Rectification of Mistake [Sec.

154]
An income-tax authority, is empowered (suo moto or on application by assessee) to -
a) rectify any mistake apparent in an order passed by him; or
b) amend any intimation issued u/s 143(1) or deemed intimation
c) amend any intimation issued u/s 200A(1).
Taxpoint: Such order of rectification must be passed in writing.

Time limit for Rectification [Sec. 154(7)]

Within 4 years from the end of the financial year in which the order sought to be amended was passed.
However, in respect of an application made by the assessee or deductor or collector, the
authority shall, within a period of 6 months from the end of the month in which the
application is received by it, pass an order -
a. making the amendment; or
b. refusing to allow the claim.
Opportunity of being heard [Sec. 154(3)]: If such rectification order is prejudicial to the
assessee or deductor or collector, an opportunity of being heard must be given to the assessee,
before passing such order.
Note:
• Where any such amendment has the effect of reducing the assessment or otherwise
reducing the liability of the assessee or the deductor or collector, the Assessing Officer
shall make any refund which may be due to such assessee or the deductor or
collector.
• Where any such amendment has the effect of enhancing the assessment or reducing a
refund already made or otherwise increasing the liability of the assessee or the deductor
or collector, the Assessing Officer shall serve on the assessee or the deductor or
collector, as the case may be a notice of demand in the prescribed form specifying the
sum payable, and such notice of demand shall be deemed to be issued u/s 156.

OLM NBVJ
APPEAL

An Introduction about Income Tax Appellate Tribunal (ITAT)

Income Tax is the subject for Central Government to legislate under Schedule VI of the Constitution of
India. No tax can be levied under the Article 265 of without authority of law. Income -Tax Act is that law
under which income tax is levied.
To determine tax properly and accurately, an appeal is necessary and the Central Government is given
the power and duty to constitute the Income Tax Appellate Tribunal.
It has thus constituted the Income Tax Appellate Tribunal in 1941 as a second appellate forum, initially
with 6 members (presently 126 members) with equal number of judicial and accountant members.
Though it is constituted by the Central Government, it operates independently as per its own procedure
as stated in Section 255 with the powers to regulate its own procedure.
WORKS UNDER- The Tribunal is under the administrative supervision of Ministry of law and Justice.
Tribunal is a quasi-judicial body independent into its working and in its decisions.

By virtue of Article 227 of the Constitution, the Tribunal is under the superintendence of the High Court and thus
subordinating to the High Court and is bound to follow the judgment of the High Court in the State in which it
functions and of the Supreme Court under Article 141.

AT WHAT STAGE- The Tribunal is a second appellate forum under the Act, the first appeal being to the
Commissioner of Income Tax (Appeals) – CIT (A). The Disputes before it come mainly by way of second appeal
from orders of the Commissioners of Income Tax (Appeals) – CIT (A).

Direct first appeals before the Tribunal are against orders of Commissioner under Section 263 and orders of
Assessing Officer (AO) pursuant to directions of Dispute Resolution Panel (DRP) under section 144C of the Act.

The litigation before the Tribunal also includes miscellaneous applications for recall or rectification of orders, stay
petitions etc.
Appeals to Tribunal mainly relate to cases of
1. Excessive assessments,
2. Search and seizure,
3. Disallowances and additions,
4. Interests and
5. Levying of penalties under Chapter VIA of the Income Tax Act.

HOW MANY CASES HAVE BEEN DECIDED- Its excellence lies in the fact out of about 50,000 cases decided
annually by it, about 45,000 become final then and there. Only about 5,000 cases go to the High Court for further
adjudication.

The Tribunal in its 79th year [1941 – 2020] of existence has earned ample price for the independence of its
decisions.

Representing Appeal before ITAT

An appeal before the Tribunal, when is fixed for hearing has to be attended to and argued. The assessee himself
can represent or he can put in appearance through an authorized Representative.

Relevant Provision under Income Tax (Appellate Tribunal) Rules, 1963

Rule 16 of the Income Tax Appellate Tribunal Rules, 1963, provides for authorizing a representative to appear.

It says ‘In any appeal by any assessee, where the memorandum of appeal is signed by his authorised
representative, the assessee shall append to the memorandum a document authorising the representative to
appear for him and if the representative is a relative of the assessee, the document shall state what is his
relationship with the assessee, or if he is a person regularly employed by the assessee, the document shall state
the capacity in which he is at the time of employed.

