CENTRAL UNIVERSITY OF SOUTH BIHAR

SCHOOL OF LAW AND GOVERNANCE

Topic- Appeal under Income Tax Act, 1961

UNDER THE SUPERVISION OF:

Dr. (Prof.) S. P. SRIVASTAVA

Professor
School of Law and Governance
Central University of South Bihar.

Submitted By-
Chandan Kumar B.A.LL.B. (Hons)
9th Semester
(2017- 2022)
Enrollment No.CUSB1713125012

1
 Index
1. Introduction ………………………………………………………………………...…3
1.1.Right To Appeal’ Is A Statutory Right Under Income Tax Act, 1961…………….….4
1.2.Parties in any appeal………………………………………………………………...…4
1.3.Appeal before Commissioner …………………………………………………………5
1.4.When it can be filed ……………………………………………………………...……5
1.5.Procedure for Appeal ……………………………………………………………...…..7
1.6.Order of Commissioner of Income – tax ……………………………………...………8
2. Appeal before Income Tax Appellate Tribunal (ITAT)………………………….……8
2.1. Procedure for appeal ……………………………………………………………..….10
2.2. Order of ITAT ………………………………………………………………………10
2.3. Appeal before High Court ………………………………………………..…………11
2.4. National Tax Tribunal (NTT)………………………………………….…………….11
2.5.Appeal before Supreme Court …………………………………...…………………..12
3. Conclusion ……………………………………………………………..…………….13
4. References …………………………………………………………………………...14

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 Appeal
INTRODUCTION:

In general parlance, ‘appeal’ means ‘making a request’ and in legal parlance, it means ‘apply
to a higher court for a reversal of the decision of a lower court’. In this article I have covered
the levels of appeal under Income Tax Act. In India, the taxpayer computes the tax payable
on his total income and pays to the government. If the Income Tax department (the
government) disagrees with the tax computed by the taxpayer, they can levy an additional
tax. Under Income Tax Act, the liability is determined at the level of Assessing Officer (it can
be Income Tax Officer (ITO) or Assistant/Deputy Commissioner of Income Tax) A tax payer
aggrieved by various actions of Assessing Officer (say higher tax demand) can appeal before
Commissioner of Income Tax (Appeals). Further appeal can be preferred before the Income
Tax Appellate Tribunal. On substantial question of law, further appeal can be filed before the
High Court and even to the Supreme Court.1

Appeal is a proceeding resorted to rectify an erroneous decision of a court by submitting the

question to a higher court, or court of appeal. It means ‘making a request’ and in legal
parlance, it means ‘apply to a higher court for a reversal of the decision of a lower court.
Income tax liability is primarily determined at the level of Assessing Officer. Where the
Income Tax department (the government) disagrees with the tax computed by the taxpayer,
they can levy an additional tax. In such a situation, as per Income Tax Act, 1961 the liability
is determined at the level of Assessing Officer. Where a taxpayer is aggrieved certain action
of Assessing Officer, he can move an appeal. The assignment herein deals exhaustively with
procedure for such appeal as provided by Income Tax Act, 1961.

1
•“Appeal to Commissioner of Income-Tax (Appeals)”Income Tax Department, Govt. of India, 2016

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Right To Appeal’ Is A Statutory Right Under Income Tax Act.

Appeal refers to an act of referring the case/matter/situation to a higher authority against the
order passed by a lower authority in respect of that case or matter. It implies a complaint to a
higher authority against the order or judgement (alleged to be erroneous) of an administrative
authority or appellate authority. The complex nature of Income Tax Act and the various rules
often, create a situation where there is difference of opinion among the assessee and the
assessing officer (i.e., Income tax department). Quite often, an assessee is not satisfied by an
assessment order/any other order issued by any income tax authority and such an aggrieved
assessee can present his case before specified authorities prescribed under Income Tax Act.
Such prescribed authorities constitute ‘appellate machinery’ or ‘appellate authorities’.

