What is the procedure for filing an appeal before the Income Tax Appellate Tribunal?

Discuss its functions. ---- 2020 (7 marks)

Origin:
INCOME TAX APPELLATE TRIBUNAL (ITAT)
Section 252 of the Income-tax Act, 1961 provides that the Central Government shall
constitute an Appellate Tribunal consisting of as many Judicial Members and Accountant
Members as it thinks fit, to exercise the powers and discharge the functions conferred on
the Appellate Tribunal by the said Act. The Income-tax Appellate Tribunal was established
on 25th January, 1941, in pursuance of a similar provision contained in the erstwhile Indian
Income-tax Act, 1922.

Background about the ITAT

1. (a)  quasi-judicial institution set up in January, 1941 and specializes in dealing with
appeals under the Direct Taxes Acts.
2. (b)  orders passed by the ITAT are final (last fact finding authority), an appeal lies to
the High Court only if a substantial question of law arises for determination.
3. (c)  Chapter XX-B of the Income-tax Act, deals with the appeals to the Tribunal
(Section 252-255)
4. (d)  Relevant Rules – Rule 47 of the Income-tax Rules, 1962
5. (e)  Income-tax (Appellate Tribunal) Rules, 1963.

Bench Strength:
The Tribunal as constituted presently, consists of 63 Benches comprising of sanctioned
strength of one (01) President, who is assisted by ten (10) Zonal Vice- Presidents and 115
Members (i.e. Accountant Members and Judicial Members). The present sanctioned
strength of Members is 126 (including President and Vice Presidents) for 63 Benches as
spread over 30 cities throughout the country.
Constitution of Appellate Tribunal [Section 252]
1. (1)  The Central Government shall constitute an Appellate Tribunal consisting of as
many judicial and accountant members as it thinks fit to exercise the powers and
discharge the functions conferred on the Appellate Tribunal.
2. (2)  A judicial member shall be a person -
1. (i)  who has held a judicial office in the territory of India at least for ten year;
or
2. (ii)  who has been a member of the Indian Legal Service and has held a post in
Grade II of that service or any equivalent or higher post for at least three
years; or
3. (iii)  who has been an advocate for at least ten years.
3. (3)  An accountant member shall be a person -
1. (i)  who has been in the practice of accountancy as a Chartered Accountant at
least for ten years; or
2. (ii)  who has been a member of the Indian Income Tax Service, Group A and
has held the post of Additional Commissioner of Income Tax or any
equivalent or higher post for at least three years.
Powers and Functions:
The Income-tax Appellate Tribunal, constituted under the Income-tax Act, deals with second
appeals in all matters of direct taxes, including appeals against the revisionary orders of
Administrative Commissioners as well as orders denying registration under Section 12A or
under Section 80G of the Income-tax Act 1961, etc. The Appellate Tribunal also deals with
second appeals in all matters of the Black Money (Undisclosed foreign income and assets)
and imposition of Tax Act, 2015 including any revisionary order passed by the Principal
Commissioner/Commissioner under the Black Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Act, 2015.
The powers and functions of the Appellate Tribunal are exercised and discharged by the
Benches constituted by the President of the Tribunal from amongst the Members thereof.
Generally, a Bench consists of one Judicial Member and one Accountant Member. However,
in appropriate cases, at the discretion of the President, a Bench may consist of more than
two Members. The President or any other Member of Tribunal authorised in this behalf by
the Central Government may, sitting singly, dispose of any case which has been allotted to
the Bench of which he is a Member and which pertains to an assessee whose total income
as computed by the Assessing Officer in that case does not exceed fifty (50) lakhs rupees
and the President may, for the disposal of any particular case, constitute a Special Bench
consisting of three or more Members, one of whom shall necessarily be a Judicial Member
and one Accountant Member, subject to the provisions of the Income-tax Act, 1961.

Appeal Before Income Tax Appellate Tribunal

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An Appeal is a procedure through which one rectifies the erroneous decision of the lower
court by putting forth the question of law or fact to the higher Court. An Appeal in simpler
terms can be said to ‘apply to a higher court for a reversal of the decision of the lower court.
Central government for the purpose of exercising the powers and discharging the duties
appoints a group of judicial and accounting professionals. It established Income Tax
Appellate Tribunal under the supervision of the Ministry of Law and Justice as the second
Appellate Tribunal. Although the Central government established ITAT, it operates as per
section 255 independently.
As per Article 227 of the Indian Constitution, ITAT is subordinate to the High Court and
bound to follow the order of the High Court in the respective state and Supreme Court.

The issues of income tax liabilities are dealt with by the Assessing Officer. If the order of the
Assessing Officer is not satisfactory, then he can file an appeal to the Commissioner of
Income Tax. Many a time, it happens that the taxpayer is not satisfied with the order of CIT.
In such a case he has the power to file an appeal against the order of the CIT before Income
Tax Appellate Tribunal.

