Summary: Under Section 154 of the Income Tax Act, authorities can correct mistakes in orders if they are evident from the records. This power allows rectification of errors in various orders including those from the Assessing Officer, intimation of returns, and statements of tax collected. Mistakes that have been subject to appeal or revision cannot be rectified. Rectification can be initiated by the authority on their own or if pointed out by the assessee. Specific timelines are prescribed for different authorities: Assessing Officers and CIT(A) must act within four years from the financial year end, whereas ITAT must complete rectifications within six months from the order’s end month. Failure to comply with specific conditions under Sections 35ABA, 115JH, or 115JG also allows rectification within four years. Assessments can include summary, scrutiny, and best judgment assessments. Summary assessments check for arithmetic errors and incorrect claims without detailed verification. Scrutiny assessments involve a detailed examination and can be limited or complete, conducted electronically. Best Judgment Assessments are made when the assessee fails to cooperate or maintain proper accounts, with specific cases requiring compulsory judgments. All rectification orders, if contested, can be appealed to higher authorities.
Taxpayers are required to maintain books of accounts and get them audited if their gross turnover or receipts during the previous year exceed the prescribed threshold limit. The requirement to keep the books of accounts is specified under Section 44AA, and to get them audited is mentioned in Section 44AB of the Income-tax Act. The purpose of a tax audit is to ensure that the taxpayer maintains proper books of account and complies with the provisions of the Income-tax Act.
If there is any mistake in the order passed by the Income-tax authorities, the said authority can rectify such mistake under section 154. The power to rectify the mistake may be exercised by the authority concerned on his own initiative or when the mistake is brought to his notice by the assessee concerned. Every taxpayer has to furnish the details of his income to the Income-tax Department by filing his return of income. Once the return of income is filed by the taxpayer, the next step is the processing of the return of income by the Income Tax Department. The process of examining the return of income by the Income Tax department is called as “Assessment”. An appeal is a process by which a person (assessee or revenue) aggrieved by an order passed by the tax authority or judicial authority, as the case may be, can challenge it before the higher judicial authorities.
Rectification, Assessment, and Appeal
Rectification of Mistake – If there is any mistake in the order passed by the Income-tax authorities, the said authority can rectify such mistake under section 154. The power to rectify the mistake may be exercised by the authority concerned on his own initiative or when the mistake is brought to his notice by the assessee concerned.
| RECTIFICATION OF MISTAKE [SECTION 154] | |
| Which order can be rectified? | If any mistake is apparent from the record, the Income-tax authority can rectify such mistake. The Income-tax authority can rectify the mistakes which are apparent in the following orders:
(a) Any order passed by it; (b) Intimation issued after processing of Income-tax return; (c) Intimation issued after processing of statement of Tax Deducted or Tax Collected at source. The Income-tax authority cannot rectify that part of his order, which has been considered and decided in any proceeding by way of appeal or revision. However, a mistake in the order, which was not the subject matter of appeal or revision, can be rectified by the authority which has passed that order. |
| Who can rectify the mistake? | The power to rectify the mistake may be exercised by the authority concerned on his own initiative. The authority can exercise this power if mistake has been brought to his notice by the assessee or deductor or collector.
