The Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] is the first appellate authority which can be approached whenever an assessee is not in agreement with the order passed by the Assessing Officer during the course of an assessment. Section 246 and Section 246A list out the orders that are appealable before the first appellate authority. In this article, we will see the basic procedures to be followed and the points to be kept in mind while dealing with appeals before the CIT(A).
As per section 249(2) an appeal before the CIT(A) is to be presented/filed within 30 days of service of notice of demand/order appealed against. This means the starting date for calculation of limitation period is the date on which the notice of demand/ order appealed against is received by the assessee and not the date of passing of order or the date of dispatch thereof in name of the assessee.
However, under section 249(3) the Commissioner (Appeals) has been entrusted with the power to condone the delay in filing of appeal if he satisfied that the appellant had sufficient cause for not presenting the appeal within the prescribed time. An application for condonation of delay in writing is to be made by the appellant specifying the reason for the delay. It is to be noted that the power to condone the delay in filing the appeal is a discretionary power vested on the CIT(A) and it is not mandatory for the CIT(A) to condone the delay in every application received thereof.
Some of the instances, whereby the delay in filing the appeal may be condoned by the CIT(A) are presented below:
1. Illness or death of a family member of the appellant or the person authorized to file an appeal on behalf of the appellant (partner, director)
2. Delay due to negligence of counsel not attributable to the appellant
3. Conflicting legal advises
In any case, the application for condonation of delay will have to be supported by documentary or other circumstantial evidence.
From 01/03/2016 it is mandatory to file an appeal before the CIT(A) in electronic form, for all the assessees who are required to file the return of income in electronic form. An appeal in paper/physical form shall be accepted only in case of an assessee who has the option also to file the return of income in paper form.
On the e-filing portal, FORM 35 can be prepared and submitted online. FORM 35 is available under the following tab on the filing portal:
e-file—> Income Tax Forms—> In Form Name select FORM 35 ->Select the CIT(A) jurisdiction from the drop down —> Continue
FORM 35 will have to be accompanied by the following documents, that will have to be submitted as separate attachments (each being of not more than 5MB and in pdf format):
1. Order appealed against
2. Notice of demand
3. Any other attachment (usually the power of attorney, detailed statement of facts and the copy of challan in respect of appeal fees paid)
Appeal filing fees:
|Total income computed by AO is upto Rs. 1lakh||250/-|
|Total income computed by AO is more than Rs.1lakh but upto Rs.2 lakh||500/-|
|Total income computed by AO is more than Rs.2lakh||1000/-|
|Any other case (eg. appeal against penalty orders)||250/-|
In case of a deceased assessee, an appeal can be filed by the legal heir by registering himself/herself as legal heir on the e-filing portal of the deceased person. It can be done following the below-mentioned steps:
My Account—> Register as representative —> In category select legal
While registering a legal heir the following documents shall be required to be submitted:
1. Copy of PAN Card of deceased
2 Copy of PAN Card of the legal heir
3. Copy of death certificate
4. Copy of legal heir proof
5. Copy of order passed in name of the deceased
The e-filing portal accepts only the following documents as a legal heir certificate:
1. A legal heir certificate issued by the court of law
2. A legal heir certificate issued by the local revenue authorities
3. A surviving family members certificate issued by the local revenue authorities
4. Registered will
5. Family pension certificate issued by state/central government
6. Letter issued by banking or financial institution on their letterhead with seal and signature mentioning the particulars of the nominee or joint account holders the account of the deceased at the time of demise
7. VII.Provide a Hindi/English translation of the will/legal heir certificate, duly notarised along with the copy of the original certificate
As per Rule 46A, of the Income Tax Rules, 1962 additional evidences may be admitted by the CIT(A) only in the following circumstances:
1. where the AO has refused to admit evidence which ought to have been admitted; or [eg. non-acceptance of submission during the assessment proceedings without reasonable cause thereto]
2. where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO; or [eg. non-availability of the evidence at the time of assessment proceedings]
3. where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal ; or [eg. delay in obtaining the relevant evidence not attributable to the assessee]
4. where the AO has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
While filling the FORM 35 one may opt to request the CIT(A) to admit additional evidence and submit a list of additional evidence that the appellant wishes to present.
If the additional evidences are accepted by the CIT(A), the same shall then be first also sent to the AO for cross-examination and rebuttal. The AO shall submit his/her report in form of a “Remand Report” either by raising or without raising any qualifications to the admission of additional evidences.