The right to appeal is not the natural or inherent right of the assessee. It is available to him
only if specifically granted under Income Tax Act. Thus, it is a statutory, right of the assessee
and cannot be denied to him by ny orde f Central Board of Direct Tax (CBDT). It can be
snatched from the assessee only by a express provision provided under Income Tax Act.2

There are following two parties in any appeal3 :

1. Appellant. The person filing an appeal is cal1ied ‘appellant’ or ‘applicant’. Under

Income Tax, the first appeal can only be filed by assesseeand—hence only assessee
can be appellant in such a case. However, in subsequent appeals (i.e., appeal to ITAT,
HC or SC) appellant can be assessee or C.I.T.
2. Defendant / Respondent. The person against whom the appeal is filed is called
‘defendant’ or ‘respondent’.4

Various Appellate Authorities under Income Tax Act

Commissioner (Appeals)

Income Tax Appellate Tribunal (ITAT)

2
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.
3
“Appeal to Commissioner of Income-Tax (Appeals)”Income Tax Department, Govt. of India, 2016
4
www.mondaq.com › india › Appeals+Before+Appellate+Authorities+Unde

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 High Court / NTT

Supreme Court

Appeal before Commissioner (Appeals)5

Aggrieved tax payer can file appeal before the Commissioner (Appeals) having, jurisdiction
over the tax payer. Appeal can be filed when a taxpayer is adversely affected by the Orders
passed by Tax authorities. Every appeal to the Commissioner (Appeals) is to be filed in Form
No. 35, signed by the taxpayer/director or his authorized representative. Appeal Fees to be
paid depending upon total income determined by the Assessing Officer, subject to a
maximum of Rs.1000. Appeal is to be filed within 30 days of the date of service of notice of
demand relating to assessment or penalty order or the date of service of order sought to be
appealed against, as the case may be. The commissioner may admit an appeal after the expiry
of 30 days, if he is satisfied that there was sufficient cause of not presenting the appeal within
the period of 30 days. On receipt of Form no. 35, Commissioner of Income-tax (Appeals)
fixes date and place for hearing the appeal by issuing notice to the tax payer and the
Assessing Officer, against whose order appeal is preferred. After the hearing is concluded,
Commissioner (Appeals) passes order in writing, disposing of the appeal and stating the
decision on each ground of appeal with reasons.

WHEN CAN IT BE FILED:6

As provided by S. 246 of the IT Act, an assessee who is aggrieved by an order, passed by

Assessing Officer may prefer an appeal to the Commissioner of Income- Tax. Such
Commissioner may admit an appeal, even beyond period of limitation, if satisfied that there
was a sufficient cause for not presenting the appeal. Within time.

An appeal before ITAT can be filed by a taxpayer against;

1. an intimation issued u/s 143(1)/ (1B), where adjustments have been made in income
offered to tax in the return of income,

5
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.
6
www.mondaq.com › india › Appeals+Before+Appellate+Authorities+Unde

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2. an assessment order passed u/s 143(3) except in case of an order passed in pursuance
of directions of the Dispute Resolution Panel,
3. an assessment order passed u/s 144 or an order assessment, reassessment or re-
computation passed after reopening the assessment u/s 147 except an order in
pursuance of directions of the Dispute Resolution Panel,
4. an order referred to inspection u/s150,
5. order passed against the taxpayer in a case where the taxpayer denies the liability to
be assessed under Income Tax Act,
6. intimation issued u/s 200A(1) where adjustments are made in the filed statement,
7. an order of assessment or reassessment passed u/s 153A or 158BC in case of
search/seizure,
8. an assessment or reassessment order passed u/s 92CD(3),
9. a rectification order passed u/s 154 or 155,
10. an order passed u/s 163 treating the taxpayer as agent of non-resident,
11. an order passed u/s 170(2)/(3) assessing the successor of the business in respect of
income earned by the predecessor,
12. an order passed u/s 171 recording the finding about partition of a Hindu Undivided
Family,
13. an order passed by Joint Commissioner u/s 115VP(3) refusing approval to opt for
tonnage-tax scheme to qualifying shipping companies,
14. an order passed u/s 201(1)/206C(6A) deeming person responsible for deduction of tax
at resource as assessee-in-default due to failure to deduct tax at source or to collect tax
at source or to pay the same to the credit of the Government,
15. an order determining refund passed u/s 237,
16. an order imposing penalty u/s 221/ 271/ 271A/ 271AAA/ 271F/ 271FB/ 272A/
272AA/ 272B/ 272BB/ 275(1A)/ 158B FA(2)/ 271B/ 271BB/ 271C/ 271CA/ 271D/
271E/ 271AAB,

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PROCEDURE FOR APPEAL:7

An appeal to Commissioner of Income-tax must be in Form No. 35 along with details of

“Relief claimed in appeal”, “Statement of Facts” and “Grounds of appeal”, signed and
verified by the individual taxpayer himself or by a person duly authorized by him holding
valid power of attorney. Further, e-filing of Form has been made mandatory by Income-tax
(3rd Amendment) Rules, 2016, for persons for whom e-filing of return of income is
mandatory.