If there is a mistake in an order passed by the Joint Commissioner (Appeals) or Commissioner (Appeals), the Joint Commissioner (Appeals) or Commissioner (Appeals) can rectify the mistake if it has been brought to his notice by the assessee or deductor or collector or the Assessing Officer. Further, if there is a mistake in an order passed by the Appellate Tribunal, the Tribunal can rectify the mistake if it has been brought to his notice by the assessee or the Assessing Officer. |
| Time limit for rectification of order | Order passed by Assessing Officer or CIT (Appeals) or JCIT (Appeals)
An order of rectification is required to be passed within a period of 4 years from the end of the financial year in which the order (sought to be rectified) was passed. However, where an application for rectification is made by the assessee, deductor, or collector, the income tax authority is required to pass an order rectifying the mistake within a period of 6 months from the end of the month in which the application is received by it. Order passed by ITAT Where rectification is to be made by the Appellate Tribunal, it shall be made within a period of 6 months from the end of the month in which such order was passed. The rectification can be made when the mistake was brought to its notice by the assessee or the Assessing Officer. Where such rectification is prejudicial to the assessee, he shall be provided an opportunity of being heard. Order passed by TPO for determination of ALP Where Transfer Pricing Officer has passed an order, under Section 92CA, determining the Arm’s Length Price in relation to an International Transaction or specified transaction and it contains a mistake apparent from the record, the Assessing officer is required to rectify the order to correct such mistake. Such rectification can be made any time within 4 years from the end of the previous year in which the order of Transfer Pricing Officer was passed. Failure to comply with conditions of Section 35ABA Where an assessee was allowed deduction for expenditure incurred on the acquisition of any right to use spectrum for telecommunication services under Section 35ABA, but subsequently he failed to comply with the provisions of this section, the Assessing Officer shall rectify the assessment order to disallow the deduction. Such rectification can be made any time within 4 years from the end of the previous year in which failure takes place. Increase in book profit due to APA or Secondary Adjustment Where the book profit of the assessee has increased due to an advance pricing agreement or secondary adjustment, the Assessing Officer shall, on an application made by the assessee in this behalf, re-compute the book profit of the past years and tax payable thereon. Consequently, the Assessing Officer needs to amend the assessment order within 4 years from the end of the financial year in which such application is received by him. Foreign Co. fails to comply with conditions of Section 115JH Section 115JH provides that where a foreign company has been treated as resident in India in the relevant previous year, and it has not been a resident in India in any of earlier previous years, certain provisions as notified by the Central Government shall apply with exceptions, modifications, and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which such failure takes place. Foreign Co. fails to comply with conditions of Section 115JG Section 115JG provides that where a foreign company is engaged in the banking business in India through its branch situated in India and such branch is converted into a subsidiary company (an Indian company) then certain provisions as notified by the Central Government shall apply with exceptions, modifications and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which failure takes place. |
| Appeal against rectification order | Assessee aggrieved by a rectification order passed by the competent authority having the effect of enhancing assessment or reducing refund or order refusing to allow claim made by the assessee can prefer an appeal before CIT(A) or JCIT(A) or make an application for revision. However, the appeal cannot be preferred against an assessment order passed on the invocation of GAAR.
However, the appeal shall be filed with the Income Tax Appellate Tribunal (ITAT): (a) Where rectification order is passed by the Commissioner (Appeals); (b) Where rectification order is passed by the Joint Commissioner (Appeals); (c) Where rectification order is passed against assessment orders which were passed by the assessing officer in pursuance of the directions of the Dispute Resolution Penal; or (d) Where rectification order is passed against assessment orders which were passed by the assessing officer to invoke the provisions of GAAR. |
Assessment of Income – Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing his return of income. Once the return of income is filed by the taxpayer, the next step is the processing of the return of income by the Income Tax Department. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income Tax department is called as “Assessment”.
The assessment also includes re-assessment under section 147/148 and best judgment assessment under section 144. Under the Income-tax Law, there are four major assessments as given below:
- Assessment under section 143(1), i.e., Summary assessment.
- Assessment under section 143(3), i.e., Scrutiny assessment.
- Assessment under section 144, i.e., Best judgment assessment.
- Assessment under section 147, i.e., Income escaping assessment.
| SUMMARY ASSESSMENT [SECTIONS 143(1)] | |
| What is summary assessment? | Summary Assessment is a preliminary assessment on the basis of return submitted by the assessee. It is completed without calling the assessee and without passing a regular assessment order. |
| Scope of summary assessment | The summary assessment (also known as ‘Intimation’) is done through computerized processing at Centralized Processing Centre, Bengaluru. In this, all Income-tax returns filed under section 139 or in response to a notice under section 142(1) are processed to verify and fix the arithmetical errors, apparent errors, tax calculation, and tax payments. At this stage, no verification of the income is undertaken.
