Appeal Procedure Under Income Tax Act

APPEAL PROCEDURE
UNDER INCOME TAX ACT
R.Ravichandran
Why the process of appeal necessary?
 Powers to make tax payers comply with their tax obligations and to
investigate those who do not
 Tax authorities have discretion to make ‘best judgement assessment’ and
to pass orders as they ‘may think fit’ in the circumstances of the case.
 Exercise of such powers and discretion by tax authorities is likely to
generate tax payer grievances on ground either that the tax authority
 misunderstood the law or
 incorrectly inferred facts or
 misapplied the law to the facts of the case
 had not afforded a reasonable opportunity of hearing to the tax payer may also
be voiced.
Why the process of appeal necessary?
 In case of obvious or prime facie mistakes, the tax payer can

approach the concerned authority for rectification of the
order. Such mistakes may be as to facts as well as of law.
 The tax payer can also approach the Commissioner of
Income-tax for revision of the orders of the authority
administratively subordinate to him where he does not file
appeal against this order.
 In order that the tax payers have confidence in the fair play,
credibility and impartiality of the tax administration, Direct
Tax laws have provided for independent appellate fora.
Right of Appeal
 Statutory Right
 Appeal against the order of Assessing officer lies with
the CIT(Appeal) under S.246A to S.251 of the IT Act
 Only by the assessee
 Appeal against the order of the CIT(Appeal) lies with
the appellate tribunal
 By assessee or IT Department
 Appeal against the order of the Income tax Appellate
Tribunal (ITAT) lies with the High Courts and thereafter
the Supreme Court
Ravichandran/NADT/Appeal Procedures
Alternate modes of redressal of grievances
 In case of obvious or prime facie mistakes, the tax

payer can approach the concerned authority for
rectification of the order.
 Such mistakes may be as to facts as well as of law.
 The tax payer can also approach the Commissioner
of Income-tax for revision of the orders of the
authority administratively subordinate to him
where he does not file appeal against this order.
Hierarchy of appeals
 Appellate authorities
 First level– CIT (Appeals)
 Second level – ITAT
 Third level – High Court
 Fourth Level – Supreme Court
 Authority for advance ruling
 DTAA grievances – Joint Secretary (FTD)
Appeal under Income Tax Act,1961

 Sections Covered
 246A: CIT (Appeals)

 254: ITAT ---Final Fact Finding Authority
 260A: High Court ---On substantial Question of Law
 261:SupremeCourt

 Orders not appealable
 Orders passed U/s 234A, B, and C for levying Interest
 Orders passed U/s 264 rejecting Revision Petition
 Orders of AAR (Authority for Advance Ruling)
 Orders of Settlement Commission
Procedure of Appeal
Particulars 246A 254 260A 261

Supreme Supreme
Appellate Authority CIT (A) ITAT
Court Court
120 days
60 days 90 days from
30 days from the
from the the date of
from the communicat
Time limit for Appeal communicat Order of
receipt of ion of the
ion of the Supreme
the order order of
Order Court
ITAT
1 Year
4 Year from As per
Time limit for from the As per Court
the end of Court
disposal of Appeal end of the procedure
the FY procedure
FY
As per
As per Court
Application Form 35 36 Court
procedure
procedure
As per As per
Stamps to be
0.50P 0.50P Court Court
affixed
procedure procedure
Fees to be Paid
As per As per
Returned Income
Rs 250 Rs 500 Court Court
upto Rs1 Lac
procedure procedure
As per As per
More than 1 lac
upto Rs 2 Lac
procedure procedure
1 % of
As per As per
income
More than 2 lac Rs 1000 Court Court
Max Rs
procedure procedure
(10,000)
As per As per
Appeal for other
than Income
procedure procedure
Possible
Stay of Demand Not Possible against order Possible Possible
of CIT(A)
Final order
No power to should be
stay the passed within
Recovery of Tax - -
recovery of 180 days from
Tax the stay order
so passed
If Return is
Filled: Tax
due on
Returned
Rs 2,00,000/- Rs 4,00,000/- Rs 10,00,000/-
Minimum Tax to be paid Income
for filling appeal + Question of + Question of + Question of
If Return
Law Law Law
not Filled:
At least the
Advance tax
payable
SECTION 246A- APPEAL TO COMMISSIONER
(APPEALS)
 Appealable orders
 Orders against the Assessee
 Where the assessee denies his liability to be
 assessed under IT Act
 assessed under Assessment Order U/s 143 (3), 144
 Where the assessee objects to the
 income assessed
 amount of tax determined
 amount of loss computed
 status under which he is assessed
(APPEALS)…
 Order of Assessment / Re-assessment U/s 147,153A

 Orders made U/s 154,155
 enhancing the assessment
 reducing a refund
 refusing to allow a claim
 Orders made U/s 163 ---treating Assessee as an
agent of NR
 Orders made U/s 170 (2) / (3)
 on succession of Business or Profession
(APPEALS)…
 Orders made U/s 171-----refusing Partition of HUF

 Orders made U/s 201----levying interest for delay in
remitting TDS / TCS
 Orders made U/s 206C (6A)---levying penalty for
failure to collect or delay in remitting TDS /TCS
 Order made U/s 237----Refund
 Order imposing penalty U/s 221, 271, 271A, 271AAA,
271F, 271FB, 271B, 271BB, 271C, 271CA, 271D,
271E, 272A, 272AA, 272BB, 158BFA, Chapter XXI
SECTION 246A- APPEAL TO
COMMISSIONER (APPEALS)….
 Order imposing / enhancing penalty U/s 275 (1A)