The prescribed fees for any such appeal is as under:

 Rs. 250, where the assessed income is Rs 1lakh or less

 Rs. 500, where assessed income is more than Rs. 1 lakh but less than Rs. 2 lakhs
 Rs.1,000, where assessed income is more than Rs. 2 lakhs

On receipt of Form no. 35, Commissioner of Income-tax fixes date and place for hearing the
appeal by issuing notice to the taxpayer and the Assessing Officer, against whose order
appeal is preferred. Before passing the order, the Commissioner of Income-tax may make
such further inquiries as he thinks fit, or may direct the Assessing Officer to make further
inquiry and report the result to him. As a rule, a taxpayer is not entitled to produce any
evidence, whether oral or documentary other than what was already produced before the
Assessing Officer. However, in certain exceptional circumstances as provided below,
additional evidence are accepted by the Commissioner of Income-tax (Appeals);8

1. Where the Assessing Officer has refused to admit evidence which ought to have
been admitted; or
2. Where the appellant was prevented by sufficient cause from producing the
evidence which he was called upon to be produced by the Assessing Officer; or
[As amended by Finance Act, 2016]
3. Where the appellant was prevented by sufficient cause from producing any
evidence before the Assessing Officer which is relevant to any ground of appeal;
or

7
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.
8
•“Appeal to Commissioner of Income-Tax (Appeals)”Income Tax Department, Govt. of India, 2016

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 4. Where the Assessing Officer has made the order appealed against without giving
sufficient opportunity to the appellant to adduce evidence relevant to any ground
of appeal.

ORDER OF COMMISSIONER OF INCOME- TAX:9

After hearing the case/arguments, the Commissioner of Income-tax passes his order, and the
same is recorded in writing. Where the order passed is that for disposal of the appeal and the
Commissioner must supply reasons for the same. While disposing of an appeal, the
Commissioner of Income-tax may consider and decide any matter arising out of the
proceedings in which order appealed against was passed, even if such matter was not raised
by the taxpayer before the Commissioner of Income-tax. The order should be issued within
15 days of last hearing.

Appeal before Income Tax Appellate Tribunal (ITAT)10

Appeal against an order of Commissioner (Appeals) lies with the Income Tax Appellate
Tribunal (ITAT). Both tax payer and the Assessing Officer can file appeal before ITAT.
Appeal is to be filed (in Form 36) before the Appellate Tribunal within 60 days of the date on
which order appealed against is communicated to the taxpayer or the Commissioner, as the
case may be. Appeal fee to be paid based on the taxable income subject to a maximum of
Rs.10000. The Appellate Tribunal may admit an appeal after the period of 60 days if it is
satisfied that there was sufficient cause for not presenting it within the prescribed time.
Normally appeals are heard by a Bench comprising of one judicial member and one
accountant member.

An appeal before ITAT can be filed by a taxpayer against;

1. an order passed by the Commissioner of Income-tax (Exemption), u/s 10

(23C)(vi), which provides for filing of application by the educational institute or
hospital for the purpose of grant or exemption;
2. an order passed by the Principal Commissioner of Income-tax or Commissioner of
Income-tax with respect to registration application made by a charitable or
religious trust as provided u/s 12AA
9
www.mondaq.com › india › Appeals+Before+Appellate+Authorities+Unde
10
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.

