Appeals and Adjudication under Income Tax Act

Appeals and Adjudication under
Income Tax Act
CA. Jugal Gala

Credits and Acknowledgments
Anand N Krishna
Thirumal V

Legends used in the Presentation
AO Assessing Officer
CIT Commissioner of Income Tax
CIT(A) Commissioner of Income Tax (Appeals)
CCIT Chief Commissioner of Income Tax
DCIT(A) Deputy Commissioner of Income Tax (Appeals)
DSC Digital Signature Certificate
EVC Electronic verification Code
ITAT Income Tax Appellate Tribunal
PCIT Principal Commissioner of Income Tax

Presentation Schema
Introduction Appeals to CIT(A)
Procedure, Fees,
Manner and
Adjudication
Appeals to Income Tax
Appellate Tribunal
Procedure, Fees,
Manner and
Adjudication
Appeal to High Court
Appeal to Supreme
Court
Effect of Decisions of
High Court and
Supreme Court

Introduction
An appeal is a process by which a judgment/order of a subordinate court is challenged
before its superior court
It implies a complaint to a higher authority against the order or judgement of an
administrative authority or appellate authority
At times it may happen that the taxpayer is aggrieved by an order issued the AO
In such cases the assessee can file an appeal against the order of the AO before the CIT(A)
and before ITAT if aggrieved by order of CIT(A) and so on

Appeals to Commissioner of Income Tax
(Appeals)

Orders Appealable before CIT(A) – Sec 246A
• Any assessee or any deductor or any collector aggrieved by any of the following order may appeal to
the Commissioner (Appeals)
Order passed by Joint
Commissioner in writing
refusing to approve the
option for tonnage tax
scheme
Order passed against the
taxpayer in a case where
the taxpayer denies the
liability to be assessed
An Intimation of processing of
return of income, TDS returns
or Statement of non-
deduction of TDS, where the
assessee objects to the
adjustments
Order of any Assessment except
in pursuance of directions of the
DRP or order after approval of
PCIT or CIT in GAAR cases or Best
Judgement Assessment
Order of Assessment, Re-assessment or Re-
computation under Income Escaping Assessment
except an order passed in pursuance of directions of
the DRP or order after approval of PCIT or CIT in GAAR
cases or order in pursuance of an order or appeal
Order giving effect to
APA
An order of assessment or
reassessment in case of
search/seizure except in pursuance
of directions of the DRP or order
after approval of PCIT or CIT in GAAR
cases

Contd.
Rectification order enhancing assessment or reducing
refund or refusing claim of assessee except order after
approval of PCIT or CIT in GAAR cases
an order treating the
assessee as the agent of
a non-resident
an order made against
the successor of a
business
An order of assessment
after partition of HUF
Order determining
refund
Order imposing penalty Order of refund
Order for interest in case
of under-estimation
Order deeming assessee
as assessee-in-default as
a consequence of failure
to deduct or pay TDS

Transfer to CIT(A)
CIT(A) may proceed with such appeal or matter from the stage at which it was on that day
Notwithstanding anything contained in section 246(1) (Appealable Orders), every appeal which is pending immediately
before the appointed day, before the DCIT(A) and any matter connected with such appeals, shall stand transferred to the
CIT(A) on that date
The appellant may demand that the previous proceeding
or any part thereof be reopened or that he be re-heard
before proceeding further with the appeal or matter
Explanation: “Appointed day" means the day
appointed by the Central Government by
notification in the Official Gazette

Appeal Denying Liability to Deduct Tax – Sec 248
Where the tax deductible on any sums paid to non-residents under Sec 195
is to be borne by the person by whom the income is payable,
and such person having paid such tax to the credit of the Central
Government,
claims that no tax was required to be deducted on such income,
he may appeal to the CIT(A) for a declaration that no tax was deductible on
such income
Appeal shall be presented within 30 days from the date of payment of tax

Form of Appeal and Limitation – Sec 249
• Every appeal made to CIT(A) shall be in Form – 35 and shall be accompanied a fee as under:
Total income of the assessee as computed by the AO in the case to which the appeal relates Prescribed Fee
Less than Rs. 1,00,000 Rs. 250
Exceeds Rs. 1,00,000 but less than
Rs. 2,00,000
Rs. 500
Exceeds Rs. 2,00,000 Rs. 1,000
Where the subject matter of an appeal is not covered above Rs. 250
The appeal shall be presented within 30 days from:
Form 35 must be filed electronically using DSC or Electronic verification Code (EVC)
and shall be verified by person authorised to verify return of income under Sec 140
However, the date on which the order was received is to be excluded while calculating the number of days
where the appeal relates to any assessment or penalty, the date of service of the notice of demand
in any other case, the date on which intimation of the order sought to be appealed against is served
( intimation shall be in manner prescribed in Sec 282)
Where application for Immunity from imposition of penalty is made
under Sec 270AA, and is rejected, the time taken shall be excluded
CIT(A) may admit
an appeal after the
expiration of period
if he is satisfied that
the appellant had
sufficient cause

