Appeal before Income Tax Appellate Tribunal (ITAT)
The Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income Tax Act. Appeals against orders passed by the Joint Commissioner (Appeals) or Commissioner (Appeals) lie before the ITAT. Its decision is final on questions of fact, but an appeal may be made to the High Court on questions of law.
- Appealable Orders before ITAT –Appeals can be filed by both the assessee and the Commissioner/Principal Commissioner. The Commissioner may, if he objects to any order passed by the JCIT(A) or CIT(A) under Sections 250 or 154, direct the Assessing Officer to file an appeal only where the tax effect exceeds the prescribed monetary limits. An assessee aggrieved by the following orders may appeal to the Appellate Tribunal.
o Orders of the Joint Commissioner (Appeals):
➢ Orders under Section 250 or rectification under Section 154;
➢ Penalty orders under Sections 270A, 271A, 271AAC, 271AAD, 271J.
o Orders of the Commissioner (Appeals):
➢ Orders under Section 250 or rectification under Section 154;
➢ Penalty orders under Sections 158BFA, 270A, 271A, 271AAB, 271AAC, 271AAD, 271J, 272A.
o Orders of Tax Authorities:
➢ AO’s order under Section 115VZC(1);
➢ PCIT/CIT orders under Sections 12AA, 12AB, 80G(5)(vi), 263, 270A, 272A or 154 (amending any such order);
➢ PCCIT/CCIT/PDGIT/DGIT/PDIT/DIT orders under Sections 263, 272A or 154 (amending any such order);
➢ Orders under Section 10(23C)(iv) to (via).
o Assessment orders based on directions of DRP under Sections 143(3), 147, 153A, 153C, and related rectifications under Sections 154.
o Assessment orders invoking GAAR under Sections 143(3), 147, 153A, 153C, with approval under Section 144BA(12), and related rectifications under Sections 154/155.
- Appeal Filing Process—An appeal to ITAT must be filed inForm 36 within 2 months from the end of the month in which the order is communicated. A memorandum of cross-objections in Form 36A can be filed within 30 days of receiving notice of the appeal.
- Constitution of Benches –The Power and Functions of the ITAT may be exercised and discharged by Benches constituted by the President of the Tribunal.
o Its President constitutes benches of ITAT and generally comprises one Judicial Member and one Accountant Member.
o Cases involving total income not exceeding Rs. 50 lakh may be disposed of by a single member authorized by the Central Government.
o The President may also constitute Special Benches of three or more members for complex cases.
o If the Bench members differ on any point, the matter is decided by majority opinion. However, if the member’s decision is equally divided, the President refers the matter to one or more additional members, and the decision is made by the majority, including the original and additional members.
- Stay of Proceedings –On application, the Tribunal may grant a stay on recovery proceedings for a specified period. The appeal must be disposed of within that stay period.
- Grounds of Appeal –The appellant may not urge grounds not outlined in the memorandum unless permitted by the Tribunal. The Tribunal is not restricted to stated grounds, but must give affected parties an opportunity to be heard on any new grounds considered.
- Time limit for Disposal of Appeal –The Tribunal may dispose of the appeal within 4 years from the end of the financial year in which the appeal was filed.
- Order of the ITAT– ITAT may pass any appropriate order after granting an opportunity of hearing to both parties. The cost of appeal is at the discretion of the Tribunal. The order is communicated to both the assessee and the PCIT/CIT.
- Rectification of Mistake– Rectification application can be made within 6 months from the end of the month in which the order was passed.
o Mistakes must be apparent from the record, not involving long-drawn arguments or debatable points of law.
o Rectification is allowed only after giving the assessee an opportunity to be heard.
o Where the assessee applies for rectification, such application shall be accompanied by a fee of Rs. 50.
- Filing of Additional Evidence– Additional evidence is not generally allowed. However, the Tribunal may allow it if it is required to enable the order to pass, or the Income-tax Authorities did not provide a fair opportunity to the assessee to adduce evidence.
- Faceless Disposal of Appeals by ITAT– The Central Government is empowered to notify a scheme for faceless ITAT proceedings to improve transparency and efficiency.
- Powers of ITAT –The Tribunal may regulate its own procedure and exercise powers vested in income-tax authorities under Section 131. Proceedings before the ITAT are deemed judicial proceedings, and the ITAT is deemed a civil court.