Rise of American Accounts. "Hollywood. "

Direct Tax

Appeals.

Introduction.

On receipt of any order of Assessing Officer, if assessee is not satisfied, he has the following two remedies available :

(A) To fall back upon the Appellate Machinery provided under Income Tax Act, i.e., to file an appeal to CIT ( Appeals) and to other appellate authoritise ( i.e., ITAT, HC/NTT or SC) in sequential manner. [ Appeals ]. OR

(B) To apply to Commissioner of Income Tax ( CIT) for the revision of the order passed by an authority subordinate to him. [ Revision u/s 264.]

However, in certain cases, Commissioner of Income Tax ( CIT) can also revise any order of Assessing Officer, if such order is found to be erroneous and prejudicial to the interest of the revenue [ Revision u/s 263 ].

(A) Appeals

Meaning. Appeal refers to an act of referring the case / matter / situation to a higher authority against the order passed by a lower authority in respect of that case or matter. It implies a compliant to a higher authority against the order or judgement ( alleged to be erroneous) of an administrative authority or appellate authority. The complex nature of Income Tax Act and the various rules often, create a situation where there is difference of opinion among the assessee and the assessing officer (i.e.,Income tax department). Quite often, an assessee is not satisfied by an assessment order / any other order issued by any income tax authority and such an aggrieved assessee can present his case before specified authorities prescribed under Income Tax Act. Such prescribed authorities constitute 'appellate machinery ' or ' appellate authorities '.

' Right to appeal ' is a statutory right under Income Tax Act.

The right to appeal is not the natural or inherent right of the assessee. It is available to him only if specifically granted under Income Tax Act. Thus, it is a statutory right of the assessee and cannot be denied to him by any order of Central Board of Direct Tax (CBDT). It can be snatched from the assessee only by an express provision provided under Income Tax Act.

.Parties to an Appeal.

There are following two parties to any appeal :

(a) Appellant. The person filing an appeal is called 'appellant ' or 'applicant ' .Under Income Tax, the first appeal can only be filed by assessee and hence only assessee can be appellant in such a case. However, in subsequent appeals (i.e.,appeal to ITAT, HC or SC) appellant can be assessee or C. I. T.

(b) Defendent / Respondent. The person against whom the appeal is filed is called 'defendant ' or ' respondent '

.Special provisions for avoiding repetitive appeals.

The Taxation Laws (Amendment) Act, 1984 has inserted following provisions in the Income tax Act, 1961 with effect from assessment year 1985-86. These provision give powers to Assessing Officer and other appellate authorities to dispose of a case in which a question of law identical to a point which is pending with High Court or Supreme Court, is involved. These provision are :

1. Furnishing of declaration. [ Section 158 A (1) ]. Where an assessee claims that any question of law arising in his case for another assessment year is pending before High Court or Supreme Court, he may furnish to the Assessing Officer or the appellate authority, a declaration in prescribed form. Through this declaration he may request that if the Assessing Officer or appellate authority agrees to apply in the relevant case the final decision in the other case, he shall not raise such question of law in this relevant case in appeal before any appellate authority or in reference of High Court or Supreme Court.

2. Calling for report from Assessing Officer [ Section 158A (2) ]. When such declaration ( as above) is filed before an appellate authority, such authority shall call for a report from the concerned Assessing Officer about the correctness of such claim. Assessing Officer shall submit such report or can request to the appellate authority to give him an opportunity of being heard.

3. Disposal of claim [ Section 158 A(3) ] . The Assessing Officer or other appellate authority before whom such declaration is filed, may, by order in writing :

(a) admit the claim of the assessee if it is satisfied that question of law involved in such case is identical with the point involved in other case : or

(b) reject such claim, if not satisfied.

4. Issuing of assessment order [ Section 158A(4)]. Where the claim is admitted, the relevant authority will dispose of the case and make the assessment without awaiting for the final decision of the Court.

When such assessment is made assessee shall not have any right to go in appeal to any authority or Court regarding such question of law involved in such case.

