Appeal & Revision

 Appeal & Revision   

' Appeal’ means ‘making a request’ and in legal parlance, it means ‘apply to a higher court for a reversal of the decision of a lower court’. 

                  In India, the taxpayer computes the tax payable on his total income and pays to the government. If the Income Tax department (the government) disagrees with the tax computed by the taxpayer, they can levy an additional tax. Under Income Tax Act, the liability is determined at the level of Assessing Officer (it can be Income Tax Officer (ITO) or Assistant/Deputy Commissioner of Income Tax)

                   A tax payer aggrieved by various actions of Assessing Officer (say higher tax demand) can appeal before Commissioner of Income Tax (Appeals). Further appeal can be preferred before the Income Tax Appellate Tribunal. On substantial question of law, further appeal can be filed before the High Court and even to the Supreme Court.

Appellate Hierarchy :

• CIT (A)  -  within 30 days
• ITAT      -  within  60 days
• Hc         -  within 120 days ( only question of law) 
• Sc         -  within 90 days

Note: There is no right of appeal against following order. 

• Order levying interest u/s 234 A/b/c
• Revision order u/s 264
• Order of settlement commission 
• Order of authority of advance ruling
• Order of ITAT on a question of fact

1. Appeal to CIT (A) :(section 246 A to 251)

• Can be filed only by assessee ( first appeal)  within 30 days from the date of receipt of a copy of order. 
• It can be filed in prescribed form i.e form no. 35 along with the statement of facts, grounds of appeal, copy of order of A.O ,filing fees. This entire set called as memorandum of appeal, which shall be in duplicate. 
• The CIT (A)  shall give the judgement (pass order)  within one year from the end of the year in which appeal is filed, if possible ( advisory time limit) 

Following orders that can be appealed against CIT(A):

1. Order passes by A.O u/s 143(3),144,147,153(A)

2. Investigation u/s 143(1)

3. Rectification order u/s 154

4. Any other order of A.O

Appeal filing fees                                          CIT(A)                   ITAT

1. Assessed income is upto Rs.1 lakh          250                     500

2. Assessed income >1  lakh upto 2 lakh       500                   1500

3. Assessed income > 2 lakhs                        1000               1% of assessed income

4. In any other case.                                          250                    500

5. Appeal filed by department of ITAT               -                       no fees 

6. Filing of memorandum of cross

 objections to ITAT                                              -                       no fees

7. Application of stay of demand to ITAT          -                         500

Stay of demand: 

Filing of appeal doesnot prohibit or prevent IT Authorities from recovery of demand. IT Authorities may recover the demand, even if the appeal has been filled. In cases where appellent wants demand to be stayed, he can - 

(a)  file application u/s 220(b) to AO. The AO can grant stay in appropriate cases

(b) file application to appellate Authority before whom appeal is pending. All appellate authorities has inherent powers to grant stay. Like, if appeal is pending before CIT(A),this application can be filed to CIT(A) requesting to stay the demand. 

2. APPEAL TO ITAT (SECTION 252 TO 255): 

A case of ITAT level appeal shall be heard by bench (panel of judges) normally heard by 2 members bench, one judicial member & other Accountant member. 

      However, if total income of assessee is upto Rs. 50 lakh then appeal can be heard by single member decision of ITAT level shall be taken according to the opinion of the majority. However, if the members differ on any point, & the members are equally divided on that point, then such point shall be referred to the president of ITAT who shall then refer the case to be heard by another member & then decision shall be taken according to the opinion of the majority. 

• Appeal to ITAT has to be filed within 60 days from the date of receipt of a copy order sought to be appealed against
• it shall be filed in prescribed form i. e form no. 36 along with the statement of facts, ground of appeal  ,copy of order, filing fees, every thing in triplicate. 
• ITAT shall give judgement within 4 years from the end of the year in which appeal was received by it,  if possible. 
• Following order can be appealed against ITAT 
• *order of CIT(A)
• *order of AO passed on the basis of DRP u/s 144c
• *revision order u/s 263
• *order of AO passed with approval of CIT/ principal commissioner of IT u/s 144BA
• *Any other orderyCIT/CCIT/ DIT

STAY OF DEMAND :

while filing appeal of ITAT, the assessee can apply for stay of demand. ITAT may after considering the merits of application can grant stay of demand for 180 days if assessee deposited atleast 20% of the amount of tax, interest, fee, penalty / any other sum payable under the provisions of the act/ furnishes security of equal amount. 

      The ITAT fails to give judgement within 180 days & delay is not attributed to the assessee then ITAT can extend stay period but maximum period should not be > 365 days. 

