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An Overview Appellate Proceedings Presenter: Rachna Gurnani Convener: Yogesh Mittal

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Presentation on theme: "An Overview Appellate Proceedings Presenter: Rachna Gurnani Convener: Yogesh Mittal"— Presentation transcript:

1 An Overview Appellate Proceedings Presenter: Rachna Gurnani Convener: Yogesh Mittal

2 Insight Common Concerns: How does the Tax Return gets processed post submission What powers do Tax Authorities have for their conduct What are the remedies available for me – the Aggrieved Assessee How to initiate the remedial action in the sphere of legal machinery How to prepare for hearing & disposal of appeals before Judiciary The Barrister Explains…..

3 Return of Income (original or revised) Intimation u/s.143(1) CIT(A)s Order Notice u/s.142(1) r.w.s.143(2) Scrutiny Assessment u/s.143(3) CIT(A) AppealHearing u/s.250 Order giving effect of CIT(A)s order by A.O. ITAT Appeal Hearing & Disposal Order giving effect of ITATs order by A.O. Compliance Process Summary Assessment Rectification Petition u/s 154 Grievance : Revision / Appeal Hearing & disposal of appeal Settlement Commission (Circumstantial) Appeal before Courts Payment of assessed tax / Stay Petition New Window: Advance Ruling / Advance Price Agreements Settlement Commission (Circumstantial)

4 Assessment Self assessment of own tax by the tax payer & its onward verification by Tax Authorities Assessment : the process of verification & arrival of final income & tax figure by Revenue Legal Machinery: Summary Assessment u/s 143(1): - On the basis of Return of Income filed - Completion of assessment proceedings without calling the assessee - Intimation is served upon completion of assessment - Time Limit : 1 year from the Financial Year end in which Return is submitted, deemed approval if not completed Scrutiny Assessment u/s 143(3): - After verification of additional information & evidence called from assessee in enquiry before assessment - Notice calling for additional information served u/s 143(2) within 12 months of furnishing Return - Right of tax officials to call information of past 3 years invoking section 142 - Completion of Assessment within 21 months from the end of relevant Assessment Year Best Judgment Assessment u/s 144: - Wherein assessee fails to furnish suffice information to Tax Officials - Assessment completion based on agreed parameters - Should be completed within 21 months from the end of relevant A.Y. - Cannot be based on fictitious or prejudiced parameters - Opportunity of being heard must be provided to assessee

5 Assessment… Assessment while Search or Requisition u/s 153A: - In a situation wherein search is initiated u/s 132 or books, documents, assets etc. called u/s 132A - Information up to past 6 years can be called for - Return of Income in respect of all such A.Ys to be resubmitted - Should be completed in 21 months of the year end of search & requisition - For assessment carried under this section, tax shall be chargeable at the rates applicable to such year Assessment of Income of any other person in case of Search or Requisition u/s 153C: - Based on A.Os belief of interconnections between 2 or more persons - Completed within 21 Months from end of relevant A.Y. - Upon the seized accounts or documents are handed over, assessment to be completed in its 9 months - Computation mechanism as provided u/s 153A to be followed for the purpose Reassessment u/s 147: - Once again assessment of income that allegedly has escaped assessment - Tax officials can initiate proceedings only in respect of past 4 years - 6 years if the income escaping assessment exceeds Rs. 1 Lakh - To be completed in 9 months from the financial year end of serving notice Assessment Order: - Passed as the final outcome of proceedings initiated under respective section - Favorable Order : Acceptance of Assessees contentions - Unfavorable Order: can disallow expenses/ claim for losses, make addition to the declared income - Additional Interest, penal proceedings can be initiated - Notice of Demand served u/s 156 in case of additional tax liability

6 Remedial Action Rectification Petition to A.O.: for apparent mistakes Appellate Proceedings Revision Application Appeal before CIT(A) Appeal before Tribunal - Assessee or Revenue Appeal to High Court / Supreme Court Writ Petition in Courts Once invoked, has to be in favor of appellant Can also be filed by Tax authorities CIT(A) can suo moto initiate Has to waive the right of appellate remedy Filed before High Court exercising Article 14 of Constitution Redundant due to other measures Aggrieved assessee to bring the contentious matters before Appropriate Authority for hearing & remedy A.Os Order

