1. Under Direct Tax Laws, tax authorities have been given 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.
2. 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. Grievance that the tax authority had not afforded a reasonable opportunity of hearing to the tax payer may also be voiced.
3. 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.
4. 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.
5. 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.
First appeal to commissioner (Appeals)
1. Any assessee aggrieved by the adjustments to the tax or interest in the intimation sent to him or by the order of assessment, penalty or rectification made by an Assessing (Appeals).
2. Free at the following rate is payable for filing the appeal before Commissioner (Appeals) :
Assessed total income
Rs.1 lakh or less Rs.250/-
Assessed total income more than
Rs.1 lakh but not more than 2 lakh Rs.500/-
Appeals involving total assessed income
More than Rs.2 lakhs Rs.1000/-
Appeals involving any other matter Rs.250/-
There is a prescribed from for filing the appeal (Form No.35). The form should be signed by the assessee. The grounds of appeal and the statement of facts are also required to be filed along with Memorandum of appeal.
Appeal must be filed within thirty days from the date of receipt of the relevant order. In appropriate cases where the delay is for good reasons, Commissioner (Appeals) can condone the delay.
The appeal is admitted for hearing only if at the time of filing of appeal the assessee has paid the tax due on income returned.
Once the appeal is filed, it can be withdrawn only with the permission of the Appellate Authority.
Normally the assessee cannot file additional evidence or evidence not led in before the Assessing Officer before Commissioner (Appeals). In case where the Appellate authority wants to admit this additional evidence, an opportunity to examine this additional evidence is given by the authority to the Assessing Officer.
Commissioner (Appeals) has power of enhancing the assessed income or penalty.
Commissioner (Appeals) can remand a case to an Assessing Officer to enquire and furnish a report on specified matters.
Commissioner (Appeals) makes a reasoned order in writing after giving opportunity for hearing to the appellant and the Assessing Officer.
Where possible, Commissioner (Appeals) will hear and decide appeal within a period of one year from the end of his financial year in which appeal is filed.
APPEALS AGAINST ORDERS RELATING TO UNDISCLOSED INCOME
1. In respect of search initiated on or after January 1, 1997, Commissioner of Income Tax (Appeals) is the first Appellate Authority against block assessment orders or penalty for under declaration of undisclosed income in the return of income for the block period. In these case second appeal will lie to the Tribunal.
Second appeal to Appellate Tribunal (ITAT)
An assessee aggrieved by the orders of the Commissioner (Appeals) can file further appeal to the Appellate Tribunal. He can also file appeal with the Tribunal against the order of revision or rectification prejudicial to him or an order refusing to grant registration to a Charitable Trust made by Commissioner of Income-tax.
The appeal is required to be filed in the prescribed Form No.36.
Fee at the following rate is payable for filing appeal before the Tribunal from 1st October, 1998;
Assessed total income is Rs.1 lakh or less – Rs.500/-
Assessed total income more than Rs.1 lakh but less than Rs.2 lakhs – Rs.1500/-
Assessed total income Rs.2 lakhs or more – 1% of assessed income Subject to a maximum of Rs.10,000/-
Appeals under other Direct Taxes Miscellaneous applications Rs.1000/-
Stay Petitions Rs.500/-
If Application is under U/s.254(2) Rs.50/-
Appeals involving any other matters Rs.500/-
The appeal has to be filed within sixty days from the date of receiving the relevant order. The Memorandum of appeal should be accompanied by grounds of appeal, statement of facts and a paperbook containing the relevant orders and statements, documents referred to in the order and proposed to be relied upon at the time of hearing of the appeal.
Normally a bench of the Tribunal which consists of one Judicial Member and one Accountant Member hears and decides appeals. The more important case are heard by a bench of 3 or 5 members. The cases where the total income assessed does not exceeds 50 lakh may be heard and decided by a single Member.
Where possible, Tribunal will hear and decide appeal within a period of four years from the end of the financial year in which appeal is filed.
The Assessing Officer, not satisfied with the order of the first Appellate Authority, may also file an appeal with the Tribunal after necessary authorization to file such an appeal is received from the Commissioner. No fee is required to be paid for filing of appeal by the Department.
Where the assessee has not filed an appeal and the Department does, the assessee may file a cross objection within thirty days of the receipt of the notice of departmental appeal. The cross objection is required to be filed in Form No.36A. No fee is required to be paid by the assessee for filing the cross objection before the Tribunal.
