Appeal

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 One Law Dictionary defines ‘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.
• Right to appeal under the Income Tax Law is a
creation of statute and is not an inherent right.
Appeal can be filed only against orders listed in
the Income Tax Act.
• Tax Payer Information Series – 42 issued in Jan
2013 on Procedure for filing Appeals.
 Any assessee or any deductor aggrieved by the
specified orders may appeal to CIT(A) u/s. 246A.
 Prescribed form for filing appeal is Form No. 35
(Rule 45).
 The appeal should contain the grounds of appeal and
the statement of facts. Grounds should be concise and
specific.
 It should be signed and verified by the person who is
authorized to sign the return of income u/s. 140.
 Every appeal shall be accompanied by the prescribed
fee as mentioned in sec. 249.
 The appeal shall be presented within 30 days from the
date on which intimation of the order sought to be
appealed against is served. Can be condoned for
reasonable and sufficient cause.
 Under sec. 249(4), no appeal shall be admitted by
CIT(A) unless at the time of filing of the appeal, the
assessee has paid the tax due on the income returned.
 If the appeal filed is in order, I.T.N.S-51 is
forwarded to the Assessing Officer concerned
by the office of the CIT(A).

 The Assessing Officer has to verify the appeal


form and submit the I.T.N.S-51 duly filled in
along with comments on the grounds of the
appeal of the assessee.
• Important columns in I.T.N.S-51 to be invariably
reported by the Assessing Officer:
• Column 5(d)- whether the appeal is within time.
• Whether the Assessing Officer desires to be present at
the time of hearing
• Whether the assessee has paid the tax on the
income/wealth returned by the assessee.
• Whether an amount equal to an advance tax payable by
assessee is paid if no return has been filed.
 Additional Evidence: Under Rule 46A, the
additional evidence can be admitted by the CIT(A)
during the appellate proceedings subject to certain
conditions:
 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 produce by the Assessing Officer; or
 Additional Evidence
 Where the appellant was prevented by sufficient cause
from producing before the Assessing Officer any
evidence 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.
• Additional Ground:
If the additional ground raised by the assessee
is a legal ground arising from the facts
available on record and does not require
further investigation of facts or calling for
additional evidence, the CIT(A) can admit the
additional ground for adjudication- Hon’ble
Supreme Court in the case of NTPC Ltd. (229
ITR 383).
 Does the CIT(A) has power to grant stay of
disputed demand during the pendency of appeal ?

 The CIT(A) has inherent power to grant stay of


demand though such power is not expressly conferred
on him u/s. 246A –
 ITO vs. M.K. Mohammad Kunhi (71 ITR 815)(SC).
 Jagadish N Hinduja vs. CIT (59 DTR 333)(Kar.)
 CIT(A) has no power to set aside the appeal unlike ITAT
with effect from 01.06.2001.
 CIT(A) can call for Remand Report u/s. 250(4) from the
Assessing Officer on the issues in appeal.
 The powers of the CIT(A) are co-terminus with that of the
Assessing Officer and he can enhance the assessment or
penalty.
 CIT(A) has power to consider and decide any matter
arising out of the proceedings even if not raised by the
appellant (224 ITR 610)(SC).
 CIT(A)- To pass a well reasoned speaking order on
the grounds of appeal stating
 Points for determination
 Decision thereon
 Reason for the decision
 To communicate the order to the CIT
 Agreed addition – can appeal be entertained ?

Rameshchandra & Co. vs. CIT ( 168 ITR 375)(Bom.)


