File Appeal before Commissioner of Income (CIT) Appeal

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File Appeal before Commissioner of Income (CIT) Appeal

Introduction

Dealing with tax matters can be intricate and, at times, challenging. If you find yourself dissatisfied with an order issued by the Assessing Officer, there are avenues available to challenge it through the appeals system. This blog post aims to provide clarity on the options available to taxpayers for appealing orders, with a focus on the newly introduced provisions under the Finance Act of 2023.

Joint Commissioner (Appeals)

Effective from April 1, 2023, the Finance Act of 2023 has introduced a novel approach to filing appeals, incorporating a new section, Section 246, into Chapter XX. This section specifically addresses the process of appealing before the Joint Commissioner of Income-tax (Appeals) [JCIT (Appeals)].

Appealable Orders for JCIT (Appeals)

It’s crucial to note that not every decision made by an Assessing Officer (below the rank of Joint Commissioner) is open to appeal. Only specific orders, known as “appealable orders,” can be contested before the JCIT (Appeals). Importantly, if an appealable order is sanctioned by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner, no appeal can be filed before the JCIT (Appeals).

Section 246(1) clarifies that only certain orders, as defined by the legislation, can be appealed. This selective approach ensures that the appeals process remains focused and relevant.

Appeal Against Assessment Orders

A significant aspect of the appeals process is the ability for an assessee to appeal against various assessment orders. This includes, but is not limited to:

  • An intimation issued under Section 143(1), where the assessee objects to adjustments.
  • Orders of assessment passed under Section 143(3) or best judgment assessment orders under Section 144, provided the assessee objects to the amount of income assessed, tax determined, loss computed, or the assessed status.
  • Orders related to assessment, reassessment, or recomputation under Section 147.

The list goes on to encompass orders such as intimation under Section 200A (processing of TDS statement), intimation under Section 206CB(1) (processing of TCS statement), intimation under Section 206C(6A) treating a collector of TCS as assessee-in-default, orders under Section 201 treating a deductor as an assessee in-default, and orders imposing penalties under Chapter XXI (Section 270A to 275).

Understanding the specific scenarios in which appeals can be made empowers taxpayers to navigate the appeals process effectively. In subsequent parts of this series, we will delve deeper into the procedural aspects and considerations when filing appeals, providing a comprehensive guide for individuals navigating the intricate landscape of tax appeals.

Rectification Orders under Section 154 or Section 155

A significant aspect to consider is the possibility of rectification under Section 154 or Section 155, amending any of the orders mentioned earlier. This avenue allows for corrections or adjustments to be made to the initial orders, providing a mechanism for addressing errors or oversights.

Fees for Filing Appeals

Understanding the fee structure is vital for those considering an appeal. The fees for filing appeals before the JCIT (Appeals) are categorized based on the assessed income (total income as determined by the Assessing Officer). The fee structure is as follows:

  • Assessed income less than or equal to Rs. 1,00,000: Rs. 250
  • Assessed income more than Rs. 1,00,000 but less than Rs. 2,00,000: Rs. 500
  • Assessed income more than Rs. 2,00,000: Rs. 1,000
  • Appeals related to any other matter: Rs. 250

Orders Against Which Appeal Cannot Be Filed Before JCIT (Appeals)

It’s essential to note that according to the proviso to Section 246(1), no appeal can be filed before the JCIT (Appeals) if the order in question is passed by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner. In such cases, appeals are directed to the Commissioner of Income-tax (Appeals) [CIT (Appeals)].

Transfer of Pending Appeals

The JCIT (Appeals) has been empowered to entertain both new and pending appeals. Transfers from CIT (Appeals) to JCIT (Appeals) can occur under specific conditions outlined in sub-sections (2) and (4) of Section 246. Importantly, before such transfers, appellants are provided an opportunity to be reheard.

Faceless Disposal of Appeals

Section 246(5) grants the Central Government the authority to institute a scheme for faceless proceedings before the JCIT (Appeals), aiming to streamline and expedite the appeals process. The details of this scheme will be notified in the Official Gazette.

Tentative Time-Limit of One Year for Disposal

The Finance Act of 2023 has introduced a tentative time-limit of one year for the disposal of appeals by the JCIT (Appeals). This limitation applies to various types of appeals, emphasizing the importance of expeditious resolution.

Powers of the JCIT (Appeals)

The Finance Act 2023 has broadened the powers of the JCIT (Appeals) through the insertion of a new sub-section (1A) to Section 251. These powers include the authority to confirm, reduce, enhance, or annul assessments, as well as confirm, cancel, or vary penalties. Additionally, the JCIT (Appeals) has the discretion to pass such orders as deemed fit in other cases.