However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. Income-tax return is processed to compute total income or loss after making the following adjustments: However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. 1. Any arithmetical error in the return 2. An incorrect claim apparent from any information in the return 3. Disallowance of loss claimed if return of the previous year for which set-off of loss is claimed was furnished beyond the due date 4. Disallowance of expenditure or increase in income indicated in the audit report but not considered in computing the total income in the return; 5. Disallowance of deduction claimed under Section 10AA or Chapter VI-A under the heading “C-Deductions in respect of certa in incomes”, if the return of income is furnished beyond the specified due date. Meaning of‘ Incorrect Claim’ ‘An incorrect claim apparent from any information in the return’ means a claim. On the basis of an entry in the Income-tax return: (a) Which is in consistent with another entry of the same or some other item in such return (b) In respect of which, information required to be furnished to substantiate such claim, has not been furnished (c) In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction. |
| Re-computation of tax after adjustments | The CPC is required to process the return to ascertain if any tax or interest is due from the assessee or refund is due to him. It is determined after rectifying the arithmetical error or incorrect claim in the Income-tax return. Thus, the tax and interest, if any, shall be re-computed on the basis of the adjusted income.
Before making any adjustment, an opportunity shall be provided to the assesses to explain and rectify the same within 30 days from the date of issue of such intimation. The response to such adjustment has to be submitted through the e-filing account of the assessee without any need to visit the income tax department. The response so received from the assessee shall be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation is to be made. |
| Issue of intimation to the assessee | If any tax or interest is found due from the assessee, the CPC is required to send an intimation to the assessee. Intimation shall be made in writing or electronic mode. The intimation sent to him is deemed to be a ‘Notice of Demand’. The assesses is required to pay such tax within 30 days from the date of receipt of intimation failing which he is treated as an assessee-in-default. Consequently, recovery proceedings can be started against him. Where any refund is found due to the assessee on the basis of the return, the CPC is required to grant the same to the assessee and send an intimation to him. |
| Time limit for issue of intimation | If any sum is found due from the assessee or any sum is found due to the assessee, the CPC is required to send an intimation to him within 9 months from the end of the financial year in which the return is furnished. However, the intimation may not be issued, and acknowledgement of the return shall be deemed to be the intimation, if no sum is payable by, or refundable to, the assessee, and where no adjustment has been made. |
| Appeal against intimation | Assessee aggrieved by adjustments made under intimation can prefer an appeal before CIT(A) or make an application for revision. |
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| SCRUTINY ASSESSMNET [Section 143(3)] | |
| What is scrutiny assessment? | Scrutiny Assessment is a detailed examination of the Income-tax return submitted by the assessee. All Income-tax returns are first examined at Centralized Processing Centre, Bengaluru which is called ‘Summary Assessment’. Thereafter, a certain percentage of tax returns are selected every year for scrutiny assessment, wherein the department verifies the correctness and completeness of income, deductions claimed, tax liability, etc. This assessment is done by passing an assessment order. |
| Type of scrutiny assessment | The scrutiny assessment can be either limited scrutiny or complete scrutiny. The CBDT introduced the concept of ‘Limited Scrutiny’ to limit the scope of income tax scrutiny. In such cases, the notices shall contain the issues identified for examination and the same shall be communicated to the assessee. The enquiry shall remain confined only to the specific reasons/ issues for which the case has been picked up for scrutiny. These cases shall be completed expeditiously in a limited number of hearings. |
| Manner of conducting scrutiny assessment | Section 144B has made it mandatory to conduct the scrutiny assessment under Section 143, the best judgment assessment under Section 144, and the re-assessment under Section 147 in a faceless manner. Such faceless assessment shall be made in respect of those territorial areas, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be prescribed by the Board. Therefore, the assessment of the total income or loss of the assessee under Section 143(3) shall be conducted in a faceless manner. All scrutiny assessments, other than those covered under Section 144B, shall be conducted electronically. |
| Time limit for issue of notice | To carry out an assessment under section 143(3), the Assessing Officer shall serve a notice on the taxpayer in accordance with provisions of section 143(2) within a period of 3 months from the end of the financial year in which the return is filed. |
| Deemed validity of notice served | Section 292BB provides that even an improper notice shall be deemed to be valid and served on the assessee if:
(a) The assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) He has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (c) served upon him in an improper manner. |
| Time limit for completion of scrutiny assessment | The time limit for making an assessment under Section 143(3) is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards]
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| Appeal against assessment order | Assessee aggrieved by assessment order passed for scrutiny assessment can prefer an appeal before CIT(A) or make an application for revision.