 Order made U/s 158BC ( c) for search initiated U/s
132 or requisition of books U/s 132A
 Orders made U/s 115VP
 Orders made U/s 115WE/ WF for value of Fringe
Benefits
 Orders made U/s 115 WG for re-assessment of
FBT
Powers of CIT (A)
 To Condone the Delay as regards limitation of time

limit for filling Appeal beyond 30 days
 if he is satisfied that the appellant or the Assessee has
sufficient reason to file the appeal after the due date.
 To inquire into the matters as he thinks fit, before
disposing the Appeal.
 To direct the Assessing officer to make such
inquiry and report the same, as he thinks fit.
Powers of CIT (A)….
 Can confirm, reduce, enhance or annul the
assessment -----if the Appeal is against the Order of
Assessment.
 Can confirm, cancel, and vary the Order -----if
the Order is against the Order of Penalty. (can not
set aside)
 Pass such Order as he thinks fit.
ITAT
SECTION 253: APPEAL TO INCOME TAX
APPELLATE TRIBUNAL (ITAT)
 Appealable orders
 Orders Passed by COMMISSIONER (APPEALS)
 Orders passed U/s 115 VZC refusing applicability of
tonnage tax Scheme.
 Orders passed U/s 154
 Orders passed u/s 250
 Orders passed u/s 271, 271A, 272A
SECTION 253: APPEAL TO INCOME TAX APPELLATE
TRIBUNAL
 Orders passed by Commissioner

 Orders passed U/s 12 AA refusing registration of a Trust as
religious or charitable or Cancellation of registration of a Trust.
 Orders passed U/s 80G (5) (vi) refusing to register a Trust U/s
80G
 Orders passed U/s 263, 271, 272 A
 Order passed U/s 154 amending order U/s 263
 Order passed U/s 154 amending order passed U/s
272A originally passed by Chief Commissioner, DG or
Director
Powers of ITAT
 To Condon the Delay as regards limitation of time
limit for filling Appeal beyond 120 days
 if he is satisfied that the appellant or the Assessee has
sufficient reason to file the appeal after the due date
 To accept additional evidence Under Rule 46A.
 To make necessary inquiry, wherever necessary
 To rectify the mistake apparent from record
Powers of ITAT….
 Rectify ( can not REVIEW ) its own order at any time

---within 4 years from the date of the Order---with a view
to rectify any mistake apparent from record. (if any order
is prejudicial to the interest of the Assessee then shall give
opportunity of being heard).
 ITAT is the final fact finding authority i.e, on a question of
fact, the Order of ITAT are final and no appeal against the
said order can be filed at Supreme Court
 On a question of Law the Order of ITAT is final until
appeal is not filed at Supreme Court against the said Order
APPEAL AGAINST ITAT
 On a question of Fact
 A WRIT PETITION can be filed to the Supreme
Court, challenging the fact finding process adopted by
ITAT.
 If the Supreme Court is satisfied that the Fact Finding
process is not proper, then the Order of ITAT shall be
quashed and a direction shall be issued by the Supreme
Court to the ITAT to do the Fact Finding in a proper
manner and /or as per the direction
Appeal against ITAT….
 If the WRIT PETITION filed by assessee is
dismissed by SUPREME COURT
 The assessee can file a SPECIAL LEAVE PETITION
to the SUPREME COURT challenging the Fact
Finding process of ITAT.
 If the Supreme Court is satisfied that the Fact Finding
process is not proper, then the Order of ITAT shall be
quashed and a direction shall be issued by the Supreme
Court to the ITAT to do the Fact Finding in a proper
manner and /or as per the direction
Procedure
Procedure for filing of appeals before CIT(A)
&ITAT
 The Income-tax Rules, 1962 provides that an appeal

to the Commissioner (Appeals) shall be made in Form
No. 35
 Form of verification shall be signed and verified by
the person who is authorized to sign the return of
income under section 140 of the Income-tax Act, 1961
(the Act) (Rule 45) .
 Income-tax (Appellate Tribunal ) Rules, 1963
specifies as to the contents of the memorandum of
appeal.
Procedure for filing of appeals before CIT(A) &ITAT
 Rule 8 mandates that every memorandum of appeal

shall be written in English and shall set forth,
concisely and under distinct heads the grounds of
appeal without any argument or narrative and such
grounds shall be numbered consecutively.
 Rule 47 of the Rules prescribes Form No. 36 for an
appeal to the Income-tax Appellate Tribunal and
Form No. 36A for filing memorandum of cross-
objections
&ITAT…..
 Both the memorandum of appeal and memorandum

of cross-objections are to be verified by the person
specified in Rule 45
 Form No. 35 requires to set out a statement of facts

along with the ground of appeal
 No statement of fact is required to be filed with the

memorandum of appeal to be filed with the Tribunal
&ITAT…..
 Annexure to the memorandum of appeal to be filed

before the Tribunal should include Form No. 35 in
which statement of facts are narrated.
 Statement of facts should be in such a manner so as to
clearly bring out the issues in the assessment/penalty
proceedings leading to the order under challenge.
 Rule 22 of the Tribunal Rules provides that
memorandum of cross-objection shall be numbered as
an appeal and all the rules so far as may be, shall apply
to such appeal.
Draft of grounds of appeal
 "On the facts and in the circumstances of the case and in law
the Assessing Officer (or ‘ the Commissioner of Income–tax
(Appeals)’ where an appeal is filed before the Tribunal against
the order of Commissioner (Appeals)) erred in …….without
appreciating …………".
 A prayer should be made for deletion or addition/disallowance
after taking relevant ground as under :
 "The Appellant prays that the addition/ disallowance of Rs.
_________ made in respect of/out of ……………. be deleted."