With a view to check frivolous appeals, from 1June, 1999, Tribunal is empowered to award costs of appeal.
The Appellate Tribunal is under the administrative control of Ministry of Law.
Reference to High Court
1. The Tribunal is the last fact finding authority under the Income-tax Act, 1961. The order of the Appellate Tribunal is final so far as facts are concerned. However, if a question of law arises out of the order of Tribunal and the tax payer is not satisfied with the decision of the Tribunal on the question of law, he can make an application to the Tribunal in the prescribed Form No. 37 to refer to question of law to the High Court for its opinion in respect of appellate orders passed by Tribunal before 1st October, 1998. The application should be accompanied by a fee of two hundred rupees. The application should be presented to the Tribunal within sixty days from the date of the tax payers is served with the Tribunal’s order.
2. If the Tribunal refuses to state the case to the High Court under the I.T. Act, the assessee can within six months from the date he is served with the order of refusal (this period is 90 days for W.T. references) apply to the High Court for direction tot eh Tribunal to state the case and refer it to the High Court for its opinion. If the High Court so directed, the Tribunal shall refer the question of law to the High Court for its opinion.
3. After the decision of High Court is received the Tribunal modifies its order in terms of the opinion given by the High Court.
4. Where there is a conflict in the decision of High Courts in respect of any particular question of law arising from appellate order of Tribunal made before 1st October, 1998, the Appellate Tribunal may draw up a statement of case and refer it through its President direct to the Supreme Court for its opinion.
Third appeal to the High Court
In respect of appellate orders passed by the Tribunal on or after 1st October, 1998, the assessee can file an appeal to the High Court if the case involves a substantial question of law. The appeal to High Court will lie not on any question of law but only in respect of a substantial question of law. The appeal to High Court will lie only, if the High Court is satisfied that the case involves a substantial question of law. The High Court will hear the appeal in respect of a substantial question of law which is formulated by the High Court.
The Memorandum of appeal before the High Court should state the substantial question of law involved in the case.
The appeal to High Court is required to be filed within 120 days from the date on which the order appealed against is received by the appellant.
The Memorandum of appeal should accompany the court fee for filing appeals to High Court.
The appeal will be heard by the High Court by a bench of not less than two judges and shall be decided by the majority of the judges.
Fourth appeal to the Supreme Court
1. If the assessee is not satisfied with the decision given by the High Court on a question of law referred to it, he may file an appeal before the Supreme Court against the judgement of the High Court. Such appeal can only be filed before the Supreme Court if the High court certifies it to be a fit case for appeal to the Supreme Court. The application before the High Court for certificate of fitness should be field within 60 days.
2. Where the High Court refuses to grant such a certificate, the assessee can under Article 136 of the constitution file a Special Leave Petition before the Supreme Court. If the Special Leave Petition to appeal is granted, the Supreme court will hear and decide the appeal on merits.
3. The procedure outlined above in regard to appeals to High court and the Supreme Court under the Income-tax Act applies mutates-mutandis to appeals under Wealth-tax Act as well.
1. With a view to avoiding disputes in respect of assessment of Income-tax liability of non-residents, the Income-tax Act provides that a non-resident assessee can apply to Authority for Advance Ruling at Delhi and obtain a ruling in advance in respect of the transaction specified by the non-resident. This ruling is binding on the Income-tax authorities and the non-resident who seeks the ruling in respect of that transaction.
2. Following persons are eligible to apply for advance ruling:
- A non-resident who has undertaken or proposes to undertake a transaction in India.
- A resident who has undertaken or proposes to undertake a transaction with a non-resident.
- A resident who has undertaken or propose to undertake one or more transactions of value of Rs.100 crore or more in total [vide Notification No. 73, dated 28-11-2014]
- A resident falling within notified class or category of persons (presently includes public sector companies).