Mode of Service of Notice – Sec 282
The service of a notice or summon or requisition or order or any other communication under this Act (hereafter referred to
as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named,
by post or by such courier
services as may be approved
by the Board or
in such manner as provided
under the Code of Civil
Procedure, 1908 or
in the form of any electronic
record as provided in
Chapter IV of the
Information Technology Act,
2000 or
by any other means of
transmission of documents
as provided by rules made
by the Board
The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail
message) to which the communication referred may be delivered or transmitted to the person
Explanation: The expressions "electronic mail" and "electronic mail message“ means a message or information created or
transmitted or received on a computer, computer system, computer resource or communication device including
attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message

Conditions for an Appeal
Pre-requisites for filing an
appeal
Payment of the appeal fee If return has been filed
Payment of tax due on the
income returned by him
If no return has been filed
Payment of an amount
equal to the amount of
advance tax which was
payable by him
Appeal to be made in Form
- 35
CIT(A) may, for any good and sufficient reason to be recorded in writing, exempt the assessee from the operation of
the provisions of this clause

Procedure in Appeal
• The CIT(A) shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the AO
The following shall have the right to be
heard at the hearing of the appeal
Appellant, either in person or by an
authorised representative
AO, either in person or by a
representative
CIT(A) shall have the power to adjourn the hearing of the appeal from time to time
CIT(A) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the AO to make
further inquiry and report the result of the same to the CIT(A)
CIT(A) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified, if the
CIT(A) is satisfied that the omission of that ground was not wilful or unreasonable
The order of the CIT(A) disposing of the appeal shall be in writing and shall state the points for determination, the
decision thereon and the reason for the decision
In every appeal, the CIT(A), where it is possible, may hear and decide such appeal within a period of 1 year from the
end of the FY in which such appeal is filed before him under section 246A(1)
On the disposal of the appeal, the CIT(A) shall communicate the order passed by him to the assessee and to the
Principal CCIT or CCIT or Principal CIT or CIT

Production of additional evidence – Rule 46A
The appellant shall not be entitled to produce before the DCIT(A) or CIT(A), any evidence, whether oral or documentary, other
than the evidence produced by him during the course of proceedings before the AO, except in the following circumstances:
• AO has refused to admit evidence which ought to have been admitted or
• Appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO or
• Appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of
appeal or
• AO has made the order appealed against without giving sufficient opportunity to the appellant to cite evidence relevant to any
ground of appeal
No evidence shall be admitted unless the DCIT(A) or CIT(A) records in writing the reasons for its admission
• The DCIT(A) or CIT(A) shall not take into account any evidence produced as above unless
the AO has been allowed a reasonable opportunity to:
Examine the evidence or document or
to cross-examine the witness
produced by the appellant
Produce any evidence or document or any
witness in rebuttal (counter-argument) of the
additional evidence produced by the appellant
OR
Nothing contained in this rule shall affect the power of the DCIT(A) or CIT(A):
• to direct the production of any document, or the examination of any witness,
• to enable him to dispose of the appeal, or for any other substantial cause including the
enhancement of the assessment or penalty whether on his own motion or on the request of the AO

Powers of CIT(A)
In disposing of an appeal, the CIT(A) shall have the following powers:
Appeal against an order of assessment Confirm, reduce, enhance or annul the assessment
Appeal against an order of assessment in
respect of which the proceeding before
the Settlement Commission abates
under section 245HA
after taking into consideration all the material and other information
produced by the assessee before, or the results of the inquiry held by the
Settlement Commission and such other material as may be brought on his
record, confirm, reduce, enhance or annul the assessment
Confirm or cancel such order or vary it so as either to enhance or to reduce the penalty
In any other case Pass such orders in the appeal as he thinks fit
• The CIT(A) shall not enhance an assessment or a penalty or reduce the amount of refund unless the
appellant has had a reasonable opportunity of showing cause against such enhancement or reduction
Explanation: In disposing of an appeal, the CIT(A) may consider and decide any matter arising out of the proceedings in which
the order appealed against was passed, notwithstanding that such matter was not raised before the CIT(A) by the appellant
Appeal against an order imposing a penalty

Documents Required for Appeal
Form 35
Statement of facts and Grounds
of Appeal
Power of Attorney
Copy of the income tax
Assessment Order
Original Demand notice
Copy of challan for the appeal
fees paid

Appeals to Income Tax Appellate
Tribunal (ITAT)