7 Revision Application Preferred before Commissioner of Income Tax u/s 264 by the Assessee Subject to the acceptance of the concerned CIT Revision of Orders by any authority subordinate to concerned Commissioner CIT can suo moto revise any of the orders Has to be discharged in favor of Assessee Once filed, no other appellate rights can be exercised Usually preferred for less litigious matters Should not be argumentative Application has to be filed within 1 year of Original Order CIT can revise the Order within 1 year of filing such petition Merely an application, hence no compulsory representation by Counsel etc. CIT can call for additional information & discharge the matter appropriately Filing fees for such application is Rs. 500 The Other Route : Appeal before CIT(A)

8 Appeal before Commissioner

9 Appealable Orders Intimation / Order made by DCIT u/s 120 Assessment Order u/s 143(3) or 144 Reassessment Order u/s 147 Rectification Order u/s 154 Assessment / Reassessment Order u/s 153A Assessment Order in respect of fringe benefits u/s 115WE(3) or 115WF Order made u/s 201(1) & section 201(1A) levying interest for delay in remitting TDS or failure to deduct TDS Block Assessment Order in case of search or requisition u/s 158BC Order imposing penalty u/s 221 for default in payment of tax Order imposing penalty under Chapter XXI (Section 270 to 275) Order of assessment made by AO under section 158BC Order imposing penalty u/s 158BFA(2) for concealment of income in case of block assessment

10 Appeal has to be filed in 2 sets before CIT(A) of own range Assessed tax must be paid before filing appeal – Stay petition can be sought Grounds of appeal should be precise & non-argumentative Statement of facts can be concise keeping the bare minimum content. While hearing, a detailed paper book can be filed Additional grounds of appeal can be filed if omission not willful or unreasonable Use of clear & easy language should be preferred while drafting Orderly arrangement of case laws & notifications relied upon Appeal has to be filed within 30 days of the date of service of Order / intimation – delay condoned only for sufficient cause Appeal can be represented by assessee or his designated attorney Must be signed by the authorized signatory specified u/s 140 Filing fees of Rs. 1,000 /- for assessed income exceeding Rs. 2 Lakhs Preparing for the Appeal

11 Documentation Sr. No.DocumentDescription 1.Form No. 35 - Form prescribed for making the appeal - Basic information about the appeal matters is served - Court fee stamp of Rs. 2/- should be affixed 2.Grounds of Appeal - Contentions of assessee in respect of various points in the Order appealed against 3.Statement of Facts - Actual facts pertaining to every ground of appeal 4.Original Notice of Demand - It reveal the sum payable / refundable in consequence with the A.O.s Order 5.Certified true copy of impugned order - Order against which the appeal is preferred - Court fee stamp of Rs. 2/- on last page of the order 6.Letter of authority for representative - Serve as authority to represent the case before CIT(A) - Must be on Stamp Paper of Rs. 100/- 7.Original Counterfoil of filing fees - Proof of payment of the filing fees in Challan ITNS-280

12 CIT(A) endeavor to hear & dispose off the appeal within 1 year from financial year end of filing the appeal Can have any number of hearings before final order Can ask for additional documents, details as deems fit Additional evidence can be placed at the time of hearing if the assessee did not have opportunity to present before lower authorities Adjournment for hearing can be plead in extreme situations CIT(A) has wide & plenary powers, wider than those of Tribunal CIT(A) may confirm, reduce, enhance or annul the A.Os order Has to pass a speaking order Verification of CIT(A) Order & Order Giving Effect (OGL) to CIT(A)s order After the order is obtained, further course of action decided Hearing & Disposal For any grievance : Appeal before ITAT

13 Appeal before I-tax Tribunal

14 Appealable Orders – Order of CIT(A), Order of Chief Commissioner u/s 272A Compliance with CIT(A)s order before ITAT appeal is filed Appeal to be preferred in 60 days of the service of order appealed against – delay condoned only for reasonable cause Appeal set has to be filed in 3 copies Must be signed by the authorized signatory mentioned u/s 140 Representation by Assessee, Counsel or a Chartered Accountant Submission of detailed paper book at time of hearing Additional grounds can be admitted if omission is not willful or unreasonable Segregation of legal notifications & factual details pertaining to case Additional submissions can be placed at every hearing Material produced before earlier authorities also presented Memorandum of cross objections filed against Tax Departments Appeal Filing fees : for income exceeding Rs. 2 lakhs, least of 1% or Rs. 10,000 Preparing for Appeal

