26-Sep-20

APPEALS
SECTION 127 TO SECTION 136

Commissioner (Appeals)
Time limit for filing of appeal
30 days from the date of receipt of order. Late filing may be admitted by the Commissioner
(Appeals) on any reasonable ground.

Documents to be submitted with appeal

a. Prescribed form of appeal
b. Grounds of appeal (i.e. a brief summary of objections)
c. Notice of demand and copy of order
d. Power of attorney in favour of the authorized representative
e. Challan for appeal fee. Appeal fee in the case of an assessment is Rs.5,000. In case of any
other order Rs. 2,500 for a company and Rs. 1,000 for others.

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Condition to be fulfilled before filing of appeal

If a taxpayer has not paid the tax which was required to be paid at the time of filing of return of
income, the appeal shall become invalid.

Stay of tax demand

Automatic stay of tax demand
If a taxpayer has paid 10% of the tax demand and the appeal is pending before Commissioner (Appeals)
then no recovery proceeding shall be initiated by the tax department – Section 140(1).

Stay of tax demand by the Commissioner (Appeals)

Commissioner (Appeals) has power has power to grant stay of tax demand for a period up to 30 Days
after providing an opportunity of being heard to the tax department.

Another stay of tax demand may also be granted for a further period of 30 days by the Commissioner
(Appeals) after providing an opportunity of being heard to the tax department provided that the order
on appeal shall be passed by the Commissioner (Appeals) within the said period of 30 days.

Time limit for Commissioner (Appeals)

The Commissioner (Appeals) shall decide the appeal within 120 days from the filing of appeal. This time
limit may be extended by 60 days for reasons to be recorded in writing.

A period during which the hearing of an appeal is adjourned at the request of the appellant or is
postponed due to any reason shall be excluded for the purpose of this time limit.

Appellate Tribunal
Time limit for filing of appeal
60 days from the date of receipt of decision order of Commissioner (Appeals). Late filing may be
admitted by the Appellate Tribunal on any reasonable ground.

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Documents to be submitted with appeal

a. Prescribed form of appeal
b. Grounds of appeal (brief summary of objections) including copy of grounds of first appeal
c. Copy of order
d. Copy of Commissioner (Appeals) decision order
e. Power of attorney in favour of the authorized representative
f. Challan for appeal fee of Rs. 5,000 for a company and Rs. 2,500 for others.

Power of attorney for appeal fee are not required if appeal is filed by the tax department.

Appellate Tribunal shall decide an appeal within 6 months of its filing.

Appellate Tribunal may grant stay of tax demand up to 180 days in aggregate. For issuing an order of stay
of tax demand the Appellate Tribunal shall provide an opportunity to the tax department – section 133.

Appellate Tribunal shall consist of a chairperson and other judicial and accountant members appointed in
the manner as the prime Minister may prescribe by the rules.

A person may be appointed as judicial member if the person:

- Has been a Judge of a High Court,
- Is or has been District Judge;
- Is an advocate of a higher court with a standing of at least 10 years;
- Possesses such other qualification as may be prescribed.

A person may be appointed as accountant member if he:

- Is an officer of Inland Revenue equivalent to the rank of Regional Commissioner;
- Is a Commissioner or Commissioner (Appeals) having at least 3 years experience; or
- Is a person who has, for a period of not less than 10 years, practiced professionally as a chartered
accountant or as a cost and management accountant.

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Reference to High Court (HC) – Section 133

An appeals can be filed to HC only in respect of question of law after the decision of the Appellate
Tribunal. Whether a question of law arises or not shall be seceded by the HC and for this purpose a
reference application is required to be filed within 90 days by the taxpayer (along with fee of Rs. 100) or
by the tax department.

This reference application shall be heard by a Bench of not less than two judges of HC and if the bench is
satisfied that a question of law arises, it may proceed to hear the case.

If a taxpayer files a reference application to HC even then he is required to pay tax in accordance with
the Appellate Tribunal order. However, HC may order for the stay of tax demand for a maximum period of
six months.

If tax demand is reduced as a result of HC judgment then the tax paid by the taxpayer is refundable.
However, the Commissioner may postpone the refund subject to the following conditions:

o Tax department intends to file an appeal to the Supreme Court;

o Tax department files an application to the HC within 30 days of the receipt of HC judgment to get
permission from HC to postpone the refund; and
o HC makes an order authorizing the Commissioner to postpone the refund till the decision of the
Supreme Court.

Type of Decision in appeals

The decisions by any appellate authority against additions made by the assessing authorities may be as
under:
 Confirm (i.e. additions made by the assessing officer may be confirmed by an appellate authority and
therefore the taxpayer may file an appeal to the higher appellate authority)
 Reduce (i.e. additions made by the assessing officer may be confirmed by an appellate authority and
therefore the taxpayer may file an appeal to the income tax department may file an appeal to the
higher appellate authority)
 Enhance (taxpayer shall be provided reasonable opportunity of being heard)
 Annual the assessment. An assessment may be annulled where:

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a) The notice has been issued without jurisdiction i.e. by a wrong officer
b) The notice has not been properly served
c) Assessment has been framed on the wrong person
d) Assessment has been made in the wrong tax year
e) Assessment has been made in respect of a capital receipt or income which is exempt
f) Assessment was time barred

Alternative Dispute Resolution (ADR) – section 134A

(a) ADR is a legal forum for resolution of an aggrieved person related to:

- Tax liability
- Waiver of default surcharge or penalty; or
- Any other specific relief

(b) A person may apply to FBR to refer the issue to the committee which is pending before any appellate
authority (including court of law) except where prosecution proceedings have been initiated or
where interpretation of question of law having effect on identical other cases.

(c) Composition of the forum

The FBR shall, upon examination of an application, appoint an Alternative Dispute Resolution Committee
(ADRC) within 60 days and refer the case to ADRC. The ADRC shall comprise:
i. Chief Commissioner having jurisdiction over the case
ii. Two persons from a panel notified by the FBR comprising chartered accountants, cost and
management accountants and advocates having minimum 10 years experience in the field
of taxation and reputable businessmen.

FBR may prescribe remuneration for the services of ADRC members other than Chief Commissioner.

FBR shall communicate the appointment of ADRC to the appellate authority and the Commissioner.

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Stay of tax demand

The recovery of tax related to the dispute referred to ADRC may be stayed by ADRC for a maximum
period of 120 days.

Mode of proceedings and disposal

ADRC shall undertake an examination of the issue and may make enquiry, obtain expert opinion and
cause an audit by any income tax authority or any other person. Based on the findings, ADRC shall decide
the issue by majority within 120 days.

The decision of ADRC shall be binding on the Commissioner when the taxpayer withdraws his appeal
pending before appellate authority and communicated his withdrawal of appeal to the Commissioner
within 60 of the decision of ADRC. In case of failure to his communication, the ADRC decision is not
binding on the Commissioner.

In simple words, if the taxpayer is satisfied with the decision of ADRC then he is supposed to withdraw
his pending appeal and in this case the decision of ADRC shall become final.

Effect of failure to decide the case by ADRC

If ADRC fails to decide within 120 days, FBR shall dissolve ADRC and this dissolution shall be
communicated to the appellate authority where the dispute is pending.