However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT. |
| Grievance against high-pitched scrutiny assessment | Assessee aggrieved by high-pitched and unreasonable additions made by the assessing officer can prefer to file a grievance before the Local Committee. The Local Committees are constituted by the CBDT in each Principal CCIT region to quickly resolve such grievances. |
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| BEST JUDGMENT ASSESSMENT [SECTION 144] | |
| What is Best Judgment Assessment? | Best Judgment Assessment means the estimation of the taxable income of an assessee by the Assessing Officer on the basis of available information and resources. This assessment takes place if the assessee does not cooperate in assessment proceedings or if correct profit cannot be calculated on the basis of books of accounts maintained by the assessee.
The Best Judgment Assessment can be classified into the following two categories: (a) Compulsory Best Judgment Assessment (b) Discretionary Best Judgment Assessment |
| What is compulsory Best Judgment Assessment? | The Assessing Officer is bound to make an assessment to the best of his judgment in the following specified cases.
In case of failure to file a valid return The Assessing Officer shall make Best Judgment Assessments in the following cases: (a) The assessee failed to file the Income-tax return on or before the due date; (b) The assessee failed to file the belated return; (c) The assessee failed to file an updated return; (d) If the Assessing Officer issues a notice under Section 142 to the assessee to file the Income-tax return but he failed to file it in response to such notice. In case of failure to produce evidence If any person, after having filed a return, fails to comply with the notice issued under section 143(2) requiring his presence or production of evidence and documents, the Assessing Officer is required to make an assessment to the best of his judgment. In case of failure to get the special audit or inventory valued If any person fails to comply with the direction issued under Section 142(2A) requiring him to get his accounts audited or inventory valued, the Assessing Officer is required to make an assessment to the best of his judgment. In case of a defective return Where an assessee fails to rectify the defects within the time allowed for same, he can apply to Assessing Officer for condonation of delay in removing the defects. If such condonation is allowed and the assessee has removed the defects, the return filed by him will be treated as a valid return. |
| What is Discretionary Best Judgment Assessment? | If Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where no method of accounting or Accounting Standards have been regularly employed by the assessee, the Assessing Officer may make the assessment to the best of his judgment. |
| Time limit for completion of Best Judgment Assessment | The time limit for making an assessment under Section 144 is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards]
Note:
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| Appeal against Best Judgment Assessment | Assessee aggrieved by the assessment order passed under this provision can prefer an appeal before CIT(A) or make an application for revision. |
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| INCOME ESCAPING ASSESSMENT [SECTION 147] | |||||||
| When can AO make re-assessment? | The Assessing Officer can make the re-assessment of an income escaping assessment if the following conditions are satisfied:
(a) Any income chargeable to tax has escaped assessment for any assessment year; and (b) The assessing officer follows the provisions of Sections 148 to 153. If the above conditions are satisfied, the assessing officer can assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. It is imperative to note that for the purpose of assessment or reassessment or re-computation under this section, the Assessing Officer can assess or reassess all those incomes which have escaped assessment and which come to his notice subsequently in the course of such proceeding notwithstanding that the procedure prescribed in Section 148A was not followed before issuing such notice for such income. |
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| When is an income deemed to have escaped assessment? | The Assessing Officer can initiate the proceedings if he has the information which suggests that some income has escaped the assessment. Explanation 1 and 2 of Section 148 define the situation in which an assessing officer shall be deemed to have the information which suggests that the income chargeable to tax has escaped the assessment. The notice under Section 148 can be issued by the Assessing Officer after following the procedure laid down in Section 148A except in search and requisition cases. If during such process, the assessing officer concludes that the information in possession does not justify such proceedings, he may pass an order that it is not a fit case for assessment under Section 147.
