INTRODUCTION:

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.

APPEALS BEFORE COMMISSIONER:

• WHEN CAN BE FILED:

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;

• an intimation issued u/s 143(1)/ (1B), where adjustments have

been made in income offered to tax in the return of income,
• an assessment order passed u/s 143(3) except in case of an order
passed in pursuance of directions of the Dispute Resolution Panel,
• 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,
• an order referred to inspection u/s150,
• order passed against the taxpayer in a case where the taxpayer
denies the liability to be assessed under Income Tax Act,
• intimation issued u/s 200A(1) where adjustments are made in the
filed statement,
 • an order of assessment or reassessment passed u/s 153A or 158BC
in case of search/seizure,
• an assessment or reassessment order passed u/s 92CD(3),
• a rectification order passed u/s 154 or 155,
• an order passed u/s 163 treating the taxpayer as agent of non-
resident,
• an order passed u/s 170(2)/(3) assessing the successor of the
business in respect of income earned by the predecessor,
• an order passed u/s 171 recording the finding about partition of a
Hindu Undivided Family,
• an order passed by Joint Commissioner u/s 115VP(3) refusing
approval to opt for tonnage-tax scheme to qualifying shipping
companies,
• 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,
• an order determining refund passed u/s 237,
• 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,
• an order imposing a penalty under Chapter XXI.
An appeal to the Commissioner of Income-tax must be filed within 30 days
from the date of service of notice of demand relating to assessment or
penalty order.

• PROCEDURE FOR APPEAL:

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);

• Where the Assessing Officer has refused to admit evidence which

ought to have been admitted; or
• 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]
• 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
• 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:

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.

• APPEALS BEFORE INCOME TAX APPELLATE TRIBUNAL:

Income Tax Appellate Tribunal (ITAT) is the second appellate authority in
order after The Commissioner of Income Tax. This body is constituted by the
Central Government, and functions under the Ministry of Law. It consists of 2
classes of member, i.e., Judicial and Accountant. An appeal to ITAT can be
filed either by the taxpayer or by the Assessing Officer.

• WHEN CAN BE FILED:

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

• 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;
• 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
• 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)
• 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);
• a ratification order passed by the Commissioner of Income- tax u/s
154;
• 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;
• An order by the Assessing Officer u/s 115VZC(1), which provides for
order of excluding the taxpayer from tonnage tax scheme;
• an order passed by the Commissioner of Income-tax u/s 250, 270A,
271, 271A or 272A;
• an order of penalty by a Principal Commissioner of Income- Tax or
Commissioner of Income- Tax u/s 270A, 271 or 272A;
• 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.

Notwithstanding the limit above mentioned, adverse judgements relating to

following issues should be contested on merits, even when the tax effect is
less than the mandatory limits specified above;

• Where the Constitutional validity of the provisions of an Act or Rule

is under challenge, or
 • Where Board’s order, Notification, Instruction or Circular has been
held to be illegal or ultra-vires, or
• Where Revenue Audit’s objection in the case has been accepted by
the Department.
• Writ matters
• Matters pertaining to other direct taxes, i.e., other than Income-Tax
• Where the tax effect is not quantifiable or not involved, such as case
of registration of trust or institution under section 12A.
• Where the addition relates to undisclosed foreign assets/bank
accounts.
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.

• PROCEDURE FOR APPEAL:

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:
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.

• APPEALS BEFORE HIGH COURT:

Where the High Court is satisfied that the case involves substantial question
of law, an appeal shall lie against the order/ judgment of ITAT. Such appeal
may be filed either by the taxpayer or the Chief
Commissioner/Commissioner. An appeal against order of ITAT shall lie only
within 120 days of receipt of such order and in the form of memorandum of
appeal, precisely stating the substantial question of law. The High Court then
goes on to formulate the question. An appeal filed before the High Court is
heard by a bench of not less than two judges.

• APPEALS BEFORE SUPREME COURT:

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

Revision of Income Tax Order

Revision of an Income Tax order is performed when a taxpayer feels that an income
tax assessment order forwarded by the assessing officer was unjust or unreasonable.
Income Tax orders can also be revised in a manner which causes enhancement of the
taxpayer’s tax liability. A Principal Commissioner or Commissioner of the Income Tax
Department is empowered with the rights to enhance, annul or modify an income tax order
if the officer feels that the interests of the revenue are at stake due to the erroneous
passing of orders by the Assessing Officer. This article discusses the roles of a Principal
Commissioner/Commissioner pertaining to revision of income tax orders.

Income Tax Order Revision

The Principal Commissioner/Commissioner has the powers to revise the following income
tax orders:

• An order of assessment made by the Assessment Commissioner or Deputy

Commissioner or other Income Tax Officer based on the directions issued by the
Joint Commissioner.
• An order made by the Joint Commissioner in the exercise of the powers or in the
performance of the functions of Assessing Officer conferred on him under the
orders or directions issued by CBDT/Principal Chief Commissioner/Chief
 Commissioner/Principal Director/Commissioner authorized by CBDT under Section
120.

Errors in Passing of Orders

The Income-tax Act mentions the circumstances where the Assessing Officer has erred in
the passing of orders and the orders can be revised. The circumstances, as explained under
this provision, could be any of the following:

• Orders passed without making necessary inquiries or verification.

• Orders passed allowing any relief without investigating the claim.
• The order is not in par with any order, direction or instruction issued by the Board
under Section 119.
• The order hasn’t been passed in accordance with any decision which is prejudicial to
the assessee, rendered by the jurisdictional High Court in the case of the assessee or
any other person.

Time Limit for Revision of Income Tax

Order
Orders of the Assessment Officer must be revised within a period of two years from the
date of the original order. The following periods are to be excluded while computing the
period of limitation:

• The time which is utilised for giving an opportunity to the assessee to be re-heard.
• Any period during which any proceeding under this section is stayed by an order or
injunction of any court.

Taxpayers should note that revisionary orders can be passed even after the expiry of two
years under certain extraordinary circumstances.

Procedure for Revision of Income Tax

Order
The following are some of the major powers enjoyed and aspects considered by the
Principal Commissioner or Commissioner while considering a revision of an Income Tax
order:
Examination of Records
The Principal Commissioner or Commissioner may call for and examine the records of any
proceedings under the Income Tax Act while revising an Income Tax order. He/she need not
provide any reason for the same.

Entitled to Revise Parts of Other Order

The Principal Commissioner or Commissioner is entitled to revise other parts of the order
which was ignored or taken up by the Assessing Officer.

Errors of Fact/Errors of Law

The Principal Commissioner/Commissioner is by no means restricted in revising the errors.
The errors can be revised, be it errors of fact/errors of law.

Opportunity to be Heard
As is the case with many provisions of the Income Tax Act or for that matter the entire
realms of taxation, the assessee must be given an opportunity to be heard before the
Principal Commissioner or Commissioner goes on to pass the revised order.

Opinion of Subordinates Valued

The order or part of it can be taken for review even if the point of error is pointed out by a
sub-ordinate, provided the Principal Commissioner/Commissioner is satisfied with the cause
of review.

Approval from an Authority of a Higher Rank

The Principal Commissioner/Commissioner may undertake the review of any order or part
of it on the discretion of a higher authority.

When Income Tax Orders Cannot Be

Revised
The Principal Commissioner or Commissioner cannot revise an income tax order which is
subject to appeal. Also, the Principal Commissioner or Commissioner is restricted from
reviewing any orders passed by the High Court, even if the said authority considers it
erroneous.