Draft of grounds of appeal…
 And at the end the Appellant should crave leave for
variation or withdrawal of grounds of appeal as
under:
 "The Appellant craves leave to add, amend , alter
vary and / or withdraw any or all the above grounds
of Appeal."
 If the statement of facts /grounds of appeal are
separately annexed then the same should be signed
by the Appellant.
Detailed process…
 Appeal to the Commissioner (Appeals) is to be filed in
Form No. 35 and to the Tribunal in Form No. 36.
 Cross-objections are to be filed in Form No. 36A.
 As per notes to the Form No. 35 the memorandum of
appeal, statement of facts and the grounds of appeal
must be in duplicate and should be accompanied by a
copy of the order appealed against and the notice of
demand in original, if any.
 The memorandum of appeal should be accompanied by
the prescribed fee.
Detailed Process…
 Where the appeal is filed against an order imposing penalty
under section 271(1)(c) of the Act , a copy of assessment
order must also be attached.
 Rule 9 of the Tribunal Rules provides that every
memorandum of appeal to be filed before the Tribunal shall
be in triplicate and shall be accompanied by two copies (at
least one of which is a certified copy) of the order appealed
against, two copies of the order of the assessing officer, two
copies of the grounds of appeal, before the first Appellate
authority and two copies of statement of facts, if any, filed
before the said Appellate Authority.
Detailed process…
 In a case of appeal against the order of penalty, the
memorandum of appeal shall also be accompanied
by two copies of the assessment order.
 Where an assessment order is passed under section
143(3) rws 144B or under section 143(3) rws 144A
or under section 143(3) rws 147, the memorandum
of appeal shall also be accompanied by the two
copies of the draft assessment order under section
144B or directions under section 144A or the
original assessment order as the case may be.
Detailed Process…
 The memorandum of appeal before the Tribunal shall also
be accompanied by the prescribed fees.
 Four identical sets consisting of memorandum of appeal in
Form No. 36, order of Commissioner (Appeals), Form No.
35 with annexures and the assessment/penalty order from
which the appeal arises are generally prepared
 Explanation to Rule 9 clarifies that "certified copy " will
include the copy which was originally supplied to the
assessee as well as photostat copy thereof duly
authenticated by the assessee or his authorised
representative as a true copy.
Beware
 The Supreme Court in CIT vs. Calcutta Discount
Co. Ltd., (1973) 91 ITR 8 (SC) observed that in
considering an appeal the Appellate Authority
should deal with the substance of the matter at
issue and not be unduly influenced by mere
procedural technicalities, for example, whether the
memo of appeal was or was not in proper form etc.
Appeal Fees
 Fee must be paid for admitting the appeal
 The Hyderabad Bench of the Tribunal in Andhra
Pradesh State Electricity Board vs. ITO (1994) 49
ITD 552 (Hyd) have held that even where total
income is computed at a loss and such loss exceeds
Rs.1 lakh, the fees payable would be as per the slab
prescribed for the income more than Rs. 1 lakh and
therefore fees are to be determined on the basis as
if loss determined is income.
Appeal fees…
 The Mumbai Bench of the Tribunal in Chiranjilal S. Goenka
vs. WTO (2000) 66 TTJ (Mum) 728 have held that the stay
application for more than one year or for more than one
order for the same assessment year can be made on payment
of fees of Rs. 500/- only.
 The Mumbai Bench of Tribunal in Amruta Enterprises vs.
Dy. CIT (2003) 84 ITD 172 (Mum) have held that the
quantum of penalty under section 271(1)(c) cannot be linked
with the assessed income and therefore the fees payable is as
per the provisions of section 253 (6)(d). Also, in Narendra
Valji Shah vs. ACIT (ITA/3545/M/99 dated 24-5-2000).
Appeal Fees…
 In Mrs. Nimu R. Thodani vs. Jt. CIT (ITA/5437/M/97
dated 1-2-2000) the Tribunal held that in cases filed
with respect to interest under sections 234A, 234B,
234C or any other interest appeal fee would be Rs.
500/- as per section 253(6)(d) because interest is in
no way related to the assessed income but is linked
with tax payable.
 The ratio of the above decisions will also apply to
the appeals to be filed before Commissioner
(Appeals).
Appeal fees…
 The Tribunal (Mumbai Bench C) held that the levy
of penalty u/s. 271B is not in any way related to the
total income and hence fees would be Rs. 500/- as
contemplated in section 253(6)(d). A similar view
was taken in Chromatte India Ltd. vs. ITO
(ITA/3486-87/M/02 dated 12-2-2002)
 where the Tribunal held that in an appeal against
an order u/s 263 the fees are to be paid as per
section 253(6)(d).
Signing of appeal
 the form of appeal is to be signed and verified by
the person who is authorised to sign the return of
income under section 140 of the Act.
 As such the appeal to be filed by an individual must
be signed and verified
 (i) by the individual himself,
 (ii) where he is absent from India, by the individual
himself or by some person duly authorised by him in
this behalf (a valid Power of Attorney should be
attached with the appeal)
Signing of Appeal…
 (iii) where he is mentally incapacitated from attending
to his affairs, by his guardian or any other person
competent to act on his behalf.,
 where, for any other reason, it is not possible for the
individual to sign the appeal, by any person duly
authorised by him in this behalf (a valid Power of
Attorney should be attached with the appeal).
 Therefore, unless any of such exceptional
circumstances be present, an appeal in order to be
valid, has to be signed by the individual himself.
Signing of appeal…..
 In case of the Hindu undivided family, the appeal is to be
signed by the Karta and where the Karta is absent from India
or he is mentally incapacitiated from attending to his affairs,
the appeal is to be signed and verified by any other adult
member of such family. If the Hindu undivided family has no
major member as Karta, appeal may be validly signed by any
male adult member of the family who is in receipt of the
income.
 In the case of Shridhar Uday Narayan vs. CIT (1962) 45
ITR 577(All)]. "Adult "is a person who has attained the age
of discretion which in India is 16 years. A person attains
majority at the age of 18 years.
Signing of appeal…
 In a case of a company an appeal is to be signed and verified by the
Managing Director thereof or where for any unavoidable reason, such
Managing Director is not able to sign, by any Directors thereof or
where there is no Managing Director by any Director thereof.
 The Calcutta High Court in National Insurance Co. Ltd vs. CIT (1995)
213 ITR 862 (Cal) held that the return signed by a Director and not by
the Managing Director was invalid in absence of any explanation.
 A company which is being wound up or for whose assets any person
has been appointed as a receiver, the appeal is to be signed and verified
by the liquidator referred to in section 178(1).
Signing of Appeal….
 In case of a firm the appeal is to be signed by the Managing Partner
thereof or where for any unavoidable reason, such Managing Partner is
not able to sign, by any partner thereof not being a minor or where
there is no Managing Partner as such, by any partner thereof not being
a minor.
 In other cases, it is the principal officer who has to sign the appeal. The
Bombay Bench of the Tribunal in Mrs. Leezo Salidan vs. CIT 16 TTJ
243 (Bom) , Pyrkashim Stores vs. CIT 9 ITD 93(Bom) and Hariledge
vs. ITO 29 Taxman 122 (Bom) as also the Gujarat High Court in
Rajendrakumar Maneklal Sheth( HUF) vs. CIT (1995) 213 ITR 715
(Guj) have held that the appeal signed by an advocate / Chartered
Accountant is valid.
 The Allahabad High Court in Court of Wards,
Naraindas Narsinghdas vs. CIT in (1950)18 ITR 204
(All) has held the appeal to be invalid whereas a
Calcutta High Court in Sheonath Singh vs. CIT (1958)
33 ITR 591 (Cal) has held it to be an irregularity which
can be rectified.
 The decisions in the case of Gouri vs. CIT (1959) 37
ITR 220 (Pat), Gianchand Virbhan vs. CIT (1960) 39
ITR 414 (Pat), and V.K. Padmalochan Sahu (1974) 95
ITR 113 (Ori) whose views are those in line with that of
Calcutta High Court.
 The Madras High Court in Arunachalam Chettiar vs. CIT (1962) 45