Appellate Tribunal
A judicial member shall be a person
• who has for at least 10 years held a judicial office in the territory of India or
• 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 3 years or
• who has been an advocate for at least 10 years
Explanation: In computing the period during which a person has held judicial office in the territory of India, there shall be included any
period, after he has held any judicial office, during which the person has been an advocate or has held the office of a member of a
Tribunal or any post, under the Union or a State, requiring special knowledge of law
Explanation: In computing the period during which a person has been an advocate, there shall be included any period during which the
person has held judicial office or the office of a member of a Tribunal or any post, under the Union or a State, requiring special
knowledge of law after he became an advocate
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

Contd..
• The Central Government shall appoint any of the below persons to be the President
• a person who is a sitting or retired Judge of a High Court and who has completed not less than 7 years of service as
a Judge in a High Court or
• one of the Vice-Presidents of the Appellate Tribunal
An accountant member shall be a person
who has for at least 10 years been in the practice of accountancy as a CA, or
as a registered accountant under any law formerly in force or partly as a registered accountant and partly as a CA, or
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 3 years
• The Central Government may appoint one or more members of the Appellate Tribunal to be the Vice-President
• The Vice-President shall exercise such of the powers and perform such of the functions of the President as may
be delegated to him by the President by a general or special order in writing

Orders Appealable before ITAT – Sec 253
• Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal
Rectification order passed by
the CIT(A)
Order of penalty passed by a
PCIT or CIT under section
270A, 271 or 272A
Order passed by the AO under
section 115VZC(1) (excluding
the taxpayer from tonnage tax
scheme)
Order passed by a PCIT or CIT
under section 263 (Revision of
the order of AO which is
considered prejudicial to the
interest of revenue)
Order passed by a PCIT or CIT
under section 12AA
(Registration application
made by a charitable or
religious trust) or for 80G
approval
Order passed by an AO in
pursuance of the directions of
the DRP or a rectification
order in respect of such order
Order passed by an AO after
approval of PCIT or CIT in
GAAR cases or a rectification
order in respect of such order
Order passed by the
prescribed authority under
Sec 10(23C) relating to
charitable trust, funds,
universities and hospitals

Appeals to ITAT
Every appeal shall be filed within 60 days from the date on which the order sought
to be appealed against is communicated to the assessee or to the PCIT or CIT
and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified
file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the CIT(A),
may, notwithstanding that he may not have appealed against such order or any part thereof, within 30 days of the receipt of the notice,
The AO or the assessee, on receipt of notice that an appeal against the order of the CIT(A), has been preferred by the other party,
• The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the
expiry of the relevant period, if it is satisfied that there was sufficient cause for not presenting it within that period

Form of Appeal – Sec 253
• Every appeal made to ITAT shall be in Form – 36 (Rule 47) and shall be verified in the
prescribed manner and shall be accompanied a fee as under:
Total income of the assessee as computed by the AO in the case to which the appeal relates Prescribed Fee
Less than Rs. 1,00,000 Rs. 500
Exceeds Rs. 1,00,000 but less than
Rs. 2,00,000
Rs. 1,500
Exceeds Rs. 2,00,000 1% of the assessed income or Rs. 10,000
(whichever is lower)
Where the subject matter of an appeal is not covered above * Rs. 500
* An application for stay of demand shall be accompanied by a fee of Rs. 500
A memorandum of cross-objections to the Appellate Tribunal shall be made in Form No. 36A

Powers of ITAT
In every appeal, the Appellate Tribunal may hear and decide such appeal within a period of 4 years from the end of the
financial year in which such appeal is filed
The Tribunal may pass an order of stay in any proceedings relating to an appeal filed under section 253(1), for a period not
exceeding 180 days from the date of such order and the Tribunal shall dispose of the appeal within the said period of stay
specified in that order
Where such appeal is not so disposed of within the said period, the Tribunal may, on an application made in by the assessee
and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay,
or pass an order of stay for a further period or periods as it thinks fit
However, the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any
case, exceed 365 days and the Tribunal shall dispose of the appeal within the period or periods of stay so extended or
allowed
If such appeal is not so disposed of within the periods extended (which can’t exceed 365 days), then the order of stay shall
stand vacated after the expiry of such periods, even if the delay in disposing of the appeal is not attributable to the assessee

Contd..
The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit
at any time within 6 months from the end of the month in which the order was passed to amend its order
for rectifying any mistake apparent from record when brought to its notice by the assessee or the AO
An amendment which has the effect of enhancing an assessment or reducing a refund or otherwise
increasing the liability of the assessee, shall not be made unless the Tribunal has given notice to the assessee
of its intention to do so and has allowed the assessee a reasonable opportunity of being heard
Any application filed by the assessee in this regard shall be accompanied by a fee of Rs. 50
The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal
The Tribunal shall send a copy of any orders passed under this section to the assessee and to the PCIT or CIT