 Sec. 253 – (Form 36)
 Any assessee aggrieved by the order of the CIT(A) or
the CIT objects to any order passed by the CIT(A)
under sec. 263 and other specified orders can file
appeal before the ITAT.
 The appeal is to 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
Commissioner, as the case may be.
 Cross Objections: (Form 36A)
 Cross objections can be filed by the respondent within
30 days from the date of receipt of copy of memo of
appeal from the ITAT.
 Cross objections by the AO have to be filed after
taking approval of the CIT concerned.
 It is noticed that in some cases, the appellant lost and
the respondent benefited by cross objections.
 Tribunal is final fact finding Authority. Its finding on
facts is final and no appeal lies to the High Court
unless the order is perverse.
 The powers of ITAT include power to annul an
assessment order or set it aside. But no power of
Enhancement.
 Tribunal has power to stay the disputed demand either
fully or partly. If the stay is granted, the Tribunal has
to dispose of the appeal within 180 (365) days from
the date of stay order.
 Special Bench of ITAT: Section 255(3) authorizes
President to constitute a Special Bench consisting of
three or more members in recommendation of
Division Bench.
 Third Member of ITAT: In case of difference of
opinion between two members, Third Member
adjudicates on the points of difference. He has to
agree with one of the views and he cannot take third
view.
 Is ITAT a court? (176 ITR 1)(SC)(242 ITR 329)(Mad)
• Sec. 260A –
• An appeal shall lie to the High Court from every order
passed in appeal by the Appellate 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.
• The appeal is to be filed within one hundred and
twenty days from the date on which the order
appealed against is received by the assessee or the
Chief Commissioner or Commissioner.
 Substantial question of law:
 ‘Substantial’ means having substance,
essential, real, of sound worth, important or
considerable.
 It is to be understood as something in
contradistinction with technical, of no
substance or consequence or merely academic.
 Sir Chunilal Mehta vs. Century Spinning &
Manufacturing Co. (AIR 1962 SC 1314). (273 ITR
50)(SC). Tests to decide whether issue involved is
substantial question of law:
 It is of general public importance or
 It directly or substantially affects the rights of the
parties or
 It is an open question not settled yet by SC (or) the
issue is not free from difficulty (or) It calls for
discussion for alternative views.
 Perversity of facts also constitutes 'Substantial Question of
Law‘ Hon'ble Supreme Court in Sudarshan Silk & Sarees v.
CIT 300 ITR 205 has laid down the attributes of perversity
  (a)  The finding is without any evidence.
  (b)  The finding is contrary to the evidence.
  (c)  There is no direct nexus between the conclusion of fact
and primary fact upon which that conclusion is based?
  (d)  When an authority draws a conclusion which cannot be
drawn by any reasonable person or authority on the material
and facts placed before it.
 Instructions regarding Standard Operating
Procedure on filing of appeals to High Court
under section 260A and related matters-
Instruction No. 07/2011 dated 24.05.2011.
 On satisfaction that substantial question(s) of
law arise out of the order of ITAT High Court
may admit the appeal and formulate questions.
 Sec. 261 –
 An appeal shall lie to the Supreme Court from any
judgment of the High Court delivered in any case
which the High Court certifies to be a fit one for
appeal to the Supreme Court.
 SLP (Special Leave Petition)– Article 132 of the
Constitution of India provides for an appeal to the
Supreme Court of India from a judgment, decree or
final order of a High Court, whether in civil, criminal
or any other proceedings.
 For filing SLP, period of limitation of 90 days
begins from the date of judgment/order of the
High Court and not from the date of receipt of
certified copy by the CIT.
 In case an application for grant of certificate of
fitness u/s 261 of the Income-tax Act, 1961 is
made, the limitation to file Civil Appeal/SLP is
60 days from disposal of the application.
 Instructions regarding Standard Operating Procedure on
filing of Appeals/Special Leave Petitions (SLPs) by the
Department in the Supreme Court and related matters -
Instruction No. 4/2011 [F. NO. 279/Misc./M-20/2011-
ITJ], dated 9-3-2011.
 Revised Proforma B To Instruction NO. 4/2011, Dated
9-3-2011-Letter [F No 279/Misc/M-20/2011-1TJ], dated
1-7-2014.
 Instruction No. 8/2013 [F No. 279/Misc./M-33/2013-
ITJ], dated 16-7-2013 - Procedure in case of
appeals/SLPs filed by the assessees.
• Date of Service of notice under sec. 143(2) of the
I.T. Act is not mentioned.
• Reasons for re-opening of assessment under sec.
147 are not clearly spelt out.
• The objections raised by the assessee against the
reasons are not dealt with in the re-assessment
orders.
• The important evidences are neither scanned and
pasted in the assessment order nor enclosed to the
assessment order.
• CIT can invoke jurisdiction u/s. 263, if the order passed by the
Assessing Officer is erroneous and prejudicial to the interests of the
revenue. (243 ITR 83)(SC)
• Can issues, with are subject matter of revision u/s. 263 be agitated in
appeal before the CIT(A) ?
• If there are specific directions by the CIT and the issues have
attained finality by virtue of order of the CIT under sec. 263, such
issues can not be agitated in appeal before the CIT(A)- Herdillia
Chemicals vs. CIT (221 ITR 194)(Bom.)
• If the entire assessment is set aside to the Assessing Officer for
denovo consideration, the consequential order passed by the
Assessing Officer can be subject matter of appeal before the CIT(A).
 Power can be exercised by CIT either of his own
motion or an application by the assessee for revision.

 Assessee has to move an application within one year


from the date of communication of order.

 Assessee cannot avail of an appeal before the CIT(A)


as well as revision under sec. 264 on the same issue.
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