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 3. an order passed by the Principal Commissioner of Income-tax or Commissioner of
Income-tax with respect to the approval of a charitable trust for donations made to
it which would be eligible for deductions in the hands of the donor, as provided
u/s 20G(5)(vi)
4. an order passed by the assessing officer u/s 143(3) or 147 or 153A or 153C, either
in pursuance of direction given by Dispute Resolution Panel or with approval of
the Principal Commissioner of Income- Tax or Commissioner of Income- Tax as
provided u/s 144BA(12);11
5. a ratification order passed by the Commissioner of Income- tax u/s 154;
6. an order passed by a Principal Commissioner of Income- Tax or Commissioner of
Income- Tax u/s 263, which relates to revision of the order of Assessing Officer
which is considered as prejudicial to the interest of revenue;
7. An order by the Assessing Officer u/s 115VZC(1), which provides for order of
excluding the taxpayer from tonnage tax scheme;
8. an order passed by the Commissioner of Income-tax u/s 250, 270A, 271, 271A or
272A;
9. an order of penalty by a Principal Commissioner of Income- Tax or Commissioner
of Income- Tax u/s 270A, 271 or 272A;
10. an order or penalty by a Principal Chief Commissioner or Chief Commissioner or
a Principal Director General a Director General or a Principal Director or Director
under section 272A.

A Principal Commissioner of Income-Tax or Commissioner of Income-Tax, may direct the

Assessing Officer to make an appeal to ITAT, if he objects the order passed by the
Commissioner of Income-Tax (in appeals) under section 154 or section 250. Such an appeal
is also called a Departmental Appeal, i.e., the Income-Tax department moving to ITAT
against the order of the Commissioner of Income-Tax. However, Departmental Appeals are
allowed only in cases where the tax effect involved in the appeal exceeds Rs. 10,00,000.

Any appeal to ITAT must be filed in 60 days of the date on which order appealed against is
communicated to the taxpayer or the Commissioner.

11
www.mondaq.com › india › Appeals+Before+Appellate+Authorities+Unde

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PROCEDURE FOR APPEAL:12

An appeal to ITAT must be in Form No. 36- in triplicate. The prescribed fees for any such
appeal is as under:

 Rs. 500, where the assessed income is Rs 1lakh or less

 Rs. 1,500, where assessed income is more than Rs. 1 lakh but less than Rs. 2 lakhs
 1% of assessed income, subject to maximum of Rs.10, 000, where assessed income is
more than Rs. 2 lakhs

Where the subject matter of appeal relates to any other matter, fee of Rs 500/- is to be
paid. An application for stay of demand is to be accompanied by fee of Rs. 500. The
appellant may submit a paper book in duplicate containing documents or statements or
other papers referred to in the assessment or appellate order, which it may wish to rely
upon, at least a day before the hearing of the appeal along-with proof of service of copy
of the same on the other side at least a week before. Parties to the appeal are neither
entitled to produce additional evidence of any kind, nor oral or documentary before the
Tribunal. The Appellate Tribunal then fixes the date for hearing the appeal and notifies
the parties specifying date and place of hearing of the appeal. A copy of memorandum of
appeal is sent to the respondent either before or along with such notice. The appeal is
heard on the date fixed and on other dates to which it may be adjourned.

ORDER OF ITAT:13

The Appellate Bench comprises of one judicial member and one accountant member.
Appeals where total income computed by the Assessing Officer does not exceed Rs. 5lakh
may be disposed of by single member Bench. If members are equally divided in their
opinion, the points of difference are stated by each member and the case is referred by the
President of the ITAT for hearing such points by one or more of other members of the ITAT.
Such point or points is decided according to opinion of majority of the members of ITAT
who have heard the case, including those who first heard it.

12
https://www.indiafilings.com › Guides › Income Tax
13
•“Appeal to Commissioner of Income-Tax (Appeals)”Income Tax Department, Govt. of India, 2016

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Appeal before High Court14

Appeal against Appellate Tribunal’s order lies with the High Court, where the High Court is
satisfied that the case involves a substantial question of law. Appeal to the High Court against
Appellate Tribunal’s order can be filed by the tax payer or the Chief
Commissioner/Commissioner within 120 days of receipt of the order and in the form of
memorandum of appeal, precisely stating the substantial question of law involved. Appeal
filed before High Court is heard by bench of not less than two Judges and decision is by
majority.15

