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Income Tax Appellate Tribunal (ITAT) is a quasi-judicial authority to file appeals against the orders of income tax authorities. A tax appeal can be filed by a taxpayer who does not agree with the assessment order or any other order, passed by an income-tax authority. Similarly, an income-tax authority can also file an appeal against any order passed by lower income-tax authorities.

  1. Nature and structure of ITAT
  2. Functions of the ITAT
  3. Appealable orders
  4. Monetary limits applicable to the filing of appeals
  5. Procedure to file an appeal before the ITAT
  6. Appeal filing fees
  7. Time available for filing an appeal
  8. Filing memorandum of cross-objections
  9. Representation before the ITAT
  10. Presentation of evidence
  11. Orders by the ITAT

1. Nature and structure of ITAT

The ITAT is a quasi-judicial body set up by the Central Government to deal with appellate matters under the Income Tax Act, 1961. The ITAT functions under the Ministry of Law and Justice. There are different benches of the ITAT for different regions having regional jurisdiction.

The President of the ITAT constitutes a bench of an ITAT from amongst the members of the ITAT. Each bench shall consist of an accountant member and a judicial member. However, the President or any member of the ITAT may dispose of any appeal, where the total income as calculated by the Assessing Officer does not exceed Rs 50 lakh. In cases where required, the ITAT may constitute a special bench with three or more members to dispose of appeals, with at least one accountant member and one judicial member.

The ITAT is also the final fact-finding authority. Any decision of the ITAT is final when it concerns factual matters.

2. Functions of the ITAT

Income Tax Appellate Tribunal hears appeals concerning orders passed by the income-tax authorities. It is the second forum to hear income-tax appeals after the Commissioner of Income-tax (Appeals).

The ITAT functions under the supervision of the jurisdictional High Court and is subordinate to the High Court. The ITAT should follow the precedent set by the jurisdictional High Court. That means it is bound to follow the law laid by the High Court in a matter it is dealing with in appeal. Similarly, the ITAT should also follow the precedent or law laid by the Supreme Court of India.

3. Appealable orders

The following orders are appealable before the ITAT:

  1. Orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)].
  2. Orders passed by the jurisdictional Commissioner.
  3. Orders passed by the Assessing Officer as per the directions of the Dispute Resolution Panel.
  4. Orders passed by the Assessing Officer.
  5. Penalty order passed by the Commissioner.
  6. Application for stay of tax demands.
  7. Other miscellaneous applications for recall of orders.

4. Monetary limits applicable to the filing of appeals

The Central Board of Direct Taxes (CBDT) can issue orders or instructions or directions to the income-tax authorities. The CBDT can also fix the monetary limits to regulate the filing of appeal or application or reference to the ITAT, jurisdictional High Court or Supreme Court.

The CBDT vide instruction no. 17/2019 dated 8 August 2019 for filing appeals by the income tax department before the ITAT, High Courts or Supreme Courts as follows:

  1. Before the ITAT – Rs 50 lakh.
  2. Before the High Court – Rs 1 crore.
  3. Before the Supreme Court – Rs 2 crore.

The monetary limits are for the tax effect in a particular case. ‘Tax effect’ refers to the difference between the tax on the assessed income and tax on the income without the assessment adjustments. An Assessing Officer should determine the tax effect for each assessment year for a taxpayer. Though above are the monetary limits for filing appeals, one should check the merits of the case before submitting a request.

5. Procedure to file an appeal before the ITAT

An appeal to the ITAT should be in Form No. 36, filed in triplicate. The appeal submission should be in the form of a paper book consisting of:

  1. Two copies of the order appealed against with one certified copy.
  2. Two copies of the order of the Assessing Officer.
  3. Two copies of Grounds of appeal earlier submitted before the first appellate authority, the CIT(A).
  4. Two copies of the Statement of facts provided before the CIT(A).
  5. Two copies of the assessment order in a case where the appeal is against a penalty order.
  6. Two copies of the directions of the Joint Commissioner where the appeal is against an assessment order passed according to instructions of the Joint Commissioner.
  7. Two copies of the original assessment order where the appeal is against a reassessment order passed under section 147.
  8. A copy of the ITAT fee paid challan.
  9. Two copies of the submissions, documents and papers, as submitted earlier during the income-tax proceedings or before the CIT(A).
  10. Two copies of any other documents or facts the appellant wishes to provide.

The paper book should be in order and with due indexing. A person filing an appeal should submit the paper book at least a week in advance before the scheduled hearing and also furnish a copy to the respondent. The ITAT may condone the delay in filing a paper book depending on the facts and circumstances of a case.

6. Appeal filing fees

A person filing an appeal with the ITAT should pay the following appeal filing fee. The fee is dependent on the income assessed by the Assessing Officer. The income does not include the effect of the order passed by the CIT(A).

  1. Total income assessed is less than Rs 1 lakh – Rs 500
  2. Total income estimated is more than Rs 1 lakh but less than Rs 2 lakh – Rs 1,500
  3. Total income assessed is more than Rs 2 lakh – 1% of the total income assessed not exceeding Rs 10,000

In case the appeal relates to any other matter, the filing fee is Rs 500. And, in the case of an application for stay of demand, the appeal filing fee is Rs 500.

The ITAT fixes and notifies both the parties about the date and place for the hearing of the appeal. The respondent also receives a copy of the memorandum to the appeal along with the notice. The respondent may receive a notice of appeal before the memorandum.

7. Time available for filing an appeal

The time allowed to file an appeal is 60 days from the date of communication of the order, which is the subject matter of the appeal.

8. Filing memorandum of cross-objections

The respondent to an appeal should file a memorandum of cross-objections with the ITAT within 30 days of receiving notice from the ITAT. The form prescribed for filing cross-objections in Form No. 36A. There is no fee to file the cross-objections. The ITAT may accept a delayed submission of Form No. 36A depending on the facts and circumstances of the appeal.

9. Representation before the ITAT

The appellant and respondent can seek representation from an authorised person to appear for the hearing before the ITAT. Section 288 of the Income Tax Act, 1961 prescribes the persons who can act as an authorised representative. However, a taxpayer cannot seek representation in cases of a personal examination on oath.

10. Presentation of evidence

None of the parties is eligible to file additional evidence before the ITAT. In a case, the ITAT requires any document, affidavits or seeks to examine any witnesses, and the ITAT may allow for the production of documents or examination of persons or other evidence.

11. Orders by the ITAT

The bench of the ITAT hears the matter of the appeal and passes the order deciding the appeal.

In a case where one or more of the parties fail to appear on the dates fixed for hearing, the ITAT can dispose of the appeal ex-parte. In case the other party/parties appear after the disposal and satisfy the ITAT with reasons for non-appearance, the ITAT may set aside its earlier ex-parte order.

In general, a bench consisting of an accountant member and one judicial member passes the order of the ITAT. However, in specific cases of importance, the President of the ITAT may constitute a special bench consisting of three or more members, with at least one accountant member and one judicial member. In case the members differ in the decision on any point under consideration, the decision of the majority prevails. In case the members of the bench are divided in opinion, the President hears and decides the appeal.