ITR 407 (Mad) and Andhra Pradesh High Court in Chelamala Setti
Adeyya vs. CGT (1964) 54 ITR 339 (AP) held that failure to attach
notice of demand to memorandum of appeal is mere irregularity
which can be subsequently rectified.
 The above view was held by Gyan Manjari Kuari vs. CIT (1944) 12
ITR 59 (Pat); Ag IT v. Keshab Chandra Madanlal (1950) 18 ITR
569, 573(SC)].
 The Bombay High Court in Malani Trading Co. vs. CIT (2001) 252
ITR 670 (Bom) have held that merely because there is defect in the
memo of appeal, dismissal of appeal without giving opportunity to
cure said defect will be improper.
Presentation of Appeal
 Where revenue filed appeal without including therein
grounds of appeal and statement of facts as required and
Tribunal did not issue defect memo, the Gauhati Bench
of the Tribunal in Asst. CIT vs. Rayang Timber Products
(P) Ltd. (2002) 82 ITD 73 (Gau)(TM) held that appeal
was to be deemed to have been accepted and it had to be
further presumed that Tribunal had already exercised its
discretion under sub-rule (3) of rule 9 of ITAT rules in
favour of appellant
Presentation of appeal
 A memorandum of appeal to the Commissioner (Appeals) must be
presented to the office of the Commissioner in person or by an agent
or sent by Registered Post addressed to the Office of the
Commissioner (Appeals).
 A memorandum of appeal to the Tribunal must be presented by the
Appellant in person or by an agent to the Registrar at the Head
Quarters of the Tribunal at Bombay or to an Officer authorised in this
behalf by the Registrar or sent by Registered Post addressed to the
Registrar or to such officer.
 Vide order No. 1 of 1973 dated 1.10.1973, the Registrar of the
Tribunal has authorised Asst. Registrars of the Appellate Tribunal
situated at different places to be the authorised Officer to receive the
appeals or applications as per Rule 7 of the Tribunal Rules.
Presentation of appeal…
 In the case the applicant apprehends that it is last day of the
limitation for presentation of his appeal and application, he
may present it to the Assistant Registrar at his residence or any
other place wherever he may be or to Member of the Tribunal
at his residence or wherever he may be.
 If an appeal is send by post it shall be deemed to have been
presented on that day on which it is received by the office of
the Commissioner (Appeals) or the Tribunal (pl.see Rule 6(2)
of the Tribunal Rules and F.N.Roy vs. Collector of Customs
AIR 1957 (SC) 648 – postal authorities are not considered as a
agents of the addressee but are the agents of the sender).
Decisions on Time limit
 An appeal to the Commissioner (Appeals) should be filed within
a period of 30 days of the service of the order against which the
appeal is preferred.
 The Calcutta High Court in Charki Mica Mining Co. Ltd. vs. CIT
(1978) 111 ITR 193 (Cal) has held that the period of limitation
for filing an appeal to the Commissioner (Appeals) is to be
computed from the date of the receipt of demand by the assessee
and not from the date of receipt of assessment order by the
assessee.
 An appeal to the Tribunal should be filed within a period of 60
days from the date on which the order sought to be appealed
against is communicated.
Decisions on Time limit…
 Where the assessment order was served on the person who
was not an authorised agent of the assessee, and later on, the
assessee applied for and obtained a copy of the assessment
order for purpose of filing an appeal, it was held that the time
limit for filing the appeal should be reckoned from the date on
which the assessee obtained the copy of the assessment order
and notice of demand and not from the earlier date of service
of the assessment order – CIT vs. Prem Kumar Rastogi (1980)
124 ITR 381 (All). Also see, Jayalakshmi Cloth Stores vs ITO
(1981) 132 ITR 764 (AP), Rasipuram vs. CIT (1956) 30 ITR
687 (Mad) and Malayalam Plantations Ltd vs. CIT (1959) 36
ITR 205 (Ker).
Decisions on Time limit…
 Where postal acknowledgment in file of Assessing
Officer did not bear signature of any person and so
also it did not bear any date of service, it was
reasonable to believe that the assessee was not
served with the order of assessment and the demand
notice and in such case appeal filed by the assessee
on 10-8-1980 against the order of assessment for
the assessment year 1981-82 could not be said to be
barred by limitation. (Badri Singh Thakur vs. ITO
(1995) 78 Taxman 206(Jab).
Delay in filing the appeal
 Section 249 (3) gives a power to the Commissioner (Appeals) to
condone the delay in filing the appeal to the Commissioner
(Appeals).
 Section 253(5) empowers the Tribunal to admit an appeal or
permit the filing of memorandum of cross-objection after the
expiry of the relevant period if it is satisfied that there was
sufficient cause for not presenting it within that period.
 When an application for condonation of delay in filing an appeal
is preferred, it is statutory obligation of the appellate authority to
consider whether sufficient cause for not presenting the appeal in
time was shown by the appellant – Shrimant Govindrao
Narayanrao Ghorpade vs. CIT (1963) 48 ITR 54(Bom).
Delay in filing the appeal…
 An assessee has a statutory right to present an appeal within
prescribed period without any order being required from the
Appellate Authority for admission of the appeal.
 After the expiry of the prescribed period, an appeal can be
entertained only if it is admitted by the appellate authority
after condoning the delay [CIT vs. Mysore Iron & Steel Ltd.
(1949) 17 ITR 478, 480 (Bom)].
 The power to condone the delay is discretionary and the
discretion must be judicially exercised. (J & K Small Scale
Industries Development Corpn Ltd., v. Dy. CIT (1949) 71
ITD 367 (Asr).
 The Supreme Court in Collector of Land Acquisition vs. Mrs. Katiji &
Others (1987)167 ITR 471(SC), held that Court should have