Difference between power of CIT (A)  & ITAT:

                                                                                 CIT(A)    ITAT 

 1.Power to enhance the assessment                    Y             N 

 2.Power to reduce/confirm the assessment         Y             Y

3.Power to cancelled  the assessment.                  Y             Y
4.Power to make inquires.                                       Y             Y
5.Power to rectification of mistake                      sec154      254
6.Power to review.                                                      No.        No
7. Power to admit additional grounds of appeal.     Y             Y
8.Power to grant stay                                                  Y             Y

9. power to reject appeal                                             Y            Y

10. power to admit additional evidence                  yes       Yes

11. power to set aside & refer back by AO

 for fresh assessment                                               No      Yes

3. APPEAL TO HIGH COURT (SECTION 260 A&B):

• Appeal  to high court can be filed within 120 days only if there is a question of law
• appeal form, fees& procedure goverened by code of civil procedure, 1908
• High court have power to review its order. 

4. APPEAL TO SUPREME COURT SECTION 261 & 262;

• Appeal  against high court order
• within 90days
• Supreme Court have power to review its order
• form, fees & procedure - code of civil procedure, 1908.

REVISION BY THE PRINCIPAL COMMISSIONER OR 

COMMISSIONER [SECTIONS 263 AND 264]

(1) Revision of Orders prejudicial to the Revenue [Section 263] 

i) Under section 263(1), if the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner considers that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making an enquiry, pass an order enhancing or modifying the assessment made by  the Assessing Officer or cancelling the assessment and directing fresh assessment.

ii) An order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the Revenue, if, in the opinion of the Principal Chief Commissioner or Chief Commissioner or Commissioner,— 

(a) the order is passed without making inquiries or verification which should have been made;

(b) the order is passed allowing any relief without inquiring into the claim;

(c) the order has not been made in accordance with any order, direction or instruction issued by the CBDT under section 119; 

(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.

iii) The term ‘record’ shall include and shall be deemed always to have included all records relating to any proceedings under the Act available at the time of examination by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

(iv) Where any order referred to in section 263(1) passed by the Assessing Officer had been the subject-matter of any appeal, the powers of the Principal Chief 

Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under section 263(1) shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. 

(v) No order shall be made after the expiry of 2 years from the end of the financial year in which the order sought to be revised was passed.

(vi) In computing the period of 2 years, the time taken in giving an opportunity to the assessee to be reheard under section 129 and any period during which the revision proceeding is stayed by an order or injunction of any court shall be excluded. 

vii) The time limit, however, does not apply in case where the effect has to be given to a finding or direction contained in the order of the Appellate Tribunal, High Court or the Supreme Court.

Revision of other orders [Section 264] 

i) In the case of any other order (not being an order prejudicial to the Revenue) passed 

by any subordinate authority, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may either on his own motion or on receipt of an application from the assessee, call for the record of any proceedings under the Act in the course of which the order was passed. After making such enquiries as may be necessary the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may pass such order as he thinks fit. 

ii) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is not empowered to revise any order on his own motion if a period of more than one year has expired from the date of the order sought to be revised. 

iii) If the application for revision is made by the assessee, it must be made within one 

year from the date on which the order in question was communicated to him or the 

date on which he otherwise comes to know of it, whichever is later. 

iv) However, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may admit an application even after the expiry of one year, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period. 

(v) The application to the Principal Chief Commissioner or Chief Commissioner or

Principal Commissioner or Commissioner for revision must be accompanied by a fee 

of Rs.  500. 

vi) If an order is passed by the Principal Chief Commissioner or Chief Commissioner

or Principal Commissioner or Commissioner declining to interfere in any proceeding, 

it shall not be deemed to be an order prejudicial to the assessee. 

(vii) However, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is not empowered to revise any order in the following cases, viz.,

(a) where an appeal against the order lies to the Commissioner (Appeals) or the 

Tribunal but has not been made and the time within which the appeal may be made has not expired or in the case of an appeal to the Tribunal the assessee has not waived his right of appeal;

(b) where the order is pending on an appeal before the Commissioner (Appeals);

(c) where the order has been made subject to an appeal to the Commissioner (Appeals) or the Appellate Tribunal.

Faceless Revision [Section 264A] 

i) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of revision of orders under section 263 or section 264, so as to impart greater efficiency, transparency and accountability by— 

(a) eliminating the interface between the income-tax authority and the assessee or 

any other person to the extent technologically feasible;

(b) optimising utilisation of the resources through economies of scale and functional specialisation;

(c) introducing a team-based revision of orders, with dynamic jurisdiction.

(ii) The Central Government, may, for the purpose of giving effect to the scheme made 

under section 264A(1), by notification in the Official Gazette, direct that any of the provisions of the Income-tax Act, 1961 would not apply or would apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no such direction shall be issued after 31.3.2022. 

(iii) Every notification issued under (i) and (ii) above has to be laid before each House of Parliament, as soon as may be after the notification is issued.