BB, 271C, 271CA,
271D, 271E, 271F, 271FB, 272AA or 272BB
4)
Which are the orders which can be appealed against before the hon’ble
Income Tax Appellate Tribunal ?
a) an order passed by the Commissioner of Income Tax (Appeals) u/s.
250 or 154 or 271 or 271A or 272A;
b) an order passed by an Assessing Officer u/s. 115VZC(1);
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c) order of block assessment where search initiated or requisition made
on or before 1/1/1997;
d) an order passed by the Commissioner u/s. 12AA, 263, 271, 154
amending order u/s. 263;
e) order passed by Chief Commissioner of Income or Director General
or a Director u/s. 272A;
f) An order passed by an AO u/s. 143(3) or section 147 or section
153A or section 153C in pursuance of the directions of the Dispute
Resolution Panel or an order passed u/s. 154 in respect of such order;
g) An order u/s. 143(3) or 147 or 153A or 153C with the approval of
Commissioner u/s. 144BA(12) or an order u/s. 154 or 155 in respect
of such order i.e. GAAR.
5)
Whether an order u/s. 263 passed by the Commissioner of Income Tax can
be appealed against before CIT(A) ?
No. As the Commissioner of Income Tax and the CIT(A) are of the same
rank, an appeal against an order u/s. 263 would not lie before the CIT(A)
but would lie before the Tribunal, which is a superior authority.
6)
Whether an order passed u/s. 143(3) r.w.s. 263 can be appealed against
before CIT(A) ?
Yes. An order passed by an AO giving effect to the CIT’s order u/s. 263 is
appealable. However, it is advisable to file an appeal against the order u/s.
263 before Tribunal. In an appeal against an order u/s. 143(3) r.w.s. 263, it
may not be possible for the CIT(A) to decide the basic issue which has been
decided by the CIT for which the order u/s. 263 has been passed. However,
it may be possible for the CIT(A) to decide as to whether the AO has
properly carried out the directions of the order u/s. 263 and matters
incidental from it.
7)
Within how may days from the service of order is one required to file an
appeal before the Commissioner of Income Tax (Appeals) ?
Appeal is required to be filed within 30 days from the date of service of an
assessment order or penalty order [Refer to section 282 regarding
provisions pertaining to service.].
8)
Within how may days from the service of order is one required to file an
appeal before the hon’ble Income Tax Appellate Tribunal?
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The appeal is generally required to be filed within a period of 60 days from
the date of service of order. However, in case of an order u/s. 158BC
(where search or requisition has taken place prior to 1/1/97), appeal is
required to be filed within a period of 30 days from the date of service of
order [Refer to section 282 regarding provisions pertaining to service.].
9)
Whether an order giving effect to CIT(A’s) order/ITAT order is
appealable?
Yes, the order giving effect to CIT(A’s) order or ITAT order is in effect an
order u/s. 143(3) r.w.s. 250 or 143(3) r.w.s. 254 and can be appealed
against.
10)
Whether the CIT(A)/ITAT have power to condone delay in filing appeal ?
Yes, CIT(A)/ITAT have power to condone delay in filing appeal if he is of
the view that there was a reasonable cause for delay in filing the appeal.
However, an application for condonation of delay should be filed before the
CIT(A)/ITAT along with an Affidavit stating the reasons for delay. The
words “substantial cause” should receive liberal construction so as to
advance substantial justice [ Sandhya Rani Sarkar v. Sudha Rani Debi, AIR
1978 SC 537,542]. Where no negligence, nor inaction, or want of bona
fides can be imputed to the appellant a liberal construction of the provisions
has to be made in order to advance substantial justice [Shakuntala Devi Jain
v. Kuntal Kumari, AIR 1969 SC 575].
The hon’ble Supreme Court was required to decide an issue with respect to
condonation of delay in filing an appeal in the case of Vedabai &
Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil 122 Taxman
114: 253 ITR 798. The hon’ble Apex Court held that Courts should adopt a
pragmatic approach in exercising discretion and a distinction between
inordinate delay and delay of a few days should be made. Whereas in the
former case the consideration of prejudice to the other side will be a
relevant factor so the case calls for a more cautious approach but in the
latter case no such consideration may arise and such a case deserves a
liberal approach.