Rule 17 provides for Authorization to be filed and says

‘An authorised representative appearing for the assessee at the hearing of an appeal shall, unless the document
referred to in rule 16 has been appended, file such a document before the commencement of the hearing.
Who can be Authorised Representative before ITAT
1. In relation to an assessee, a person duly authorised by the assessee;
2. In relation to the Department, a person duly appointed by the Central Government by notification in the official
Gazette as authorised representative to appear, plead and act.

Section 288 of the Income Tax Act, 1961 prescribes for person qualified and disqualified as an authorised
representative.

Section 288 permits an assessee to be represented before the Tribunal or any income-tax authority in the
connection with any proceeding under the Act, by an authorised representative.

However, the right to appear through an authorised representative does not extend to cases where the
assessee is required U/s. 131 to attend personally for examination on oath or affirmation.

The position and obligation of accountants representing assessees in proceedings under this Act are similar to
those of advocates representing parties before a court of law.

Time limit for filing Appeal before ITAT

Appeal is to be filed before the Tribunal within 60 days of the date on which order appealed against is
communicated to the taxpayer or the Commissioner, as the case may be.

. Condonation of Delay in filing Appeal before ITAT

The Tribunal may admit an appeal of memorandum of cross objections after the period of 60 days or 30 days as
the case may be, if it is satisfied that there was sufficient cause for not presenting it within the prescribed time.

Miscellaneous Petitions or Applications before ITAT

The Tribunal, at any time within four years from the date of order passed by it, can rectify any mistake apparent
from record, if the same is brought to its notice by the tax payer or the Assessing Officer. A fee of Rs. 50 is to be
paid for filing miscellaneous application.

Petition to stay before Income Tax Appellate Tribunal

On application by the tax payer, the Tribunal can pass an order of stay in any proceedings relating to an appeal
filed before the Tribunal. The stay can be for a period up to 180 days, and the Appellate Tribunal is expected to
dispose of the appeal within the period of stay.

Where the appeal is not disposed of within the period of stay, the Appellate Tribunal may grant further stay,
however, the total stay period cannot be exceed 365 days.

Fees to be paid by the Tax payer for filing Appeal before ITAT

The fees on appeal before the Tribunal has to be levied on the basis of income as computed by the Assessing
Officer and not on income as computed after effect to appellate order of Commissioner of Income Tax(Appeals).

Where the subject matter of appeal relates to any other matter, fee of Rs. 500 is to be paid. An application for
stay of demand is to be accompanied by fee of Rs. 500.

E-filing of Appeal before Income Tax Appellate Tribunal

In line with the e-Governance policy of the Government of India, the Tribunal will be launching E-Filing of
Appeals for providing efficient taxpayer services. With this facility, the appellants before the Tribunal can
electronically file their appeals and get acknowledgement for the same. Later on, they may submit the physical
documents in the Tribunal Office (within the permitted time).

The Tribunal will be launching the said e-Filing portal for the benefit of tax payers and the income tax
department, shortly.

11. Documents to be submitted with appeal before IITAT

Form No. 36 – in triplicate.
Order appealed against – 2 copies (including one certified copy).
Order of Assessing Officer – 2 copies
Grounds of appeal before first appellate authority [i.e., Commissioner of Income-Tax (Appeals)] – 2 copies.
Statement of facts filed before first appellate authority [i.e., Commissioner of Income-Tax (Appeals)] – 2 copies.
In case of appeal against penalty order – 2 copies of relevant assessment order.
In case of appeal against order under section 143(3), read with section 144A – 2 copies of the directions of the
Joint Commissioner under section 144A.
In case of appeal against order under section 143, read with section 147 – 2 copies of original assessment
order, if any.
Copy of challan for payment of fee.

Filing of additional evidence before Income Tax Appellate Tribunal

Filing of additional evidence before the ITAT by parties to the appeal is not permitted. In other words, additional
evidence of any kind, either oral or documentary cannot be filed before the ITAT. However, if the Tribunal
requires production of any document, examination of any witness or filing of any affidavit to enable it to pass
orders, it may allow such document to be produced, witness to be examined, affidavit to be filed and such
evidence to be adduced.

Memorandum of cross objection before Income Tax Appellate Tribunal

On filing of the appeal to the ITAT by the taxpayer or by the Assessing Officer (as the case may be) the opposite
party will be intimated about the appeal and the opposite party has to file a memorandum of cross objection with
the ITAT.