In other words, the assessing officer can do the re-assessment under Section 147 only if there is an income which has escaped assessment and which has been enquired in the manner laid down in Section 148A. If the Assessing Officer concludes, on the basis of his enquiry and the reply submitted by the assessee, that there is an income which has escaped assessment, he can initiate the proceedings under Section 148 and complete it under Section 147. When an information suggests that income has escaped assessment? (a) In cases other than Search, Survey, or Requisition -The following information shall be deemed to be suggesting that the income chargeable to tax has escaped assessment:
(b) In search, survey, or requisition cases -In search, survey, or requisition cases initiated or made or conducted, on or after 1st April 2021, it shall be deemed that the Assessing Officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee in the following cases:
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| Notice to file return of income | Before issuing a notice under Section 148, the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Officer shall decide, after passing an order, whether it is a fit case for the issue of notice under Section 148 and serve a copy of such order along with such notice on the assessee.
The aforesaid procedure does not apply in search or requisition cases. However, in the case of a survey, the assessing officer has to follow the procedure laid down in Section 148A before issuing a notice under Section 148. To make an assessment or reassessment or re-computation in Section 147, a notice is required to be issued to the assessee under Section 148 requiring him to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act. The assessee shall be required to furnish the return of income within 3 months from the end of the month in which such notice is issued or such further period as may be allowed by the AO on the basis of an application made in this regard by the assessee. Such return shall be furnished in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Where the return is furnished beyond the period of 3 months or the time allowed by the AO, such return shall not be deemed to be a return under Section 139 and, accordingly, the assessing officer can proceed with best judgment assessment in such a case. |
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| When can a notice be issued? | The notice can be issued only if the Assessing Officer has the information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year. Further, prior approval of the specified authority is also required to be obtained before issuing such notice by the Assessing Officer.
However, no such approval shall be required to issue a notice under Section 148 where the Assessing Officer has passed an order under Section 148A(d) with prior approval of specified authority stating that it is a fit case to issue a notice under this section. Section 148A(d) provides that before issuing any notice under section 148, the Assessing Officer shall decide, on the basis of material available on record, including the reply of the assessee, whether or not it is a fit case to issue a notice under section 148 by passing an order, with the prior approval of the specified authority. |
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| Time limit to issue notice | The notice should be issued by the Assessing Officer within the following time limit:
For this purpose, the ‘asset’ shall include the following: (a) Immovable property, being land or building or both; (b) Shares and Securities; (c) Loans and Advances; (d) Deposits in Bank Account. |
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| Course of Action for Assessee | Co-operate with the Assessing Officer
On receipt of notice under section 148A for conducting the enquiries by the Assessing Officer, the assessee should co-operate in the proceedings and file his replies which shall be important factors in deciding whether it is a fit case for the issue of notice under section 148 or not. File Income-tax return The assessee can file a fresh return of income wherein he can declare his true income. The income may be more than what he had already declared in the original return or it may be the same. Participate in the Assessment Proceedings The assessee should submit his response to the notices issued during the course of Assessment. If the Assessing Officer passes any adverse order, the assessee can go in appeal against the order of assessment. |
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| Time limit for completion of assessment | The reassessment under Section 147 must be completed within 12 months from the end of the financial year in which notice was served. | ||||||
| Re-assessment proceedings to be dropped | Where an assessment has been reopened, the assessee (if he has not preferred an appeal or applied for revision) can claim that the re-assessment proceedings shall be dropped if he shows that:
(a) He had been assessed on an amount, which is not lower than what he would be rightly liable for, even if income alleged to have escaped assessment had been taken into account; (b) The assessment or computation had been properly made. |
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| Deemed validity of notice served | Section 292BB of the Income-tax Act provides that even an improper notice shall be deemed to be valid and served on the assessee if:
(a) the assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) he has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (a) (c) served upon him in an improper manner. |
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| Appeal against assessment order | Assessee aggrieved by reassessment order passed under Section 147 can prefer an appeal before CIT(A) or make an application for revision. If the order is passed by an Assessing Officer (below the rank of Joint Commissioner), an assessee can file an appeal before JCIT (A).