In Ramnath Sao & Ors. v. Gobardhan Sao & Ors. (2002) 3 SCC 195, the
Hon’ble Supreme Court in the context of condonation of delay held as
under :
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"Thus it becomes plain that the expression "sufficient cause" within the
meaning of section 5 of the Act or Order 22 Rule 9 of the Code or any other
similar provision should receive a liberal construction so as to advance
substantial justice when no negligence or inaction or want of bona fides is
imputable to a party. In a particular case whether explanation furnished
would constitute "sufficient cause" or not will be dependent upon facts of
each case. There cannot be a straitjacket formula for accepting or rejecting
explanation furnished for the delay caused in taking steps. But one thing is
clear that the courts should not proceed with the tendency of finding fault
with the cause shown and reject the petition by a slipshod order in over
jubilation of disposal drive. Acceptance of explanation furnished should be
the rule and refusal, an exception, more so when no negligence or inaction
or want of bona fides can be imputed to the defaulting party. On the other
hand while considering the matter, the courts should not lose sight of the
fact that by not taking steps within the time prescribed a valuable right has
accrued to the other party which should not be lightly defeated by
condoning delay in routine-like matter. However, by taking a pedantic and
hyper technical view of the matter, the explanation furnished should not be
rejected when stakes are high and/or arguable points of facts and law are
involved in the case causing enormous loss and irreparable injury to the
party against whom the lis terminates, either by default or inaction and
defeating decision on merit. While considering the matter, courts have to
strike a balance between resultant effect of the order it is going to pass
upon the parties either way."
11)
Whether any fees are payable for filing an appeal ?
Fees for filing appeal with CIT(A) are as under :
Relevant Order
Assessment Order
Any other order
Relation to Income
Income assessed Rs.
1,00,000/- or less
Income assessed is more
than Rs. 1,00,000/- but
not more than Rs.
2,00,000/Income assessed above
Rs. 2,00,000/N. A.
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Fees (Rs.)
250/500/-
1,000/250/-
Fees for filing appeal before the hon’ble Income Tax Appellate Tribunal are
as under :
Relevant Order
Assessment Order
Any other order
12)
Relation to Income
Income assessed Rs.
1,00,000/- or less
Income assessed more
than Rs. 1,00,000/- but
not more than Rs.
2,00,000/Income assessed above
Rs. 2,00,000/-
N. A.
Fees (Rs.)
500/1,500/-
1%
of
assessed
income or Rs.
10,000/-,
whichever is
lower
500/-
Which is the challan for payment of appeal fees ?
The challan for payment of advance tax/self assessment tax as such is not
supposed to be used for payment of appeal fees and an application should
be made to the AO to issue a challan for payment of appeal fees. It may be
appreciated that on the back of this challan, it has been stated that no
signature of I. T. Clerk or AO on challan is required for payment of
advance tax and self assessment tax. Accordingly, technically speaking, one
should obtain these challans from the AO. However, in practice, as long as
the appeal fees are paid, there is generally no objection from the CIT(A’s)
office or Tribunal’s office.
13)
Whether an appeal can be filed if the tax due as per the return of income
has not been paid ?
No. If the tax due on the returned income is not paid, an appeal cannot be
filed against the said order – section 249(4). However, if due to financial
constraints, an assessee is unable to pay the tax as per return of income, he
may file an appeal without payment of such taxes. On payment of taxes due
as per return of income, it is advisable to file a fresh appeal along with an
application for condonation the delay in filing the appeal. Where no return
is filed, an appeal cannot be preferred unless the assessee has paid the taxes
equal to the amount of advance tax payable by him. The CIT(A) has power
to exempt an assessee who has not filed a return of income and has also not
paid advance tax if there is a good and sufficient reason.
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In this context, it may be appreciated that the Chennai Bench of the
Income Tax Appellate Tribunal has in the case of Subbiah Nadar & Sons
v. ACIT 78 TTJ (Chennai) 549 held that the expression 'tax due on the
income returned' in section 249(4)(a) does not include interest payable u/s.
234A, 234B and 234C. The provisions of section 140A cannot be imported
into section 249(4)(a), and if the assessee has paid only the tax without
paying the interest, the appeal would still be admissible. Similar view has
been taken in Jagdish Raj Chauhan, Sohagwanti & Gurbachan Singh (AOP)
v. ITO (2006) 99 TTJ (Asr) 45.
14)
Is there a specified form for filing appeal ?
Yes. An appeal before the CIT(A) has to be in Form No. 35. An appeal
before the hon’ble Income Tax Appellate Tribunal has to be in Form No.
36.
15)
Can a partner file an appeal in his individual capacity against an assessment
order of the firm ?
Yes, in the case of a partnership firm, each of the partners would be
individually liable for the tax dues of the firm. Accordingly, if the firm does
not pay the taxes, the same can be recovered from the partner. There have
been instances where disputes between partners are pending before the
Courts. In such a case, a partner can file an appeal against the order passed
against the firm. Refer Jyothi Tin & Allied Industries v. ITO (1993) 44 ITD
743 (Hyd).
16)
Who is required to sign the appeal memo/papers ?