Appeal Filed Under Income Tax Appellate Tribunal

When the taxpayer is not content by the order of the Commissioner of Income Tax, he can
file an appeal in ITAT against the following orders
 Orders by Commissioner of Income Tax (appeals) under Section 250/271/
271A/272A
 Order of rectification under Section 154
 Order by the Commissioner against the registration application of a charitable or
religious institution under Section 12AA
 Order by Commissioner u/s 263 revising assessing officer’s order which is considered
prejudicial to the interest of revenue
 Order by Assessing Officer under section 158BC(c) – Procedure for Block Assessment
– in respect of search action initiated during 1995 to 1997.
 Order of the Assessing Officer excluding the taxpayer from the tonnage tax scheme
 Order by Commissioner under section 154 to verify an Order under section 263.
 Penalty order passed by Chief Commissioner u/s 272A of the Income Tax Act
 Order passed by Assessing Officer u/s 143(3)/147 in pursuance of direction of
Dispute
 Rectification orders enhancing the assessment or reduction of refund.
Direct first appeals are allowed before the ITAT against the orders passed by CIT under
section 263 and orders of the Assessing Officer given pursuant to the Dispute Resolution
Panel direction given under section 144C of the Act.
The Tribunal also looks into the miscellaneous applications for the recall and rectification of
order and stay petitions etc.

Procedure for appeal to Appellate Tribunal (Section 253)

Time limit for filing appeal : The appeal to the Appellate Tribunal shall be filed within 60
days of the date on which the order sought to be appealed against, is communicated to the
assessee or to the CIT, as the case may be. [Section 253(3)]
Filing of cross objections and time limit : The Assessing Officer or the assessee, as the case
may be, on receipt of notice that an appeal against the order of Commissioner (Appeals) has
been filed by the other party, may, notwithstanding that he has not appealed against such
order or any part thereof, file a memorandum of cross objections with the Appellate
Tribunal. The memorandum of cross objections shall be in the prescribed form and shall be
disposed of by the Appellate Tribunal as if it were an appeal before it. The memorandum of
cross objections has to be filed within 30 days of the receipt of above said notice. [Section
253(4)]
Condonation of delay of time limit : The Appellate Tribunal may admit an appeal or permit
the filing of a memorandum of cross objections after the expiry of 60/30 days, if it is
satisfied that there were sufficient cause for not presenting it within the specified period
[Section253(5)]
Monetary Limit For Filing The Appeal In The ITAT
Under the Finance Act, 2008, section 268A, the Board has the power to instruct the income
tax authorities to fix the monetary limits for the purpose of regulating the appeal filed
before the Tribunal.
Following are the monetary limits for filing appeals related to income tax matters before the
ITAT, High Court and the Supreme Court in matters related to Special Leave Petition
  Appeals related to Income Tax matters Monetary Limit
1.        Filed before The Income Tax Appellate Tribunal Rs. 10,00,000/-
2.        Filed before High Court Rs. 20,00,000/-
3.        Filed before The Supreme Court Rs. 25,00,000/-

Procedure For Filing An Appeal Before ITAT

 An appeal must be made within 60 days from the order of the CIT
 Notice is given to the opposing party informing them about the appeal
 The Tribunal fixes the date of the hearing and notifies the parties about the place
and date of hearing.
 The Pleadings start either by the Appellant or his representative.
 The ITAT has the power to adjourn cases or put stay orders on the proceedings
related to Section 253(1) or look into additional evidence where sufficient cause is
available.
 The ITAT has the power to conduct inquiry.
 If a dispute is related to a sum less than Rupees 50,00,000 it can be decided by a
single member bench.
 The ITAT has to render a decision within four years from the end of the financial year
in which the appeal is filed according to section 254(2A) Income Tax Act. But it is not
mandatory.
 The ITAT will hear additional grounds for appeal.
 Amendments to an order on a question of fact presented erroneously may be made
within 6 months after the judgment is passed.
 The Tribunal will give the order in writing within 180 days from the stay order so
passed.
 Communication of order to the parties involved.

Decision
Normally, the Appellate Bench addresses the Appeals, it is comprising of one judicial and
one accountant member. A single bench will hear matter where the total income computed
by the Assessing Officer does not exceed Rs. 5 Lakhs.
The President of the ITAT looks into the matter if the members of the bench are equally
divided on their opinion. The members state the points of difference, and the case is
decided according to the majority of the members of ITAT.
The President of the ITAT has the authority to constitute a Special Bench consisting of three
or more than three members for the disposal of important matters. The special bench will
have one judicial member and an accountant.