pragmatic and liberal approach. [Also see Raja Jagadambika Pratap
Narain Singh vs. CBDT 100 ITR 698 (SC)]
 The Supreme Court in N. Balkrishnan vs. M. Krishnamurthy (1998) 7
SCC 123 had condoned a delay of 833 days. It was observed that
condonation of delay is a matter of discretion of the Court and the
only criterion is the acceptability of explanation irrespective of the
length of delay.
 A subsequent decision of the Supreme Court/High Court was
considered as sufficient cause for condoning delay in filing the appeal.
(State of Andhra Pradesh vs. Venkataramana Chudava & Muramura
Merchant (1986) 159 ITR 59 (AP).
 The Courts have also held that the mistake of an Advocate or
Chartered Accountant is a reasonable cause for delay in filing an
appeal. (pl. see Rafiq C. Munshilal AIR 1981 SC 1400 (1401),
Mahavir Prasad Jain vs. CIT (1988) 172 ITR 331 (MP), Concord of
India Insurance Co. Ltd. vs. Smt. Nirmaladevi & Sons (1979) 118 ITR
507 (SC). Punam Singh vs. ITO (2002) 257 ITR 38 (Chennai) ( Trib).
Shakti Clearing Agency P. Ltd. vs. ITO (127 Taxman 49 (Mag) (Raj.).
 Revenues petition for condonation of delay was dismissed in Asst.
CIT vs. Taggas Industries Development Ltd. (2002) 80 ITD 21 (Cal);
Asst. CIT vs. Punna Textiles Industries P. Ltd., (2002) 122 Taxman
264 (Cal) (Mag), Asst. CIT vs. Mahadeo Agarwalla (2002) 125
Taxman 229 (Cal) (Mad).
Payment of admitted tax…
 Section 249 (4) provides that no appeal shall be entertained under
chapter XX unless at the time of filing the appeal the assessee has paid
 (a) the taxes due on the returned income or
 (b) where no return is filed, an amount equal to the amount of
advance tax which was payable by him.
 The Commissioner (Appeals) is empowered, for any good and
sufficient reason, to exempt the assessee from operation of this
provision in case of (b).
 Prior to amendment from 1-4-1989 the Commissioner (Appeals) had
power to exercise his power to exempt in case (a) also.
 Order refusing to exercise such discretion is an appealable order – CIT
vs. Smt. Nanhibai Jaiswal (1988) 171 ITR 646 (M.P.).
 Filing of appeal before Tribunal also falls under
chapter XX , hence provisions of section 249(4) are
applicable to an appeal filed before the Tribunal. (V.
Baskaran vs. Asst. CIT (1998) 62 TTJ (Chennai)
698).
 The Indore Bench of the Tribunal in Pawan Kumar
Lodha vs. ACIT (2003) 78 TTJ (Ind) 983 held that
prepayment of tax does not apply to appeal filed
before the Tribunal.
 It does not apply to appeals filed to the Tribunal from
assessment framed under Chapter XIV B. [V.S.N.
Sudhakaran vs. Asst. CIT (2002) 83 ITD 159
(Chennai); Anil Sanghi vs. ACIT (85 ITD 73 (Del)
(SB)].
 The Madras High Court in CIT vs. Smt. G.A. Somanth
Kamani (2002) 125 Taxman 424 (Mad) held that
section 249 (4) cannot be read down so as to restrict it
to appeal against assessment only it will be applicable
in case of appeal against penalty also.
Maintainability of appeals…
 Appeal is not maintainable
 where tax is not deducted at source from payment made to non-
resident and is not paid to the Govt. prior to filing of appeal (ITO vs.
Tata Iron & Steel Co. Ltd. (2001) 71 TTJ (Cal) 323.
 Crucial date for deciding the applicability of amended provisions to
section 249(4) was the date of issue of notice under section 143(2)
and not date of filing return. (Satyendra Pal Chaudhary vs. Asst. CIT
(2002) 74 TTJ (Mum) 741) .
 Where despite adjustment of seized amount full amount of tax due
from assessee was not paid before filing appeal, assessee’s appeal
was not maintainable (Bharatkumar Sekhsaria vs. Dy. CIT (2002) 82
ITD 512 (Mum) ( CIT vs. Smt. G.A. Samonthakamani (2002) 125
Taxman 424 (Mad).)
 In Shri Parasram G. Purohit vs. ACIT, ITA No.
2689/Bom/93 Bench ‘B’ Assessment year 1989-90,
the Hon’ble Bombay Tribunal, held that once the
tax required to be paid u/s. 249(4) has been paid
before the final date of hearing, it is incumbent to
consider the appeal having been filed on the date of
payment. (Decision of Supreme Court in CIT vs.
Filmistan 42 ITR 163 referred to).
 Where appellant was ‘notified entity under the Special Court (Trial of offences
relating to Transactions in Securities) Act, 1992 and all properties had been
attached, in view of this fact that the Appellant had requested the Assessing
Officer to approach special Court to release amount of self assessment tax
payable and such request had been made by Assessing Officer, assessee could
be said to have made implied compliance with the provisions of section 249(4).
(Divine Holdings (P) Ltd vs. Dy. CIT (2001) 119 Taxman 27 (Mum) (Mag)
(Also see, Ashwin S. Mehta (HUF) vs. Asst CIT (2002) 75 TTJ (Mum) 960).
 Where assessee filed appeal on 2.4.1976 and 4.11.1997 was last date on which
AAC heard appeal by which time assessee had paid entire tax due, the Delhi
High Court in CIT vs. Rama Body Builders (2001) 250 ITR 825 (Del), AAC
was not justified in refusing to entertain appeal on the ground that tax due had
not been paid by 2.4.1976, the date on which the appeal was filed, [also see S.
Venkatesh vs. Asst. CIT (2000) 112 Taxman 31 (Chennai) (Mag)].
Death of Assessee
 Where an assessee to an appeal dies or is adjudicated insolvent
or in the case of the company wound up, the appeal will not
abate and will continue against the executor, administrator or
other legal representatives of the assessee or by or against the
assignee, receiver or liquidator as the case may be.
 In case of a death of assessee, the legal heirs of the assessee must
file copy of death certificate and an affidavit of they being the
legal heirs.
 A fresh memorandum of appeal signed by the legal heirs must be
filed before the Commissioner (Appeals) or the Tribunal as the
case may be where the assessee is the appellant so that the legal
heirs are brought on record.
High Court
High Courts
 The High Court stands at the head of a State's