However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT. |
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Appeals under Income-tax law – An appeal is a process by which a person (assessee or revenue) aggrieved by an order passed by the tax authority or judicial authority, as the case may be, can challenge it before the higher judicial authorities. The party challenging such order is known as the appellant, and the other party is known as the respondent.
| APPEAL TO JCIT(A) OR CIT(A) [SECTION 246 OR 246A] | |||||||||||
| Who can file an appeal? | Any assessee aggrieved by the orders passed by an Assessing Officer (below the rank of Joint Commissioner) can prefer an appeal against such order before the Joint Commissioner of Income Tax (Appeals). Further, the proviso to Section 246(1) provides that no appeal shall be filed before the JCIT(A) if an appealable order is passed by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner.
The Joint Commissioner of Income-tax (Appeals) and Commissioner of Income-tax (Appeals) is the first appellate authority. The taxpayer aggrieved by an assessment order, order imposing a penalty, or any other order, can file an appeal before the CIT(A) having jurisdiction over him. |
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| Order against which appeal can be filed before the JCIT(A) | Section 246 specifies the orders against which an appeal can be filed before the Joint Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Joint Commissioner of Income-tax (Appeals) is given below:
(a) An intimation issued under Section 143(1) where the assessee objects to the making of adjustment. (b) any order of assessment passed under Section 143(3) or best judgment assessment order passed under Section 144 where- the assessee objects to the amount of income assessed or
(c) An order of assessment, reassessment, or recomputation under Section 147; (d) An order being an intimation under Section 200A(1), i.e., processing of TDS statement; (e) An order being an intimation under Section 206CB(1), i.e., processing of TCS statement; (f) An order being an intimation under Section 206C(6A) treating a collector of TCS as assessee-in-default; (g) An order under Section 201 treating a deductor as an assessee in default; (h) An order imposing a penalty under Chapter XXI; (i) A rectification under Section 154 or Section 155 amending any of the orders mentioned above. |
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| Order against which appeal can be filed before the CIT(A)
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Section 246A specifies the orders against which an appeal can be filed before the Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Commissioner of Income-tax (Appeals) is given below:
(a) Order passed against the taxpayer in a case where the taxpayer denies the liability to be assessed under Income Tax Act. (b) Intimation issued under section 143(1)(1B) where adjustments have been made in income offered to tax in the return of income. (c) Intimation issued under section 200A(1) where adjustments are made in the filed statement. (d) Assessment order passed under section 143(3) except in case of an order passed in pursuance of directions of the Dispute Resolution Panel (e) An assessment order passed under section 144. (f) Order of Assessment, Re-assessment, or Re-computation passed after reopening the assessment under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel (g) An order referred to in section 150. (h) An order of assessment or reassessment passed under section 153A or under section 158BC in case of search/seizure. (i) Order made under section 92CD(3). (j) Rectification order passed under section 154 or under section 155. (k) Order passed under section 163 treating the taxpayer as an agent of non-resident. (l) Order passed under section 170(2)/(3) assessing the successor of the business in respect of income earned by the predecessor. (m) Order passed under section 171 recording the finding about the partition of a Hindu Undivided Family. (n) Order passed by Joint Commissioner under section 115VP(3) refusing approval to opt for tonnage-tax scheme to qualifying shipping companies. (o) Order passed under section 201(1)/206C(6A) deeming the 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. (p) Order determining refund passed under section 237. (q) Order imposing penalty under section(s) 221/271/271A/271AAA/271F/271FB/272A/272AA/72B/272BB /275(1A)/158BFA(2)/271B/271BB/271C/271CA/271D/271E/271AAB. (r) Order imposing a penalty under Chapter XXI. (s) Order passed by the AO under section 239A |
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| Time limit for filing appeal | As per Section 249(2), an appeal should be presented 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. |
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| Document to be submitted |
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| Fees for filing appeal
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The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows:
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| Time limit for disposal of the appeal | Where it is possible, the JCIT(A) or CIT(A) shall dispose off the appeal within a period of 1 year from the end of the financial year in which the appeal is filed. The order should be issued within 15 days of the last hearing. | ||||||||||
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| APPEALTO ITAT [SECTION 253] | |||||||||||||||||||
| Introduction | Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income-tax Act. Any appeal against an order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) lies with the ITAT. An order passed by the appellate tribunal shall be final unless a question of law arises out of such order. | ||||||||||||||||||
