APPEAL UNDER INCOME TAX PROVISIONS

[Mr. M. GOVINDARAJAN]

Chapter XX of the Income Tax Act, 1961 (‘Act’ for short) provides for filing first appeal before the Appellate Authority vide sections 246 to 251.  The Finance Bill, 2023 (‘Bill’ for short) amended the provisions of sections 246, 249, 250 and 251.  The procedure for filing appeal is discussed in this article after incorporating the amendments that will be taken place by means of Bill.

Appellate Authorities

The Appellate Authorities are Joint Commissioner (Appeals) and Commissioner (Appeals).

Appeal before Joint Commissioner (Appeals)

Appeal can be filed before Joint Commissioner (Appeals) against the order of Assessing Officer, who is below the rank of Joint Commissioner,-

• an order being intimation under section 143(1) where the assessee objects-

• to the making of adjustments; or
• any order of assessment under Section 143(3) or Section 144;
• amount of income tax assessed; or
• amount of tax determined; or
• amount of loss computed; or
• status (individual or HUF and so on) under which the assessee is assessed.

• an order of assessment or re-assessment or re-computation under section 147;
• an order being an intimation under section 200A(1) – (processing of statements of tax deducted at source);
• an order under section 201 (failure to deduct tax or pay the tax deducted);
• an order being an intimation under section 206C(6A) – (failure to pay the tax collected – deemed to be assessee in default);
• an order under section 206CB (processing of statements collected at source);
• an order imposing penalty under Chapter XXI;
• an order under Section 154 (Rectification of mistakes) or section 155 (other amendments) amending any of the order mentioned above.

No appeal shall be filed before the Joint Commissioner (Appeals) if an order referred to in this sub-section is passed by or with the prior approval of, an income-tax authority above the rank of Deputy Commissioner.

Transfer of cases

Where any appeal filed against an order referred to above is pending before the Commissioner (Appeals), the Board or an income-tax authority so authorized by the Board in this regard, may transfer such appeal and any matter arising out of or connected with such appeal and which is so pending, to the Joint Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before, it was so transferred.

The Board or an income tax authority so authorized by the Board in this regard, may transfer any appeal which is pending before a Joint Commissioner (Appeals) and any matter arising out of or connected with such appeal and which is so pending, to the Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before, it was so transferred.

Before transferring such application the appellant shall be given a reasonable opportunity of being heard.

Scheme for disposal of appeal

For the purposes of disposal of appeal by the Joint Commissioner (Appeals), the Central Government may make a scheme, by notification in the Official Gazette, so as to dispose of appeals in an expedient manner with transparency and accountability, by eliminating the interface between the Joint Commissioner (Appeals) and the appellant, in the course of appellate proceedings to the extent technologically feasible (Faceless scheme).  The Central Government may direct that any of the provisions of this Act relating to jurisdiction and procedure for disposal of appeals by the Joint Commissioner (Appeals), shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.  The Board may specify that the provisions of that sub-section shall not apply to any case or any class of cases.

Appeal before Commissioner (Appeals)

Section 246A of the Act provides for filing appeal before Commissioner (Appeals).  According to this section any assessee or tax deductor or tax collector may file an appeal before Commissioner against-

• an order passed by a Joint Commissioner under section 115VP(3)(ii) or an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation sub-section (1B) of section 143(1) or (1B) or  section 200A (1) or section 206CB, where the assessee or the deductor or the collector objects to the making of adjustments, or any order of assessment  section 143(3) except an order passed in pursuance of directions of the Dispute Resolution Panel  or an order referred to in section 144BA (12) or section 144, to the income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;
• an order of assessment section 115WE(3) or section 115WF, where the assessee, being an employer objects to the value of fringe benefits assessed;
• an order of assessment or reassessment under section 115WG;
• an order of assessment, reassessment or re-computation under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to in section 144BA (12) or section 150;
• an order of assessment or reassessment under section 153A [except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to section 144BA (12);
•  an order made under sub-section (3) of section 92CD;
•  an order made under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections except an order referred to in section 144BA (12);
• an order made under section 163 treating the assessee as the agent of a non-resident;
• an order made under section 170(2) or 170(3);
•  an order made under section 171;
• an order made under section 201;
• an order made under section 206C(6A);
• an order made under section 237;
• an order made under section 239A;
• an order imposing a penalty under-

