Appeal Before Commissioner of Income Tax (Appeals)- 1st Appeal detailed process

Adv Aditya Narayan

1 year ago

Appeal before Commissioner of Income Tax: An Assessing Officer (AO) plays a pivotal role in the tax system, ensuring that taxpayers accurately declare their income and calculate their tax liabilities. Additionally, AOs have the authority to investigate potential cases of tax evasion and levy taxes and penalties on the default taxpayers whenever necessary. In such situations, taxpayers have the option to challenge the AO’s decision by filing an appeal before the Commissioner of Income-tax (Appeals) who is the first appellate authority.

The Income-tax Act of 1961 provides several avenues for taxpayers to contest AO orders following assessment proceedings. It’s essential to grasp the key concepts related to filing appeals or petitions before the first appellate authority in the income tax appeals hierarchy, known as the Commissioner of Income Tax (Appeals) or CIT(A). Section 246A of the Act specifies the list of orders against which an appeal can be filed before the CIT(A).

List of Orders against which appeal can be filed before CIT(A)

The list of major orders against which an appeal can be preferred before the Commissioner of Income-tax (Appeals) is given below:
Order passed against the taxpayer in a case where the taxpayer denies the liability to be assessed under Income Tax Act.
Intimation issued under section 143(1)/(1B) where adjustments have been made in income offered to tax in the return of income.
Intimation issued under section 200A(1) where adjustments are made in the filed statement.
Assessment order passed under section 143(3) except in case of an order passed in pursuance of directions of the Dispute Resolution Panel
An assessment order passed under section 144.
Order of Assessment, Re-assessment or Re-computation passed after reopening the assessment under section 147except an order passed in pursuance of directions of the Dispute Resolution Panel.
An order referred to in section 150.
An order of assessment or reassessment passed under section 153A or under section 158BC in case of search/seizure.
Order made under section 92CD(3).
Rectification order passed under section 154 or under section 155.
Order passed under section 163 treating the taxpayer as agent of non-resident.
Order passed under section 170(2)/(3) assessing the successor of the business in respect of income earned by the predecessor.
Order passed under section 171 recording the finding about partition of a Hindu Undivided Family.
Order passed by Joint Commissioner under section 115VP(3) refusing approval to opt for tonnage-tax scheme to qualifying shipping companies.
Order passed under section 201(1)/206C(6A) deeming person responsible for deduction of tax at source as assessee-in-default due to failure to deduct tax at source or to collect tax at source or to pay the same to the credit of the Government.
Order determining refund passed under section 237.
Order imposing penalty under section(s) 221/ 271/ 271A/ 271AAA/ 271F/ 271FB/ 272A/ 272AA/ 272B/ 272BB/ 275(1A)/ 158BFA(2)/ 271B/ 271BB/ 271C/ 271CA/ 271D/ 271E/ 271AAB.
Order imposing a penalty under Chapter XXI.
Order passed by the AO under section 239A

Time-limit for filing an appeal

As per Section 249(2), appeal to the CIT(A) should be filed within 30 days of the following date:

(a) Where the appeal relates to any assessment or penalty, the date of service of notice of demand relating to the assessment or penalty.

(b) In any other case, the date on which intimation of the order sought to be appealed against is served.

The Commissioner of Income-tax (Appeals) has the discretion to accept a late application if valid reasons are presented. To request an extension for filing an appeal after the due date, taxpayers should submit an application for condonation of delay, accompanied by an explanation for the delay and any supporting evidence. This application should be submitted using Form No. 35, which is the designated form for appeals.

Form used for appeal before commissioner

The Central Board of Direct Taxes (CBDT) made changes to Rule 45 of the Income-tax Rules, 1962, concerning the submission of the Form of appeal to the Commissioner of Income Tax (Appeals) or CIT(A) through the Income-tax (3rd Amendment) Rules, 2016. As a result of this amendment, the CBDT introduced a new Form No. 35 for the purpose of filing appeals before the CIT(A). Furthermore, it’s important to note that e-filing of this Form has been made compulsory for individuals for whom e-filing of their income tax returns is mandatory. This move aims to streamline and modernize the appeals filing process, aligning it with the broader trend of digitalization in tax administration.

Authorized Person to sign the appeal before commissioner

The Form of appeal, along with the attached Grounds of appeal and the Form of verification, should be signed and confirmed by the individual who is authorized to sign the income tax return under Section 140, as applicable to the taxpayer. In other cases, form of appeal is to be signed and verified by following:

(1) In case of appeal by an individual taxpayer, by the individual taxpayer himself or by a person duly authorized by him who is holding a valid power of attorney;

(2) In case of a Hindu Undivided Family, by the Karta of the family or if Karta is absent from India or is not capable for signing, by any other adult member of such family;

(3) In case of a company, by the Managing Director or if Managing Director is not available or where there is no Managing Director by any director of the company;

(4) In case of foreign company, by a person who holds a valid power of attorney from such company;

(5) In case of a firm, by the Managing Partner or if Managing Partner is not available or where there is no Managing Partner by any partner (not being a minor);

(6) In case of a LLP, by the Designated Partner or if Designated Partner is not available or where there is no Designated Partner by any partner.

(7) In case of a Local Authority, by the Principal Officer thereof;

(8) In case of a Political Party, by the Chief Executive Officer of such party;

(9) In case of any other Association, by the Principal Officer thereof or by any member of the Association;

(10) In case of any other Person, by that Person or by some person competent to act on his behalf.

Pre-deposit of tax for appeal before Commissioner of Income Tax (Appeals)

Prior to filing an appeal, it is necessary for the taxpayer to settle the tax amount that corresponds to the income declared in their income tax return. If the taxpayer hasn’t filed an income tax return, they are required to pay an amount equal to the advance tax they are liable for. However, under certain circumstances, the Commissioner of Income-tax (Appeals) has the authority to grant an exemption from the pre-appeal tax payment upon request from the taxpayer. This exemption is considered when the taxpayer can demonstrate valid and substantial reasons for their inability to make the tax payment before filing the appeal.

Documents to be submitted with appeal before commissioner

Form No. 35 (including statement of facts and grounds of Appeal)
Copy of order, appealed against.
Notice of demand in original.
Copy of challans of fees paid for appeal having details of BSR code, date of payment of fee, serial number and amount of fee.
Any additional document on which appeal is based upon, like bank statement, ITR copy of the year appealed for, sample case laws on which grounds of appeal is based, etc.

Fees for Appeal before Commissioner of Income Tax

The fees for filing the appeal before the Commissioner of Income-tax (Appeals) are as follows:

Subject Matter	Assessed Income	Appeal fees
Assessment	Up-to Rs.100000	Rs.250
	More than Rs.100000 & Up-to Rs.200000	Rs.500
	More than Rs.200000	Rs.1000
Any other matter		Rs.250

Conclusion: Appeal Before Commissioner of Income Tax (Appeals)

In conclusion, the AO’s role in tax assessment is crucial, and taxpayers have legal recourses to challenge their decisions through the Commissioner of Income-tax (Appeals) and other appellate authorities as provided under the Income-tax Act, 1961. Understanding the appeal process and the types of orders eligible for appeal is vital for taxpayers seeking to contest tax assessments.

For more details, you can refer the FAQ from official Income Tax site-https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-form/form35-faq

Presumptive Taxation Scheme u/s. 44ADA & 44AE of Income Tax Act

Presumptive Income Under Section 44AD

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