Procedure of Appeal
The President or any other member of the 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 AO in the case does not
exceed Rs. 50 lakhs,
and the President may, for the disposal of any particular case, constitute a Special Bench
consisting of 3 or more members, one of whom shall necessarily be a judicial member and
one an accountant member
• The powers and functions of the Tribunal may be exercised and discharged by Benches constituted by the President
of the Tribunal from among the members thereof
• Subject to the provisions contained below, a Bench shall consist of 1 judicial member and 1 accountant member

Contd.
The Tribunal shall, for the purpose of discharging its functions, have all the powers which are
vested in the income-tax authorities,
and any proceeding before the Tribunal shall be deemed to be a judicial proceeding within
the meaning of sections 193 and 228
and for the purpose of section 196 of the Indian Penal Code, the Tribunal shall be deemed
to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of
Criminal Procedure, 1898
If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority,
if there is a majority,
but if the members are equally divided, they shall state the points on which they differ, and the case shall be referred by the
President of the Tribunal for hearing on such points by one or more of the other members of the Tribunal,
and such points shall be decided according to the opinion of the majority of the members of the Tribunal who have heard
the case, including those who first heard it
The Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of
the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings
ITAT is the final fact finding authority

Form 36
Copies of Grounds of Appeal
before CIT(A)
Power of Attorney (Vakalatnama)
Copies of Statement of facts
before CIT(A)
Copy of original assessment order Copy of fee challan

Appeal to High Court – Sec 260A
• The PCIT or CCIT or CIT or an assessee aggrieved by any order passed by the Tribunal may file an appeal to the High Court and such
appeal under this shall be
• filed within 120 days from the date on which the order appealed against is received by the assessee or the PCIT or CCIT or CIT
• in the form of a memorandum of appeal precisely stating therein the substantial question of law involved
• The High Court may admit an appeal after the expiry of the period of 120 days, if it is satisfied that there was sufficient cause for not
filing the same within that period
• Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question
An appeal shall lie to the High Court from every order passed in appeal by the Tribunal before the date of establishment
of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law
Nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear the appeal on
any other substantial question of law not formulated by it, if it is satisfied that the case involves such question
• The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of
the appeal, be allowed to argue that the case does not involve such question - Sec 260A(4)
The High Court shall decide the question of law so formulated and deliver such judgment thereon
containing the grounds on which such decision is founded and may award such cost as it deems fit
• The High Court may determine any issue which
• has not been determined by the Appellate Tribunal or
• has been wrongly determined by the Tribunal by reason of a decision on such question of law

Substantial Question of Law
The proper test for determining whether a question of law raised in the case is substantial would be whether
it is of general public
importance or
it directly and
substantially affects
the rights of the
parties or
the issue has not yet
been settled by the
Supreme Court or
is not free from
difficulty or
calls for discussion of
alternative views

Hearing Cases in High Court – Sec 260B
Where there is no such
majority, the Judges shall state
the point of law upon which
they differ
and the case shall then be
heard upon that point only by
one or more of the other
Judges of the High Court
and such point shall be
decided according to the
opinion of the majority of the
Judges who have heard the
case including those who first
heard it
When an appeal has been filed before the High Court under section 260A,
it shall be heard by a bench of not less than 2 Judges of the High Court,
and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges

Copy of Statement of facts Question of Law Grounds of filing the Appeal
Copy of original assessment order Copy of order of CIT(A) Copy of order of ITAT

Appeal to Supreme Court – Sec 261
An appeal shall lie to the Supreme Court
from any judgment of the High Court
in case which the High Court certifies to be a fit one for appeal to the
Supreme Court

Hearing before Supreme Court – Sec 262
The provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court shall, so far as may
be, apply in the case of appeals under section 261 as they apply in the case of appeals from decrees of a High
Court
However nothing in this section shall be deemed to affect the provisions of section 260(1) or 265 (Tax to be paid
not withstanding reference)
The costs of the appeal shall be in the discretion of the Supreme Court
Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the order of
the Supreme Court in the manner provided in section 260 in the case of a judgment of the High Court

Copy of original
assessment order
Copy of Statement of
facts
Question of Law Grounds of Appeal
Copy of order of CIT(A)
and ITAT
Copy of order of High
Court
Judgement copy of High
Court

Effect of Order of High Court and Supreme Court – Sec 260
The High Court or the Supreme Court upon hearing any such case, shall deliver its judgment thereon containing the grounds on
which such decision is founded, and a copy of the judgment shall be sent under the seal of the Court and the signature of the
Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment
Where the High Court delivers a judgment in an appeal filed before it under section 260A, effect shall be given to the order passed on
the appeal by the AO on the basis of a certified copy of the judgment
The costs of any reference to the High Court or the Supreme Court which shall shall be in the discretion of the Court

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