| Order against which appeal can be filed by the taxpayer | An assessee can prefer an appeal with the ITAT against the following orders:
(a) Order passed by the JCIT(A) or CIT(A) under Section 250 in an appeal filed by the assessee; (b) Rectification order passed by the JCIT(A) or CIT(A) under Section 154; (c) Penalty order passed by the JCIT(A) or CIT(A) under Section 270A for under-reporting or misreporting of income; (d) Penalty order passed by the JCIT(A) or CIT(A) under Section 271A on failure to keep, maintain, or retain books of account, documents, etc., as required under Section 44AA; (e) Penalty order passed by the CIT(A) under Section 271AAB for undisclosed income unearthed during the search proceedings; (f) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAC for unexplained incomes; (g) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAD for false or omission of entry; (h) Penalty order passed by the JCIT(A) or CIT(A) under Section 271J for furnishing inaccurate information in a report or a certificate; or (i) Penalty order passed by the CIT(A) under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement. (j) An order passed by the assessing officer under Section 115VZC excluding any company from the tonnage taxation Scheme; (k) Following orders passed by the Principal Commissioner or Commissioner:
(l) Following orders passed by the specified income-tax authorities (PCCIT, CCIT, PDGIT, DGIT, PDIT, or DIT):
(m) An order passed by the Principal Commissioner or Commissioner under sub-clauses (iv), (v), (vi), or (via) of Section 10(23C). (n) Following assessment orders passed under the direction of DRP:
(o) Following assessment orders passed by the assessing officer after obtaining approval of the Principal Commissioner or Commissioner under Section 144BA to invoke the provisions of GAAR:
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| Order against which appeal can be filed by the PCIT or CIT | If the Principal Commissioner of Income-Tax or Commissioner of Income-Tax objects to the order passed by the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals) under section 154 or section 250, then he may direct the Assessing Officer to make an appeal to the ITAT against the orders of the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals). This is called as departmental appeal, i.e., the Income-Tax department moving to ITAT against the order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-Tax (Appeals).
The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 50,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against. |
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| Time limit for filing appeal | Appeal to ITAT is to be filed within a period of 60 days from the date on which the order sought to be appealed against is communicated to the taxpayer or the Principal Commissioner of Income-Tax or Commissioner of Income-Tax (as the case may be).
On receipt of the notice that an appeal has been filed before the Tribunal, the assessing officer or the assessee may file a memorandum of cross objection in Form 36A within 30 days of the receipt of the notice. |
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| Document to be submitted | Form No. 36 – in triplicate.
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| Fees for filing appeal | The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows:
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| Time limit for disposal of the appeal | Where it is possible, the ITAT shall dispose off the appeal within a period of 4 years from the end of the financial year in which the appeal is filed. | ||||||||||||||||||
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| APPEAL TO HIGH COURT [SECTION 260A] | |
| Introduction | High Court is the third appellate authority in the Income-tax Act. Appeal against an order passed by the Appellate Tribunal order lies with the High Court. |
| Order against which appeal can be filed | The appeal can be filed if the High Court is satisfied that the case involves a substantial question of law. The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax or an assessee aggrieved by an order passed by the Appellate Tribunal may file an appeal before the High Court.
The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 1,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against. |
| Time limit for filing appeal | Appeal to the High Court is to be filed within a period of 120 days from the date on which the order against which the appeal is being filed is received by the taxpayer or the PCCIT or CCIT or PCIT or CIT (as the case may be).
The appeal to the High Court shall be filed in the form of a Memorandum of Appeal precisely stating therein the substantial question of law involving the appeal. |
| Fees for filing appeal | The fee for filing the appeal to the High Court shall be such fee as may be specified in the relevant law relating to Court fees for filing of appeals to the High Court. |
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| APPEAL TO SUPREME COURT [SECTION 261] | |
| Introduction | The Supreme Court is the fourth and last appellate authority under the Income-tax Act. |
| Order against which appeal can be filed | Appeal against the order of the High Court lies with the Supreme Court. However, no appeal can be filed before the Supreme Court unless the High Court certifies the case fit for filing an appeal to the Supreme Court.
The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 2,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against. |
| Time limit for filing appeal | No time limit has been prescribed for filing an appeal to the Supreme Court. |
[As amended by Finance Act, 2024]