The memorandum of cross objection is to be filed within a period of 30 days of receipt of notice. The
memorandum of cross objection is to be filed in Form No. 36A. There is no fee for filing the memorandum of
cross objection. The ITAT may accept a memorandum of cross objection even after the period of 30 days if it is
satisfied that there was sufficient cause for not submitting the same within the prescribed time.

Person who is competent to sign Form 36 (i.e., form of appeal) has to sign and verify the memorandum of cross
objections.The ITAT will dispose of the memorandum of cross objections like an appeal in Form 36.

Composition of the Income Tax Appellate Tribunal

President
The Central Government shall appoint –
1. a person who is sitting or retired judge of a High Court and who has completed not less than 07 years of
service as a judge in a High Court; or
2. The Senior Vice President or one of the Vice Presidents of the Appellate Tribunal to be the President thereof.
(The post of Senior Vice President is omitted with effect from 01.06.2016)

Vice President of the Tribunal

The Central Government may appoint one or more members of the Appellate Tribunal to be the Vice-President
or, as the case may be, vice Presidents thereof. Any member, be he a judicial member or accountant member.

Members
As a rule, the Benches will consist of two members – a Judicial Member and an Accountant Member, exceptions
of being of Single Member Bench (SMB) or a Special Bench.

The combine of two experts is supplementing each other to deal with the complicated issues of law and
accounts arising in tax matters.

Section 252(2): A Judicial Member

A judicial Member shall be a person –
1. Who has for at least 10 years held in judicial office in the territory of India; or
2. Who has been a member of the Indian Legal Service (ILS) and has held a post in Grade II of that Service; or
any equivalent or higher post for at least three years; or
3. Who has been an advocate for at least 10 years

Generally members will be appointed on a tenure basis of five years.

Section 253(2A): An Accountant Member

An accountant member shall be a person –
1. who has for at least 10 years been in the practice of accountancy as a Chartered Accountant; or
2. Who has been a member of the Indian Income-Tax Service, Group A and has held the post of Additional
Commissioner of Income Tax or any equivalent or higher post for at least 03 years.

Orders of the Income Tax Appellate Tribunal

Normally, appeals are heard by a Bench comprising one judicial member and one accountant member. Appeals
where total income computed by the Assessing Officer does not exceed Rs. 50 lakhs may be disposed of by
Single Member Bench (SMB).
The President of the Tribunal empowered to constitute Special Bench consisting of three or more than three
members for disposal of any particular case, one of whom would necessarily be a judicial member and an
accountant member.

If the members of the Bench differ in on any point, decision is by majority. If members are equally divided in their
opinion, the points of difference are stated by each member and case is referred by the President of the Tribunal
for hearing such points by one or more of the other members of Tribunal.

The Bench normally pronounces its orders in open court. Where orders are not pronounced in the court, list of
such orders showing results of appeal and signed by members is put on the notice board of the Bench.

Procedure of filing appeal before ITAT

The Appellant or the respondent, as the case may be, may submit a paper book in duplicate containing
documents or statements or other papers referred to in the assessment appellate order, which it wish reply
upon.

The paper book duly indexed and page numbered is to be filed at least a day before (but it is advisable at least
a week before) the hearing of the appeal along with proof of service of copy of the same on the other side at
least a week before.

The Bench may in appropriate cases condone the delay and admit the paper book. Each paper in the paper
book is to be certified as true copy by the party filing the same.

The Tribunal fixes the date for the hearing the appeal and notifies the parties specifying date and place of
hearing of the Appeal. A copy of memorandum of appeal is sent to the respondent either before or along with
such notice.

The appeal is heard on the date fixed and on other dates to which it may be adjourned.

If the appellant does not appear in person or through an authorised representative when appeal is called on for
hearing, the Tribunal may dispose of the appeal on merits hearing the respondent.

However, where after disposal of appeal ex-parte, the appellant appears afterwards and satisfies the Tribunal
that there was a sufficient cause for non-appearance, the Tribunal can set aside the ex-parte order and restore
the appeal.