judicial administration.
 There are 18 High Courts in the country, three
having jurisdiction over more than one State.
 Among the Union Territories Delhi alone has a High
Court of its own. Other six Union Territories come
under the jurisdiction of different State High Courts.
.
Powers of HC
 Each High Court has power to issue to any person within its
jurisdiction directions, orders, or writs including writs
which are in the nature of habeas corpus, mandamus,
prohibition, quo warranto and certiorari for enforcement of
Fundamental Rights and for any other purpose.
 This power may also be exercised by any High Court
exercising jurisdiction in relation to territories within which
the cause of action, wholly or in part, arises for exercise of
such power, notwithstanding that the seat of such
Government or authority or residence of such person is not
within those territories.
Powers of HC….
 Each High Court has powers of superintendence
over all Courts within its jurisdiction.
 It can call for returns from such Courts, make and
issue general rules and prescribe forms to regulate
their practice and proceedings and determine the
manner and form in which book entries and
accounts shall be kept.
Supreme Court
Supreme Court
 Original, appellate and advisory jurisdiction.
 exclusive original jurisdiction extends to any dispute between the
Government of India and one or more States or between the
Government of India and any State or States on one side and one or
more States on the other or between two or more States, if and insofar
as the dispute involves any question (whether of law or of fact) on
which the existence or extent of a legal right depends.
 Article 32 of the Constitution gives an extensive original jurisdiction to
the Supreme Court in regard to enforcement of Fundamental Rights.
 It is empowered to issue directions, orders or writs, including writs in
the nature of habeas corpus, mandamus, prohibition, quo warranto and
certiorari to enforce them.
Supreme Court…
 The Supreme Court has been conferred with power to direct
transfer of any civil or criminal case from one State High Court to
another State High Court or from a Court subordinate to another
State High Court.
 The Supreme Court, if satisfied that cases involving the same or
substantially the same questions of law are pending before it and
one or more High Courts or before two or more High Courts and
that such questions are substantial questions of general importance,
may withdraw a case or cases pending before the High Court or
High Courts and dispose of all such cases itself.
 Under the Arbitration and Conciliation Act, 1996, International
Commercial Arbitration can also be initiated in the Supreme Court.
Powers of Supreme Court
 Appellate jurisdiction of the Supreme Court can be invoked by