• section 221; or
• section 271, section 271A, section 271AAA, section 271AAB section 271F, section 271FB, section 272AA or section 272BB;

• an order of imposing or enhancing penalty under section 275 (1A);
• an order of assessment made by an Assessing Officer under section 158BC(c), in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997;
• an order imposing a penalty under sub-section (2) of section 158BFA;
• an order imposing a penalty under section 271B or section 271BB;
• an order made by a Deputy Commissioner imposing a penalty under section 271C , section 271CA, section 271D or section 271E;
•  an order made by a Deputy Commissioner or a Deputy Director imposing a penalty under section 272A;
• an order made by a Deputy Commissioner imposing a penalty under section 272AA;
• an order imposing a penalty under Chapter XXI;
• an order made by an Assessing Officer other than a Deputy Commissioner under the provisions of this Act in the case of such person or class of persons, as the Board may, having regard to the nature of the cases, the complexities involved and other relevant considerations, direct.

Appeal by person denying liability to deduct tax in certain cases

Section 248 of the Act provides that where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 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 Commissioner (Appeals) for a declaration that no tax was deductible on such income.   No appeal shall be filed where tax is paid to the credit of the Central Government on or after the 01.04.2022.

Fee for filing appeal

Section 249(1) of the Act prescribes the fee payable on filing of appeal.   This section provides that every appeal shall be in the prescribed form.  The appeal shall be made to the Joint  Commissioner (Appeals) on or after the 1st day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto be accompanied by a fee of,-

• If the assessed income is less than Rs.100000/- the fee is Rs.250/-;
• If the assessed income is more than Rs.1 lakh but below Rs.2 lakhs – the fee is Rs.500/-;
• If the assessed income is more than Rs.2 lakhs  - the fee is Rs.1,000/-.

If the subject matter of an appeal is not covered under above – Rs.200/-.

Limitation

The appeal shall be presented within thirty days from-

• the date of payment if the appeal is under Section 248;
• the date of receipt of notice of demand relating to assessment or penalty;
• the date on which the intimation of order sought to be appealed in any other cases.

Exclusion of period from limitation

If an application has been made under section 146 for reopening an assessment, the period from the date on which the application is made to the date on which the order passed on the application is served on the assessee shall be excluded.

If an application has been made under section 270AA(1), the period beginning from the date on which the application is made, to the date on which the order rejecting the application is served on the assessee, shall be excluded.

Delay condonation

The Joint Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

Non admission of appeal

 No appeal shall be admitted unless at the time of filing of the appeal,-

• where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
• where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him.

Appeal Procedure

The following is the procedure involved in appeal-

• The Joint Commissioner (Appeals) 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 Assessing Officer against whose order the appeal is preferred.
•  The appellant, either in person or by an authorized representative and the Assessing Officer, either in person or by a representative  shall have the right to be heard at the hearing of the appeal.
• The Joint Commissioner (Appeals) shall have the power to adjourn the hearing of the appeal from time to time.
• The Joint Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals).
• The Joint Commissioner (Appeals)  may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission of that ground from the form of appeal was not willful or unreasonable.
• The order of the  Joint Commissioner (Appeals)] 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 Joint Commissioner (Appeals), where it is possible, may hear and decide such appeal within a period of 1 year from the end of the financial year in which such appeal is filed before him under section 246A(1).
• On the disposal of the appeal, the Joint Commissioner (Appeals) shall communicate the order passed by him to the assessee and to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

Powers of Joint Commissioner (Appeals)

Section 251 of the Act provides that the Joint Commissioner (Appeals) shall have the following powers -

• in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment;
• in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annual the assessment;
•  in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;
•  in any other case, he may pass such orders in the appeal as he thinks fit.

The Joint Commissioner (Appeals)] 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.

In disposing of an appeal, the Joint Commissioner (Appeals) 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   Joint Commissioner (Appeals) by the appellant.