The appeal memo i.e. Form No. 35 or 36, Grounds of Appeal and
Statement of Facts are required to be signed by a person who is authorized
to sign the return of income under section 140. The same in case of
individual, HUF, firm and company are an under :
Status of Appellant
Individual
Who is authorized to sign
a) the individual himself;
b) if he is absent from India, by himself or by
some other person duly authorized by him;
c) where such individual is mentally
incapacitated from attending to his affairs, by
his guardian or any other person competent to
act on his behalf; and
d) where for any other reason, if it is not
possible for the individual to sign the return, by
any person duly authorized by him in this
behalf.
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Hindu Undivided
Family
Company
Firm
17)
Karta and where the Karta is absent from India
or is mentally incapacitated, any other adult
member of such family
Managing Director if there is one. If Managing
Director for some unavoidable reason is not
able to sign or where there is no managing
director, any director thereof.
Managing partner or if Managing partner for
some unavoidable reason is not able to sign or
where there is no managing partner, any partner
not being minor.
What are the papers to be annexed with the appeal to be filed with the
Commissioner of Income Tax (Appeals) ?
The appeal papers should contain the following :
a) Form no. 35 (in duplicate)
b) Grounds of appeal if not typed on Form 35 (in duplicate);
c) Statement of Facts if not typed on Form 35 (in duplicate),
d) Original notice of demand u/s. 156;
e) Certified copy of the order appealed against;
f) If the order appealed against is a penalty order, copy of the
assessment order;
g) Copy of challan for appeal fees
h) If there is a delay in filing the appeal, application for condonation of
delay may also be filed along with the appeal papers as the matter
would be fresh at the relevant time. It would be advisable to prepare
an Affidavit and set out the reasons in the Affidavit.
18)
What are the papers to be annexed with the appeal to be filed with the
hon’ble Income Tax Appellate Tribunal?
The appeal papers should contain the following :
a) Form No. 36 (in triplicate)
b) Grounds of Appeal (in triplicate) – As per Rule 8 of the Appellate
Tribunal Rules, 1963, the grounds of appeal shall set forth, concisely
and under distinct heads, the grounds of appeal without any
argument or narrative and such grounds should be numbered
consecutively.
c) Certified copy of the order appealed against (in triplicate)
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d) Certified copy of Form No. 35, Grounds of Appeals and Statement
of Facts (in triplicate) filed with the Commissioner of Income Tax
(Appeals), if any
e) Certified copy of the original order passed by the Assessing Officer
(in triplicate)
f) In case of penalty order – Certified copy of assessment order (in
triplicate)
g) Challan for appeal fees in original
h) If there is a delay in filing the appeal, application for condonation of
delay may also be filed along with the appeal papers as the matter
would be fresh at the relevant time. It would be advisable to prepare
an Affidavit and set out the reasons in the Affidavit.
19)
Whether additional grounds can be taken before the CIT(A) ?
Yes, section 250(5) empowers the CIT(A) to go into any ground of appeal
not specified in the grounds of appeal, if the CIT(A) is satisfied that the
omission of that ground from the form of appeal was not willful or
unreasonable. The hon’ble Supreme Court has in the case of National
Thermal Power Co. Ltd. v. CIT(1998) 229 ITR 383 (SC) and Jute
Corporation of India v. CIT (1991) 187 ITR 688 (SC) held that additional
ground on legal issues can be raised at any point of time.
20)
Whether a mistake of an advocate or consultant would constitute a
reasonable cause for filing an appeal ?
Mistake of an advocate or consultant would constitute a reasonable cause
for filing an appeal. The hon’ble Supreme Court has in the case of Rafique
C. Munshilal AIR 1981 SC 1400 at page 1401 held that an innocent party
suffering from injustice cannot be penalized merely because his chosen
advocate defaulted. However, a professional should be cautious before he
admits guilt. The Mumbai Tribunal had in one of the matters written to the
Institute of Chartered Accountant to take disciplinary action against a
chartered accountant who confessed that the delay in filing the appeal was
on account of his fault. At the same time, if the delay is on his account, he
should be bold enough to admit it in the interest of getting justice for his
client.
21)
Whether an appeal would lie when the assessee or his counsel has made a
concession ?
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Often during the course of search, survey or assessment proceedings, the
assessee or his counsel makes certain concessions like offering certain
income, permitting certain disallowances to be made, etc. Depending on the
nature of concession, an appeal may lie against such concession. It has been
held that there could be no concession with respect to law. Accordingly, if
the assessment is getting time barred and the assessee gives a concession to
the Assessing Officer waiving its right to appeal if the order is passed after
the period of limitation, such concession would not be binding on the
assessee as it is concession of law. Similarly, if a receipt is exempt from tax
or is a capital receipt not liable to tax, even if the assessee concedes for
taxing it, such receipt cannot be taxed. In such a case, an appeal would lie –
CIT v. Archana R. Dhanwatay (1982) 136 ITR 355 (Bom); CIT v.
Mahalaxmi Sugar Mills Co. Ltd. (1986) 160 ITR 920 (SC); Central Council
for Research in Ayurveda & Siddha v. Dr. K. Shankara Kumari (2001) 5
SCC 60.