a certificate granted by the High Court concerned under Article
132(1), 133(1) or 134 of the Constitution in respect of any
judgement, decree or final order of a High Court in both civil
and criminal cases, involving substantial questions of law as to
the interpretation of the Constitution.
 Appeals also lie to the Supreme Court in civil matters if the
High Court concerned certifies :
 (a) that the case involves a substantial question of law of general
importance, and
 (b) that, in the opinion of the High Court, the said question needs to
be decided by the Supreme Court.
Powers of Supreme Court….
 In criminal cases, an appeal lies to the Supreme Court if the High
Court
 (a) has on appeal reversed an order of acquittal of an accused person
and sentenced him to death or to imprisonment for life or for a period
of not less than 10 years, or
 (b) has withdrawn for trial before itself any case from any Court
subordinate to its authority and has in such trial convicted the accused
and sentenced him to death or to imprisonment for life or for a period
of not less than 10 years, or
 (c) certified that the case is a fit one for appeal to the Supreme Court.
Parliament is authorised to confer on the Supreme Court any further
powers to entertain and hear appeals from any judgement, final order
or sentence in a criminal proceeding of a High Court.
Powers of Supreme Court….
 Appellate jurisdiction over all Courts and Tribunals
in India in as much as it may, in its discretion, grant
special leave to appeal under Article 136 of the
Constitution from any judgment, decree,
determination, sentence or order in any cause or
matter passed or made by any Court or Tribunal in
the territory of India.
 Special advisory jurisdiction in matters which may
specifically be referred to it by the President of India
under Article 143 of the Constitution.
Reference to SC
 There are provisions for reference or appeal to this
Court under Article 317(1) of the Constitution,
 Section 257 of the Income Tax Act, 1961, Section
7(2) of the Monopolies and Restrictive Trade
Practices Act, 1969, Section 130-A of the Customs
Act, 1962, Section 35-H of the Central Excises and
Salt Act, 1944 and Section 82C of the Gold
(Control) Act, 1968.
Appeals to SC
 Appeals also lie to the Supreme Court under the
 Representation of the People Act, 1951
 Monopolies and Restrictive Trade Practices Act, 1969
 Advocates Act, 1961
 Contempt of Courts Act, 1971
 Customs Act, 1962
 Central Excises and Salt Act, 1944
 Enlargement of Criminal Appellate Jurisdiction Act, 1970
 Trial of Offences Relating to Transactions in Securities Act,
1992, Terrorist and Disruptive Activities (Prevention) Act, 1987
 Consumer Protection Act, 1986
Enabling provision in IT act
 (i) Section 257 of Income-tax Act, provides that the Income-tax
Appellate Tribunal can, through its President, refer to the
Supreme Court, any question of law on which there is difference
of opinion between different High Courts and the question
requires to be resolved by the Supreme Court.
 Section 261 of Income-tax Act provides for an appeal to the
Supreme Court from any judgment of the High Court (delivered
on a reference made under Section 256 against an order made
under section 254 before 1st October, 1998 or on appeal made to
the High Court in respect of an order passed under section 254
on or after that date), in any case which the High Court certifies
to be a fit one for appeal to the Supreme Court.
JURISDICTION AND SEAT OF HIGH COURTS
Territorial establishment
Name Year Seat
jurisdiction
Allahabad 1866 Uttar Pradesh Allahabad (Bench at Lucknow)
Andhra Pradesh 1956 Andhra Pradesh Hyderabad
Maharashtra, Goa, Dadra and Bombay (Benches at Nagpur, Panaji and