National Tax Tribunal (NTT)16

The Supreme Court in 25th September 201417 declared as unconstitutional the National Tax
Tribunal Act under which a national tribunal was set up to decide tax-related cases by taking
away the jurisdiction of High Courts in such matters. A five-judge Constitution Bench
comprising Chief Justice of India R.M. Lodha and Justices J.S. Khehar, J.
Chelameswar, A.K. Sikri and Rohinton Nariman held that it was the ultimate
encroachment on the exclusive domain of the superior Courts of Record in India. The Bench
passed the order on a batch of petitions filed by the Madras Bar Association and others
challenging the validity of the National Tax Tribunal, contending that there was a grave
danger that the judiciary would be substituted by a host of quasi-judicial tribunals which
function as departments of various ministries. Writing the main judgment, Justice Khehar
said Parliament had the power to enact legislation and to vest adjudicatory functions, earlier
vested in the High Court, with an alternative court/tribunal. Exercise of such power by
Parliament would not per se violate the basic structure of the Constitution. “The basic
structure of the Constitution will stand violated if, while enacting legislation pertaining to
transfer of judicial power, Parliament does not ensure that the newly created court/tribunal
conforms with the salient characteristics and standards of the court sought to be substituted.
The National Tax Tribunal encroaches upon the power of higher judiciary, which only can
decide issues involving substantial laws and not a tribunal.”

Justice Nariman wrote a separate but concurring judgment.

14
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.
15
https://www.indiafilings.com › Guides › Income Tax
16
https://www.thehindu.com/news/national/sc-strikes-down-national-tax-tribunal-act/article6445065.ece
17
Madras Bar Association Vs. Union of Indian and Other 2006(SC)

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The Bench said: “It is obvious that substantial questions of law which relate to taxation
would also involve many areas of civil and criminal law, for example Hindu joint family
Law, partnership, sale of goods, contracts, Mohammedan Law, Company Law, law relating
to Trusts and societies, transfer of property, law relating to intellectual property,
interpretation of statutes and Sections dealing with prosecution for offences. It is therefore
not correct to say that taxation, being a specialised subject, can be dealt with by a tribunal.

“All substantial questions of law have, under our constitutional scheme, to be decided by the
superior courts alone. Indeed, one of the objects for enacting the National Tax Tribunals Act,
as stated by the Minister on the floor of the House, is that the National Tax Tribunal can lay
down the law for the whole of India which then would bind all other authorities and tribunals.
This is a direct encroachment on the high courts’ power under Article 227 to decide
substantial questions of law which would bind all tribunals.”

Appeal before Supreme Court18

Appeal against High Court’s order in respect of Appellate Tribunal’s order lies with the
Supreme Court in those cases, which are certified to be fit for appeal to the Supreme Court.
Special leave can also be granted by the Supreme Court under Art. 136 of the constitution of
India against the order of the High Court

18
“Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.

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Conclusion

Appeal refers to an act of referring the case/matter/situation to a higher authority against the
order passed by a lower authority in respect of that case or matter. It implies a complaint to a
higher authority against the order or judgement (alleged to be erroneous) of an administrative
authority or appellate authority. The complex nature of Income Tax Act and the various rules
often, create a situation where there is difference of opinion among the assessee and the
assessing officer (i.e., Income tax department). Quite often, an assessee is not satisfied by an
assessment order/any other order issued by any income tax authority and such an aggrieved
assessee can present his case before specified authorities prescribed under Income Tax Act.
Such prescribed authorities constitute ‘appellate machinery’ or ‘appellate authorities’.

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REFERENCES:

 “Appeal to Commissioner of Income-Tax (Appeals)”Income Tax Department, Govt.

of India, 2016.

 Appeal to the Income Tax Appellate Tribunal” Income Tax Department, Govt. of
India, 2016.

 “Income Tax Appeal Filing Procedure in Brief”. Taxguru.in. N.p., 2014. Web. 30
Sept. 2016.

 “Appeal Under Income Tax Act -I”. CAclubindia. N.p., 2016. Web. 30 Sept. 2016.

 https://www.legallyindia.com › the-bench-and-the-bar › sc-declares-nation

 https://www.thehindubusinessline.com › economy › article20873250
 https://incometaxindia.gov.in › Acts › Wealth-Tax Act, 1957
 www.legalserviceindia.com › legal › article-543-commissioner-appeals-an.
 https://www.indiafilings.com › Guides › Income Tax

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