15 ITAT Appeal Set Sr. No.DocumentDescription 1.Form No. 36 - Form prescribed to prefer the appeal - Should be verified in the prescribed manner - A list of pending appellate matters also given 2.Grounds of Appeal - Contentions of assessee - The base of filing the appeal 3.Certified true copy of impugned order - Order against which the appeal is preferred - First & last page of order to be certified 4.Appeal set filed before CIT(A) - Entire set of appeal filed with CIT(A) to be produced - Original Notice of Demand & payment challan of CIT(A) fees not to be given - Each page to be certified 5.Original Counterfoil of filing fees - Proof of payment of the filing fees in Challan ITNS-280

16 ITAT: highest fact finding body With a judicial & accountant member, special bench constituted in situations Endeavor to hear & dispose off appeals in 4 years of filing the appeal If stay is granted over proceedings, has to conclude in 180 days Hearing can be adjourned in extreme situations Tax Department represented by Departmental Representative No informal arguments can be placed Submissions in summary format should be preferred Appellant to observe the code of formal dressing & conduct Court Room – the real test

17 Stay petition: - Plea before authorities seeking relief against undue hardship - application to be filed in duplicate before AO & TRO - basic details: short facts, reasons for seeking stay, amount of demand, application etc. to be furnished Rectification petition u/s 254(2): - for rectification of any mistake apparent from records of CIT(A)s order or ITATs order - application can be made by the assessee or A.O. - should be within 4 years from the date of order Consolidation of Appeals: - hearing of 2 or more different appeals of the same assessee at the same time - for common issues involved in any of the appeals - can be of different Assessment Years also Practical Difficulties with proceedings: - long duration involved in hearing & disposal of appeals - no adjournment possible for covered matters - excess formalities to be complied with - voluminous paper books - open for general public : secrets can be leaked - unreasonable behavior of members ITAT – Miscellaneous matters

18 Appeal Petition before Courts

19 Appeal before High Court: - right exercisable u/s 260A - preferred against ITATs order - only for a case involving a Substantial Question of Law - should be filed within 120 days of receipt of ITATs order - can also be filed by the Tax Department if revenue effect exceeds 4 lakhs - rules framed for court proceedings & conduct has to be observed Appeal before Supreme Court: - right exercisable u/s 261 - against a matter decided upon by High Court - High Court to certify the case as fit for appeal before Supreme Court - should be filed within 90 days of service of High Court Judgment - decision : Law of Land - decisions are binding on non-appellants as well - separate code of conduct for appeal & representation matters Courts – Original Judiciary

20 For every disallowance – additional tax burden 30% on domestic & 40% on foreign assessees Penalty proceedings initiated under Chapter XXI poses additional burden Assessed tax becomes payable before the appeal is preferred – bear the burden before remedy For any delay in payment of assessed tax – penal interest charged u/s 220 after 30 days of notice Till the time matter is heard & concluded, money remains blocked up – stay petition can be preferred stating financial problems A.O. can keep the demand in abeyance till the disposal of appeal before CIT(A) u/s 220(6) – Circular no. 530 dated 06.03.1989 On favorable conclusion of appeal – interest u/s 244A at 0.5% p.m. payable by the Income tax department No tax shield available to payer – Tax is non-deductible item Opportunity loss of earnings for every payment made to the tax office Finances at Stake Worth the Risk??..

21 National Tax Tribunal: - A new judicial body in the making to replace High Courts – still in abeyance - All governing provisions framed under National Tax Tribunal Act, 2005 Advance rulings: - A judicial body already in operation - Tax authoritys views on particular matters can be sought before the transaction is entered into - Only in respect of transactions with foreign parties - An effective way to examine the revenues stand before initiating the transaction Advance Pricing Agreements: - Still not operative - To obtain revenues stand in respect of Transfer Pricing Agreements - Obtained before the agreement is entered into Settlement Commission: - A judicial body to hear & decide the matters pending before other authorities - For cases involving a mutual settlement by assessee & the tax department - An appreciated practical solution for litigious matters Way Forward


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