Similarly, concession made under a mistaken belief of facts or law can also
be appealed against. However, the onus would be on the assessee to
establish that the concession was given under a mistaken belief of law or of
facts.
22)
What should be the contents of Grounds of Appeal/Statement of Facts ?
The grounds of appeal should bring out the various grounds on which an
assessee is aggrieved. Alternate contentions or claims should also be made
in the grounds of appeal. Rule 8 of the Appellate Tribunal Rules, 1963
provides that the grounds should be concise and under distinct heads and
should not be argumentative or narrative and should be numbered
consequently.
Statement of facts should be brief and bring out the facts relevant to the
appeal and the grounds taken. In case of an ex-parte order passed on
account of non-attendance or non estimation of income in case of nonfurnishing various details, the statement of facts should preferably include
the reasons for non-attendance/non-compliance. As the statement of fact is
part of the appeal memo and is verified/certified by the assessee, it carries
more weight. Statement of fact is not required to be filed before the
Tribunal.
23)
Whether a new ground can be taken before the CIT(A) ?
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Yes, section 250(5) empowers the CIT(A) to go into any ground of appeal
not specified in the grounds of appeal, if the CIT(A) is satisfied that the
omission of that ground from the form of appeal was not willful or
unreasonable. The hon’ble Supreme Court has in the case of National
Thermal Power Co. Ltd. v. CIT(1998) 229 ITR 383 (SC) and Jute
Corporation of India v. CIT (1991) 187 ITR 688 (SC) held that additional
ground on legal issues can be raised at any point of time.
24)
Whether any additional evidence can be filed before CIT(A) ? If so, in what
situations and what is the procedure ?
Additional evidences which an assessee was unable to file before the AO
may be filed before the CIT(A). An application under Rule 46A is required
to be made to the CIT(A) in duplicate along with the papers and evidences,
in duplicate being filed before the CIT(A) for the first time. As per Rule
46A, the CIT(A) has power to admit the additional evidences in the
following situatins :
a) where the AO has refused to admit evidence which ought to have
been admitted;
b) where the assessee was prevented by sufficient cause from
producing the evidence which he was called upon to produce by the
AO;
c) where the assessee was prevented by sufficient cause from
producing before the AO any evidence which is relevant to any
ground of appeal;
d) where AO passed an order without giving sufficient opportunity to
the appellant to adduce evidence.
The restrictions for furnishing additional evidences are not applicable to the
CIT(A) and the CIT(A) may ask for certain details and evidences to dispose
off the appeal – Smt. Prabhavati S. Shah v. CIT (1998) 231 ITR 1 (Bom).
25)
Whether the CIT can revise an order which is the subject of appeal before
the CIT(A) ?
The CIT can revise the order which is subject matter of appeal before the
CIT(A) passes his order. However, once the CIT(A) passes the order, the
AO’s order merges with that of CIT(A). In such a case, CIT cannot exercise
his jurisdiction u/s. 263 with respect to the matters which have been dealt
with by the CIT(A). Accordingly, if the AO has disallowed deduction u/s.
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80HHC on the ground that there were no profits if one were to exclude
incentives and the assessee has filed an appeal against the said order, CIT
cannot revise the order once the CIT(A) has decided this issue. However,
with respect to other aspects, the CIT would have jurisdiction to revise the
order.
26)
What is the distinction between an appeal and a revision ?
An appeal is a continuation of a suit or proceedings wherein the entire
proceedings are again left open for consideration by the appellate authority
which has the power to review the entire evidence subject, of course, to the
prescribed statutory limitations. But in revision, whatever posers the
revisional authority may have, it has no power to reassess and reappreciate
the evidence unless the statute expressly confers on it that power.
27)
Whether the CIT(A) can set aside an assessment ?
Earlier, clause (a) to section 251(1) specified that the CIT(A) could set
aside the assessment. However, the said words have been deleted w.e.f. 1st
June, 2001. There is a difference of opinion as to whether after the deletion
of the said words, the CIT(A) has power to set aside the assessment.
However, most of the CIT(A’s) are taking a view that they no longer have
the power to set aside the assessment. Hence, they decide the appeal and if
required call for a remand report from the AO.
28)
Whether CIT(A) can enhance assessment ? If so, what is the procedure ?
Yes. If during course of appellate proceedings, the CIT(A) notices that
certain disallowances/additions, etc. have escaped the attention of the
Assessing Officer, he may after giving an opportunity to the appellant,
enhance the assessment and disallow or make additions with respect to
income which has escaped the AO’s attention.
29)
Whether the CIT(A) has power to levy penalty u/s. 271(1)( c) ?
Yes, CIT(A) can levy penalty u/s. 271(1)( c) with respect to enhancement
in income made by him.
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