Appealable order

  1. Order Challenging Tax Liability Denial:
    • Appealable when the taxpayer disputes the liability to be assessed under the Income Tax Act.
  2. Adjustments in Intimation under Section 143(1)/(1B):
    • Appeals can be preferred when adjustments are made in the income offered for taxation in the return of income.
  3. Adjustments in Intimation under Section 200A(1):
    • Appeals are admissible when adjustments are made in the filed statement under Section 200A(1).
  4. Assessment Orders under Section 143(3) (excluding D.R.P. directed orders) and Section 144:
    • Appealable except in cases where orders are passed in compliance with the directives of the Dispute Resolution Panel (D.R.P.).
  5. Orders Arising from Reassessment under Section 147 (excluding D.R.P. directed orders) and Section 150:
    • Appealable except in cases where orders are passed in line with the directives of the Dispute Resolution Panel (D.R.P.).
  6. Assessment or Reassessment Orders under Section 153A or Section 158BC (in case of search/seizure):
    • Appealable orders in scenarios of search or seizure.
  7. Orders under Section 92CD(3):
    • Appeals are admissible for orders made under Section 92CD(3).
  8. Rectification Orders under Section 154 or Section 155:
    • Appealable when rectification is sought under Section 154 or Section 155.
  9. Orders under Section 163 (Treating Taxpayer as Agent of Non-Resident):
    • Appeals can be filed against orders treating the taxpayer as an agent of a non-resident.
  10. Orders under Section 170(2)/(3) Assessing the Successor:
    • Appealable orders assessing the successor of a business regarding income earned by the predecessor.
  11. Orders under Section 171 (Partition of Hindu Undivided Family):
    • Appealable orders recording findings about the partition of a Hindu Undivided Family.
  12. Orders by Joint Commissioner under Section 115VP(3) Refusing Tonnage-Tax Scheme Approval:
    • Appeals can be lodged against orders refusing approval for opting for the tonnage-tax scheme for qualifying shipping companies.
  13. Orders under Section 201(1)/206C(6A) Deeming Person Responsible for Deduction as Assessee-in-Default:
    • Appeals are admissible for orders deeming a person responsible for deduction as an assessee-in-default due to failure to deduct or collect tax at source.
  14. Orders Determining Refund under Section 237:
    • Appeals are allowed for orders determining refunds under Section 237.
  15. Penalty Orders under Various Sections (221/271/271A/271AAA/271F/271FB/272A/272AA/272B/272BB/275(1A)/158BFA(2)/271B/271BB/271C/271CA/271D/271E/271AAB):
    • Appealable orders imposing penalties under various sections.
  16. Penalty Orders under Chapter XXI:
    • Appeals are admissible for orders imposing penalties under Chapter XXI.
  17. Orders by AO under Section 239A:
    • Appealable orders passed by the Assessing Officer under Section 239A.

Signature to the Appeal: Who Can Sign?

The signature on the appeal holds significant weight, and it must be done by the person authorized to sign the return of income under Section 140, as applicable to the taxpayer. Let’s break down the signatory requirements:

  1. Individual Taxpayer:
    • The appeal is to be signed and verified by the individual taxpayer or by a person duly authorized through a valid power of attorney.
  2. Hindu Undivided Family (HUF):
    • If the appeal is by an HUF, the Karta of the family should sign. In the absence or incapacity of the Karta, any other adult member of the family may sign.
  3. Company:
    • For companies, the signature should come from the Managing Director. If the Managing Director is unavailable, or if there is none, any director of the company can sign.
  4. Foreign Company:
    • A person holding a valid power of attorney from the foreign company is authorized to sign on behalf of the company.
  5. Firm:
    • In the case of a firm, the Managing Partner should sign. If the Managing Partner is not available or if there is none, any partner (excluding minors) may sign.
  6. Limited Liability Partnership (LLP):
    • The appeal can be signed by the Designated Partner. If the Designated Partner is not available or if there is none, any partner can sign.
  7. Local Authority:
    • The Principal Officer of the local authority is designated to sign the appeal.
  8. Political Party:
    • The Chief Executive Officer of the political party should sign.
  9. Other Associations:
    • For other associations, the Principal Officer or any member of the association is authorized to sign.
  10. Other Persons:
    • In the case of any other person, the individual himself or any person competent to act on his behalf can sign the appeal.

Pre-deposit of Tax: A Necessary Step

Before filing the appeal, taxpayers are required to pay the tax determined based on the filed return of income. If no return has been filed, the taxpayer should pay tax equivalent to the amount of advance tax payable. However, there’s room for flexibility. The Commissioner of Income-tax (Appeal) may exempt the taxpayer from pre-deposit if a valid application is made, citing good and sufficient reasons for the non-payment of tax before filing the appeal.

Resolution of Appeals: Timely Disposal

Efficiency is paramount in the resolution of appeals. The Commissioner of Income-tax (Appeal) aims to conclude the appeal process within one year from the conclusion of the financial year in which the appeal is filed. According to Instruction No. 20/2003 [file no. 279/Misc 53/ 2003- ITJ], dated December 23, 2003, the order should be issued promptly, ideally within 15 days of the last hearing. This commitment to a swift and decisive resolution underscores the commitment to providing taxpayers with a timely and efficient appeals process.

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