5. Application of final decision. [ Section 158A(5) ]. When the decision on question of law in other cases becomes final, it shall be applied to the relevant case and Assessing Officer or the appellate authority, if necessary, amend the order as issued in sub-section (4) above.

6. Order u/s 158A (3) to be final [ Section 158A (6) ] . The order of Assessing Officer or other appellate authority admitting or rejecting the claim u/s 158A (3) shall be final and cannot be challenged by way of appeal, reference or revision under this Act.

GENERAL PROVISIONS.

Tax to be paid notwithstanding reference etc. [ Section 265 ]

Notwithstanding that a reference has been made to the High Court or the Supreme Court, or an appeal has been referred to the Supreme Court, tax shall be payable in accordance with the assessment made in the case.

.Execution of orders for costs awarded by the Supreme Court [ Sec. 266 ]

On a petition made for the execution of orders of the Supreme Court, in respect of any costs awarded thereby, the High Court may transmit the order for execution to any Court subordinate to the High Court.

.Amendment of assessment on appeal [ Section 267 ]

In case any change is made or new assessment is made, as a result of appeal u/s 246 or 253, on the assessment of Association of Persons or Body of Individuals, the Deputy Commissioner ( Appeals) , Commissioner ( Appeals) or the Appellate Tribunal may direct the Assessing Officer either to amend the assessment already made or to make the assessment afresh.

.Exclusion of time taken for copy [ Section 268 ]

In computing the period of limitation prescribed for an appeal, or an application under this Act, the day on which the order complained of was served and if, the assessee was not furnished with a copy of the order when the notice of the order was served upon him, the time required for obtaining a company of such order shall be excluded.

B. REVISION.

Revision of a best judgement assessment [ Section 146 ]

The assessee may, under prescribed circumstances, make an application to the Assessing Officer against his orders issued under Section 144 of the Act making Best Judgement Assessment for not complying with the notices issued under Section 139(2) or 142(1) or 143(2) for the revision of such orders. The prescribed grounds are :

(1) That he was prevented by sufficient cause from filing the return under Section 139(2), or

(2) That he did not have a reasonable opportunity to comply or was prevented by sufficient cause from complying with the terms of any notice served either under Section 142(1) or under Section 143(2).

In case the Assessing Officer is satisfied with the contention of the assessee, he shall cancel the original Best Judgement Assessment and shall make a fresh regular assessment.

.Revision by Commissioner.

(1) Revision of orders Prejudicial to Revenue. Section 263 of the Act, gives powers to Chief Commissioner or Commissioner to review any orders passed by Assessing Officer and to pass such orders thereon as the circumstances of the case justify. While passing orders he may enhance, cancel or modify an assessment or he may order a fresh assessment. The assessee has to be provided an opportunity of being heard in this case.

No order shall be made under this section after the expiry of two years from the end of financial year in which the order sought to be revised was passed.

(2) Revision of other orders. Under the provisions of section 264 in case of any order, other than that to which Section 263 applies, passed by authority subordinate to him, the Commissioner may either of his own motion or an application by the assessee for revision, call for the record of any proceedings, under this Act in which any such order has been passed and make such inquiries and orders thereon as he thinks fit. These orders cannot be prejudicial to the assessee.

In this case the revision proceedings can be started by the Commissioner of his own motion within one year of the passing of the order sought to be revised. If the assessee wants revisions of any order, the application accompanied by a fee of Rs 500 only from 1-6-2001 must be made within one year of 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 earlier.

The Commissioner shall not revise any order under this section in the following circumstances :

(a) Where an appeal against the order lies to the Deputy Commissioner ( Appeals) or to the Appellate Tribunal or it has not been made and the time for its making has not expired or in the case of an appeal to the Tribunal, the assessee has not waived his right of appeal : or

(b) Where the order is pending on an appeal before the Deputy Commissioner ( Appeals) : or

(c) Where an appeals has been made to Appellate Tribunal against the order.

An appeal can be made by assessee to the Tribunal against the order u/s 263 but no appeal can be made against the order under Section 264.