Monetary Limit for filing Appeal

Section 268A – Filing of appeal or application for reference by Income-Tax Authority – is inserted by the Finance
Act, 2008 with retrospective effect from 01.04.1999. By sub-section (1) the Board is authorised to issue orders,
instructions or directions to other income-tax authorities, fixing monetary limits for the purpose of regulating filing
of appeal or application for reference by any income-tax authority to the Tribunal, the High Court and the
Supreme Court.

A Board’s circular or instruction No. 17/2019, dated 08.08.2019 wherein monetary limits for filing departmental
appeals (income -tax matters) before Appellate Tribunal, High Courts and Special Leave Petition (SLPs) before
the Supreme Court has been increased recently.
Keeping in view the monetary limits and conditions specified below.

It is clarified that an appeal should not be filed merely because the “tax effect” in a case exceeds the monetary
limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.

For this purpose, ‘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 to income in respect of the
issues against which appeal is intended to be filed.

The Assessing officer shall calculate the tax effect separately for every assessment year in respect of the
disputed issues in the case of every assessee.

If, in the case of an Assessee, the disputed issues arise in more than one assessment year, appeal can be field
in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the
monetary limit specified above.

Orders against Which Appeal Can Be Filed before ITAT

Tax payer can file appeal before the Income Tax Appellate Tribunal against the following Orders:

1. Order by Commissioner of Income Tax – (Appeals) under section:

154 – Rectification of Mistake.
271 – Failure to furnish returns, comply with notices, concealment of income, etc.
271A – Failure to keep and maintain or retain books of account, documents, etc.
272A – Penalty for failure to answer questions, sign statements, allow inspections, etc.
2. Order by Assessing Officer under section 158BC(c) – Procedure for Block Assessment – in respect
of search action initiated during 1995 to 1997.
3. Order by Assessing Officer under section 115VZC excluding the tax payer from tonnage tax scheme.
4. Order by the Commissioner under section 12AA on registration application by a charitable or
religious trust.
5. Order by the Commissioner under section 80G (5) (VI) regarding approval of a charitable trust for
donations made after 31.03.1992.
6. Order by Commissioner under section 263 revising Assessing Officer’s order considered prejudicial
to the interest of revenue.
7. Order by Commissioner under section 154 to verify an Order under section 263.
8. Penalty Order passed by Commissioner under section 271 or 272A
9. Penalty Order passed by Chief Commissioner or Director General or Director of Income Tax under
Section 272A.
10. Order passed by Assessing Officer under Section 143(3) or Under Section 147 in pursuance of
direction of Dispute.
The Commissioner can also direct the Assessing Officer to file appeal against order of Commissioner of
Income Tax – (Appeals) before the Appellate Tribunal.
1. Revision of orders prejudicial to Revenue [Section 263]:
The Principal Commissioner or Commissioner may call for
and examine the record of any proceedings under the Act,
and if he considers that any order passed therein by the Assessing Officer is
erroneous in so far as it is prejudicial to the interests of the revenue.
He may pass such orders thereon as the circumstances of the case justify including
an order enhancing or modifying the assessment or
canceling the assessment and directing a fresh assessment.
However, he has to pass an order only after giving the assessee an opportunity of being heard and after making or
causing to be made such enquiry as he deems necessary.

However, the Principal Commissioner or Commissioner can revise the order passed by the Assessing Officer only if
he considers that the order passed is prejudicial to the interests of the revenue.

For removal of doubts, it is provided that the Principal Commissioner or Commissioner can revise the following
orders also:

(a) an order of assessment made by the Assistant Commissioner/Deputy Commissioner or the Income-tax
Officer on the basis of
directions issued by Joint Commissioner under section 144A.
(b) an order made by the Joint Commissioner in exercise of the powers or in the performance of the
functions of Assessing Officer conferred on him under the orders or directions issued by CBDT or
Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or
Principal Commissioner or Commissioner authorised by CBDT under section 120.

When will the order of the Assessing Officer be deemed to be erroneous in so far as it is prejudicial to the interest
of the revenue?

Since the interpretation of expression "erroneous in so far as it is prejudicial to the interests of the revenue" has
been a contentious one, the Finance Act, 2015 has inserted the following Explanation 2 to section 263(1)
w.e.f. 1.6.2015 in order to provide clarity on the issue.

Explanation 2.— For the purposes of this section, it is hereby declared that an order passed by the Assessing
Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion
of the Principal Commissioner or Commissioner,—

(a) the order is passed without making inquiries or verification which should have been made:
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under
section 119: or
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered
by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.