A copy of the remand report shall also be made available to the appellant for rebutting any qualification raised by the AO. The CIT(A) while dealing with the additional evidences and disposing of the appeal, shall consider both, the AO’s remand report as well as the appellant’s reply to the remand report (usally titled as “Rejoinder to the remand report”)
Statement of facts (SOF) and Grounds of appeal (GOA):
Drafting of proper SOF and GOA is an important step while filing an appeal before the CIT(A). The SOF and GOA filed before CIT (A) are the most important documents when appeals are filed before the Income-tax Appellate Tribunal (ITAT) and High Court. This is because in appeals before the Tribunal or the High Court, Statement of Facts and Grounds of Appeal before CIT (A) compulsorily form part of the record before them. SOF cannot be filed before the ITAT and therefore it is very important to bring out all the facts relating to the case on record before the CIT(A). Moreover, bringing new facts on record before higher authorities may lead to remanding back of the case to the AO’s file and therefore cause delay.
Drafting tips for Statement of facts:
1. SOF must be comprehensive and must include all the details in respect of the case . It should include facts such as the date on which return was filed by the assessee, the taxable income declared, date of receipt of notice from the AO, details submitted before the AO, doubts raised by the AO and the assesses reply in brief.
2. All factual mistakes/ errors/ incorrect observations of the AO must be specifically mentioned, challenged, and rebutted. This would include instances where the AO has wrongly stated in the assessment order that certain details were called for and not submitted. Wherever possible, the correct position should be expressly mentioned.
3. Issues such as lack of proper opportunity of being heard, relying on documents without providing assessee proper opportunity to cross-examining, non granting of adjournment by AO without reasonable cause must explicitly be stated in the SOF.
4. Remember this is only a document stating facts or the sequence of events. It must not consists of arguments against the action of the AO. Arguments against the action of the AO and explanation regarding the correctness of claim by the assessee is to be explained by giving ground wise explanation in the written submission made before the CIT(A).
Drafting tips for Grounds of appeal:
1. Take separate ground for each addition or issue
2. Grounds must be concise and complete, they should not be general and vague. Though general grounds can be clubbed and presented as one ground of appeal with sub-points to it.
3. It advisable that the following terminology is used in presenting each ground of appeal: “ On the facts and the circumstances of the case and in law …….”
4. For presenting alternative pleas the words, “Without prejudice to” should be used.
5. In the end, the appellant must add a prayer to add, amend, or abandon any or all of the grounds of appeal.
If the appellant omits to include any ground of appeal while filing FORM 35, the same can subsequently be submitted to the CIT(A) as additional grounds of appeal during the appellate proceedings. However, raising additional ground may cause a delay on disposal of the appeal as the notice of additional grounds being raised by the appellant shall be given to the AO by the CIT(A) and his comments on the same shall be called for.
Application for stay of demand:
Once the appeal is admitted by the CIT(A), the assessee should make an application to the AO for a stay of demand raised. Also, in case were subsequent to the finalization of assessment, penalty proceedings have been initiated by the AO, an application should be made to the AO to keep the penalty proceedings in abeyance till the disposal of appeal by the CIT(A) relating to the assessment.
As the CBDT circular, a stay of demand can be obtained by the assessee by paying 20% of the demand raised by the department.
However, there are other aspects to obtaining a stay of demand such as, stay of demand without payment or payment of an amount less than 20% of the demand, stay of demand by payment of a higher sum, non granting of stay by the AO etc. These issues shall be discussed in detail in upcoming articles. But as a general practice, the AO insists on payment of 20% of the demand in order to grant a stay during the pendency of the appeal before the CIT(A).
Written submission and oral presentation before the CIT(A):
The written submission to be presented before the CIT(A) must be a detailed one. Ground wise explanation of each issue contested in the appeal must be given. Further, as far as possible each contention should be supported by relevant evidence. The evidence relied upon by the appellant must either be attached with the main submission in the form of Annexures or may be given as a separate Paper Book. In either case, references of these evidences should be given in the written submission. Other than relying on evidences, contentions can also be supported with relevant case laws of the Supreme Court or the jurisdictional High Court and ITAT. References made to the case laws should be to the point by stating proper citation and reproducing relevant extracts of the judgement.
The written submission can either be submitted beforehand to the CIT(A) or may be presented at the time of the personal hearing.