Bombay 1862
Nagar Haveli and Daman and Diu Aurangabad)
Calcutta 1862 West Bengal Calcutta (Circuit Bench at Port Blair)
Delhi 1966 Delhi Delhi
Assam, Manipur, Meghalaya, Guwahati (Benches at Kohima, Aizwal &

Guwahati(2) 1948 Nagaland,Tripura, Mizoram and Imphal. Circuit Bench at Agartala &
Arunachal Pradesh Shillong)
Gujarat 1960 Gujarat Ahmedabad

Himachal Pradesh 1971 Himachal Pradesh Shimla
Jammu & Kashmir 1928 Jammu & Kashmir Srinagar & Jammu
Karnataka(3) 1884 Karnataka Bangalore
Kerala 1958 Kerala & Lakshadweep Ernakulam
Jabalpur (Benches at Gwalior and

Madhya Pradesh 1956 Madhya Pradesh
Indore)
Madras 1862 Tamil Nadu & Pondicherry Madras
Orissa 1948 Orissa Cuttack
Patna 1916 Bihar Patna (Bench at Ranchi)

Punjab, Haryana &
Punjab & Haryana(4) 1975 Chandigarh
Chandigarh
Rajasthan 1949 Rajasthan Jodhpur (Bench at Jaipur)
Sikkim 1975 Sikkim Gangtok
NTT
Backlog in Indian courts
 At the current speed, the lower courts, may take 124 years for clearing
2,50,000 cases.
 In the last seven years, the disposal rate has increased by 48 per cent in the
high courts and by 28 per cent in the subordinate courts, but the pendency has
increased.
 The Chief Justices’ Conference has recommended increasing in the working
hours of high courts to clear the huge backlog of cases.
 Most high courts work for 210 days in a year and it has been recommended to
increase it up to 215 or 220
 Setting up 463 family courts, one in each district, to deal with matrimonial
cases
 Setting up one CBI court in each state. There were about 13,000 cases under
the Prevention of Corruption Act pending in various high courts out of which
6,100 were CBI cases
Backlog….
 Indian judiciary would take 320 years to clear the
backlog of 31.28 million cases pending in various
courts including High courts in the country
"If one considers the total pendency of cases in the
Indian judicial system, every judge in the country
will have an average load of about 2,147 cases,”
Backlog…
 A recent study indicated that the number of new
cases has direct relationship with increasing
literacy rate and awareness
 Citing example of Kerala, a high literacy state with
awareness has 28 new cases per 1000 population
per annum have been added, whereas, Bihar with
relatively low literacy rate the figure stands at just
three
Backlog…
 India has 14,576 judges as against the sanctioned
strength of 17,641 including 630 High Court Judges.
 This works out to a ratio of 10.5 judges per million
population
 The Apex court in 2002 had suggested 50 judges per
million population
 If the norm of 50 judicial officers per million becomes
reality by 2030 when the country's population would be
1.5 to 1.7 billion, the number of judges would go upto
1.25 lakh dealing with 300 million case.
Article 32…
 Things had come to a pass in the Supreme Court of India,
when Justice E.S. Venkataramiah in P.N. Kumar v. Municipal
Corporation of Delhi, (1987) 4 SCC 609 relegated the writ
petitioner under Article 32 to the High Court, without deciding
whether any fundamental rights were violated or not, giving,
among others, the following reason: “This Court has no time
today even to dispose of cases which have to be decided by it
alone and by no other authority. A large number of cases are
pending from 10 to 15 years. Even if no new case is filed in
this Court hereafter, with the present strength of Judges it may
take more than 15 years to dispose of all the pending cases.”
Workload of SC
 Justice P.N. Bhagwati, in Bihar Legal Support Authority v.
Chief Justice of India and Anr., (1986) 4 SCC 767 had this to
say: “The Supreme Court of India was never intended to be a
regular court of appeal against orders made by the High Court
or the sessions court of the magistrates. It was created for the
purpose of laying down the law for the entire country and the
extraordinary jurisdiction of granting special leave was
conferred upon it under Article 136 of the Constitution so that
it could interfere whenever it found that the law was not
correctly enunciated by the lower courts or tribunals and it
was necessary to pronounce the correct law on the subject.”
National Court of Appeals
 The Constitution Bench had itself felt the need to set up a National
Court of Appeal and observed in the very same judgment thus: “We
think that it would be desirable to set up a National Court of Appeal
which should be in a position to entertain appeals by special leave
from the decisions of the high courts and tribunals in the country in
civil, criminal, revenue and labour cases and so far as the present
apex court is concerned, it should concern itself only with
entertaining cases involving questions of constitutional law and
public law.”
 Law Commission of India in its 229th Report (2009) recommended
the setting up of a Cour de Cassation in each of the four regions to
act as a final court with regard to the matters entrusted to it.
Distance to SC
 Nick Robinson, a Yale Law School Research Fellow,
that 10 per cent of the cases filed in the Supreme Court
emanate from Delhi, 6.2 per cent from Punjab and
Haryana, and 6.2 per cent from Uttarakhand, with only
1.1 per cent and 2.4 per cent coming from large States
like Tamil Nadu and Karnataka.
 This would imply that the distance of the Supreme
Court from the southern States would, in fact, be an
impediment to access to the Supreme Court in Delhi.
Disposal by SC in India, USA &UK
 Supreme Court disposes of about 50,000 cases a year

 Falls short of the filings that year by about 3,000 to
4,000 cases
 U.S. Supreme Court with nine judges sitting en
banc is able to dispose of only 80 to 100 cases a year
 Erstwhile Judicial Committee of the House of Lords
was able to dispose of only about 180 cases a year
NTT
 Passing of the Forty Second Amendment to the Constitution of India in 1976, tribunals
became key dramatis personae in the justice delivery system
 For speedy disposal of cases, an array of tribunals were set up.
 Administrative Tribunals, the Rent Control Tribunals and also Tax Tribunals.
 Constitution of the National Tax Tribunals, through the passing of the National Tax
Tribunal Act, 2005 in pursuance of Article 323-B (1) (a).
 Act provides a machinery for the adjudication by the National Tax Tribunal of disputes
with respect to levy, assessment, collection and enforcement of direct taxes and also to
provide for the adjudication by that Tribunal of disputes with respect to the determination
of the rates of duties of customs and central excise on goods and the valuation of goods for
the purposes of assessment of such duties as well as in matters relating to levy of tax on
service.
 The Act is bound to raise constitutional issues of immense significance as to validity of
conferral of the power and functions of the Tribunal, the exercise of such powers and
functions, and the concept of judicial review under the Constitution.
Thank You

Appeal Procedure Under Income Tax Act

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Appeal Procedure Under Income Tax Act

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APPEAL PROCEDURE

UNDER INCOME TAX ACT

 In case of obvious or prime facie mistakes, the tax payer can

 In case of obvious or prime facie mistakes, the tax

 246A: CIT (Appeals)

 Order of Assessment / Re-assessment U/s 147,153A

 Orders made U/s 171-----refusing Partition of HUF

 Order imposing / enhancing penalty U/s 275 (1A)

 To Condone the Delay as regards limitation of time

 Orders passed by Commissioner

 Rectify ( can not REVIEW ) its own order at any time

 The Income-tax Rules, 1962 provides that an appeal

 Rule 8 mandates that every memorandum of appeal

 Both the memorandum of appeal and memorandum

 Form No. 35 requires to set out a statement of facts

 No statement of fact is required to be filed with the

 Annexure to the memorandum of appeal to be filed

 The Madras High Court in Arunachalam Chettiar vs. CIT (1962) 45

 The High Court stands at the head of a State's

 Appellate jurisdiction of the Supreme Court can be invoked by

Allahabad 1866 Uttar Pradesh Allahabad (Bench at Lucknow)

Andhra Pradesh 1956 Andhra Pradesh Hyderabad

Maharashtra, Goa, Dadra and Bombay (Benches at Nagpur, Panaji and

Calcutta 1862 West Bengal Calcutta (Circuit Bench at Port Blair)

Delhi 1966 Delhi Delhi

Assam, Manipur, Meghalaya, Guwahati (Benches at Kohima, Aizwal &

Gujarat 1960 Gujarat Ahmedabad

Kerala 1958 Kerala & Lakshadweep Ernakulam

Jabalpur (Benches at Gwalior and

Madras 1862 Tamil Nadu & Pondicherry Madras

Orissa 1948 Orissa Cuttack

Patna 1916 Bihar Patna (Bench at Ranchi)

 Supreme Court disposes of about 50,000 cases a year

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