Time limit for passing the revision order under section 263:
The Commissioner cannot revise the order of the Assessing Officer after the expiiy of 2 years from the end of the
financial year in which the order sought to be revised was passed. In computing the period of limitation of 2 years,
the following period shall be excluded:
(1) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129, and

(2) any period during which any proceeding under this section is stayed by an order or injunction of any court.
No time limit in the following cases:
An order of revision may be passed at any time in the case
which has been passed in consequence of,
any finding or direction contained in an order of the Appellate Tribunal.
National Tax Tribunal, the High Court or the Supreme Court under the Income-tax Act or order of Court under any
other law.

Commissioner's power of revision extends to matters not covered in appeal [Clause (c) of Explanation to section
263]:
Where an order passed by the Assessing Officer has been subject matter of any appeal,
it cannot be revised by the Commissioner.
However, in respect of such matters which have not been considered and decided in appeal, the Commissioner has
powers under section 263 for revision.

2. Power of revision involves 4 steps to be taken under section 263

Step 1:

The Principal Commissioner or Commissioner can call for and examine the records of any proceeding under the Act.
For this purpose he does not need to show any reason.

Step 2:

He would see whether the order passed under the Act by the Assessing Officer is erroneous in as much as it is
prejudicial to the interest of the revenue. Up to this time, there is no question of the assessee appealing or making
any submission.

Step 3:

If after calling for and examining the records, the Principal Commissioner or Commissioner considers that the order
of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, then he has to give the
assessee an opportunity of being heard. The Principal Commissioner or Commissioner must disclose in his notice to
the assessee the grounds on which he desires to revise the order of the Assessing Officer. Further notice to show
cause must be served upon the assessee reasonably ahead of the date fixed for hearing.

Step 4:

The Principal Commissioner or Commissioner may, after giving the assessee an opportunity of being heard and after
making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of
the case justify. lie can enhance or modify the assessment. He has also power to cancel the assessment and direct
fresh assessment.

3. Revision of orders in favour of assessee [Section 264]:

Revision of orders not covered by section 263, can be made by the Principal Commissioner or Commissioner either
on his own motion or on an application made by the assessee, provided orders have been passed by an authority
subordinate to him. The application made by the assessee shall be accompanied by a fee of Rs. 500. The Principal
Commissioner or Commissioner may call for the record of any proceeding under this Act on the basis of which such
order has been passed and may make such inquiry or cause such inquiry to be made. He may pass such orders
thereon as he thinks fit as are not prejudicial to the assessee. The Principal Commissioner or Commissioner, under
this section can cancel the assessment and direct the Assessing Officer to make a fresh assessment but such
direction shall not be prejudicial to the assessee.

The Principal Commissioner or Commissioner shall not revise any order under this section in the following cases:
 (a) where the order has been made more than one year previously, the Principal Commissioner or
Commissioner shall not, on his own motion, revise such an order; or

(b) where the application for revision by the assessee has been made after one year from the date on which
the order in question was communicated to him or the date on which he otherwise came to know of it,
whichever is earlier.

However if the Principal Commissioner or Commissioner is satisfied that the assessee was prevented by
sufficient cause from making the application within the prescribed period he may admit an application
made after the expiry of that period.

Example: Assessing Officer has passed an order on 15.11.2018 which was received by the assessee on
19.11.2018. In this case CIT can make a revision order suo moto up to 15.11 .2019 whereas the assessee
can file application under section 264 up to 19.11.2019.

(c) where an appeal against the order lies to the Commissioner (Appeals) but it has not been made and the
time within which such appeal may be made has not expired; and the assessee has not waived his right
of appeal; or

(d) where the order has been made the subject of an appeal to the Commissioner (Appeals) i.e. where an
appeal has been filed to CIT (Appeal) on any issue relating to such order.

Time limit for passing the revision order under section 264:

On application made by the assessee under this section, the Principal Commissioner or Commissioner shall pass an
order within one year from the end of the financial year in which the application is made by the assessee. In
computing the period of limitation of one year, the following period shall be excluded:

(1) the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129,
and

(2) any period during which any proceeding under this section is stayed by an order or injunction of any
court.

No time limit in the following case:

However, an order of revision may be passed at any time in consequence of or to give effect to any finding or
direction contained in an order of the Appellate Tribunal, National Tax Tribunal, high Court or the Supreme Court.