income tax

Understanding the Appeal Process Before the Commissioner of Income-tax (CIT A)

Appeal to Commissioner of Income-tax (Appeals) - CIT(A)

This article provides an overview of the appeal process before the Commissioner of Income-tax (Appeals), including appealable orders, time limits, required forms, signature requirements, tax pre-deposit, necessary documents, fees, procedures, submissions of additional evidence, decisions by the CIT(A), and disposal of appeals.

Introduction

Taxpayers may occasionally find themselves dissatisfied with an order issued by the Assessing Officer. In such situations, they have the right to file an appeal against the Assessing Officer's order with the Commissioner of Income-tax (Appeals). This section covers various provisions related to filing appeals before the CIT(A).

Appealable Order

The Commissioner of Income-tax (Appeals) serves as the first appellate authority. Section 246A outlines specific orders against which an appeal can be lodged. Below is a list of major appealable orders:

  1. Orders affirming tax liability under the Income Tax Act.
  2. Intimations under Section 143(1)/(1B) with income adjustments.
  3. Intimations under Section 200A(1) for adjustments in filed statements.
  4. Assessment orders under Section 143(3), excluding those from Dispute Resolution Panel directives.
  5. Orders under Section 144.
  6. Assessment orders after reopening under Section 147, except those from Dispute Resolution Panel directives.
  7. Orders as stipulated in Section 150.
  8. Assessment or reassessment orders under Sections 153A or 158BC due to search/seizure actions.
  9. Orders under Section 92CD(3).
  10. Rectification orders under Sections 154 or 155.
  11. Orders under Section 163 regarding a taxpayer as an agent for non-residents.
  12. Orders under Sections 170(2)/(3) related to business successors' income.
  13. Orders under Section 171 about the partition of a Hindu Undivided Family.
  14. Orders under Section 115VP(3) denying tonnage-tax scheme approval for qualifying shipping entities.
  15. Deeming orders under Sections 201(1)/206C(6A) for tax deduction/non-collection defaults.
  16. Orders determining refunds as per Section 237.
  17. Penalty orders under various sections including 221, 271, 272, and more.
  18. Orders under Section 239A.

Time-limit for Presenting an Appeal

According to Section 249(2), appeals should be submitted within 30 days from:

  • (a) For assessments or penalties, the service date of the related notice.
  • (b) In other cases, the intimation date of the order being contested.

The CIT(A) may admit delayed applications upon demonstrating sufficient cause. To condone the delay, a petition outlining reasons must accompany Form No. 35 (the appeal form).

Form of Appeal

The CBDT amended Rule 45 of the Income-tax Rules, 1962, introducing Form No. 35 for filing an appeal before the CIT(A) as of the Income-tax (3rd Amendment) Rules, 2016. E-filing of this form is mandatory for specific taxpayers.

Signature to the Appeal

The appeal form, grounds, and verification must be signed by an authorized individual consistent with the provisions of Section 140, applicable to the taxpayer. This includes:

  1. Individual taxpayers can sign themselves or authorize someone with a valid power of attorney.
  2. For Hindu Undivided Families (HUF), the Karta or another adult family member can sign.
  3. Companies must be signed by the Managing Director or another director if unavailable.
  4. Foreign companies by a duly authorized individual.
  5. Firms must be signed by the Managing Partner or a partner.
  6. Limited Liability Partnerships (LLPs) by a Designated Partner or another partner.
  7. Local Authorities by the Principal Officer.
  8. Political Parties by the Chief Executive Officer.
  9. Other Associations by the Principal Officer or any member.
  10. Any other person can sign themselves or appoint someone on their behalf.

Pre-deposit of Tax

Before filing an appeal, taxpayers should pay taxes based on their filed returns. If no return was filed, they should pay a tax amount equivalent to their advance tax. However, on request, the CIT(A) may exempt the taxpayer from pre-deposit if sufficient reasons are provided for non-payment.

Documents to be Submitted for Appeal

The appeal process requires submission of the following:

  • Form No. 35 (with detailed facts and grounds of appeal) – in duplicate; e-filing is mandatory for relevant taxpayers.
  • One certified copy of the contested order.
  • Original notice of demand.
  • Payment challan copies, including payment details (BSR code, payment date, serial number, and fee amount) for e-filing.

Fees

The appeal fees before the CIT(A) are as follows:

  • Income exceeding Rs. 1,00,000 but less than Rs. 2,00,000: Rs. 500
  • Income exceeding Rs. 2,00,000: Rs. 1,000
  • For matters unrelated to income: Rs. 250.

Procedure of the Appeal

Upon receiving Form No. 35, the CIT(A) will schedule a hearing, notifying both the taxpayer and the Assessing Officer involved. The taxpayer or their representative may present their case. The CIT(A) has the discretion to adjourn hearings and may conduct further inquiries as necessary.

Additionally, during proceedings, the CIT(A) may accept new grounds of appeal if the omission of these grounds was not willful or unreasonable.

Filing of Additional Evidences

Taxpayers may only introduce evidence that was previously submitted to the Assessing Officer unless specific circumstances apply, including:

  • The Assessing Officer rejected evidence that should have been accepted.
  • The taxpayer faced a valid barrier preventing evidence submission.
  • Relevant evidence was not admitted adequately.
  • The Assessing Officer made decisions without providing sufficient opportunities for evidence presentation.

Taxpayers must submit a request for such additional evidence along with the reasons for its admissibility, and the CIT(A) must consider the case before allowing the new evidence.

Decision of the Commissioner of Income-tax (Appeals)

After reviewing the appeal, the CIT(A) will issue a written order that addresses each ground of the appeal and provides justification for decisions made. The CIT(A) may confirm, reduce, enhance, or annul assessments/penalties when applicable. Taxpayers must be given an opportunity to respond to potential enhancements.

The CIT(A) holds the discretion to address any relevant matters arising from the original proceedings, regardless of whether they were previously raised by the taxpayer.

Disposal of Appeal

Ideally, appeals will be resolved within one year from the end of the financial year in which they are filed, with orders issued within 15 days of the final hearing, as instructed by Instruction No. 20/2003 dated 23.12.2003.

Faceless Appeal

The Finance Act, 2020 authorized the implementation of a Faceless Appeal Scheme to enhance the efficiency and transparency of the appeal process. Key features include:

  • Minimizing physical interactions between the CIT(A) and taxpayers where technological feasibility allows.
  • Streamlining resource utilization through economies of scale and specialization.
  • Enabling dynamic jurisdiction for disposing of appeals by multiple CIT(A) authorities.