- Any person (resident or non-resident) making an application for determining whether an arrangement, is an impermissible avoidance agreement as referred to in Chapter X-A (applicable from 1-4-2015)
3. The application of advance ruling is to be made in the form prescribed in this regard. Different forms are prescribed for different applicants. Following Chart highlights the form of application applicable to different applicants.
|Applicant||Form of application|
|A non-resident applicant.||Form No. 34C (application should be in quadruplicate)|
|A resident seeking advance ruling in relation to a transaction undertaken or proposed to be undertaken by him with a non-resident.||Form No. 34D (application should be in quadruplicate)|
|A resident seeking advance ruling in relation to his tax liability arising out of one or more transactions valuing Rs.100 crore or more in total which has been undertaken or proposed to be undertaken by him||Form No. 34DA (application should be in quadruplicate)|
|A resident falling within any such class or category of person as is notified by Central Government (i.e., a public sector company)||Form No. 34E (application should be in quadruplicate)|
|Any person (resident or non-resident) making an application for determination of whether an arrangement, is an impermissible avoidance agreement as referred to in Chapter X-A. (applicable from 1-4-2015)||Form No. 34EA (application should be in quadruplicate)|
4. Fees for filing the application
The fees payable along with application for advance ruling shall be in accordance with the following table:
|Category of applicant||Category of case||Fee|
||Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought does not exceed Rs. 100 crore.||Rs.2,00,000|
|Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 100 crore but does not exceed Rs. 300 crore.||Rs.5,00,000|
|Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 300 crore||Rs.10,00,000|
|Any other applicant||In all cases||Rs.10,000|
Competent authority for disputes under double tax avoidance agreements
India has entered into double taxation avoidance agreements with several countries. If a foreign tax payer is aggrieved by the actions of the tax authorities, under these agreements he can present his case to the Competent Authority which is Ministry of Finance (Department of revenue), Joint Secretary, Foreign Tax Division, North Block, New Delhi. The time limit for making reference’ to the Competent Authority is three years from the taxation complained against. This course is available to a foreign tax payer in addition to normal appellate formus in respect of assessment orders.
No appeal against pre-emptive purchase
Order of the Appropriate Authority for pre-emptive purchase of immovable property are final and no appeal is provided against these orders.
Jurisdiction of Civil Courts barred
In view of the elaborate appellate system provided under Direct Tax Laws, the Jurisdiction of Civil Courts is barred. No suit can be filed in any Court against order made under the Direct Tax Laws.
Summary of above
|1.||Appeals||Amount of fees payable|
|S. 249 — Income-tax Act||Assessed Income < Rs. 1,00,000||Rs. 250|
|Assessed Income < Rs. 2,00,000||Rs. 500|
|Assessed Income > Rs. 2,00,000||Rs. 1,000|
|Any other subject||Rs. 250|
|S. 22 — Gift Tax Act||—||Nil|
|S. 253 — Income-tax Act||Assessed Income < Rs. 1,00,000||Rs. 500|
|Assessed Income < Rs. 2,00,000||Rs. 1,500|
|Assessed Income > Rs. 2,00,000||1% of Assessed Income Maximum Rs. 10,000|
|Any other subject||Rs. 500|
|Stay of Demand||Rs. 500|
|S. 254 — Income-tax Act||Miscellaneous Application||Rs. 50|
|S. 23 — Gift Tax Act||Rs. 200|
|S. 260A — Income-tax Act||As per code of Civil Procedure and|
|S. 27A — Wealth Tax Act||High Court Rules|
|S. 264 — Income-tax Act||—||Rs. 500|
|S. 24 — Gift Tax Act||—||Rs. 500|
|S. 245 C — Income-tax Act (Rule 44C)||—||Rs. 1000|
- 1. For appeals relating to TDS, TCS and penalty for the violation of provisions governing TDS/TCS and for penalty,
the fees payable would be as per residual clauses.
- 2. For appeal against penalty orders see Bidyut Kumar Sett v. ITD 92 ITD 148 (SB)
B. Court FEES
|S. No.||Nature of Document||Amount of fees payable Rs.|
|2.||a) Memorandum of Appeal||0.50|
|b) Copy of Assessment Order (as enclosure)||0.65|
|3.||Application for stay of recovery or for grant of instalments for payment of tax||1.00|
|4.||Application for compromise or for issue of directions to Income-tax Officers when assessments are pending||1.00|
|5.||Application for obtaining copy of any order passed by IT authorities or any other document on the record of the IT authorities||1.00|
|6.||Certified copy of any order of the IT authorities
(Not for private use nor intended for filing before the ITAT)
|7.||Application for transfer of cases from one Income-tax Officer to another||1.00|
|8.||Application for recognition of provident funds||1.00|
Note : Provisions of Court Fees Act, 1870 would apply to documents and applications presented before any officer serving under Central Government.
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