-
Drafting of Appeal
-
Drafting of Statement
of Facts and Grounds of appeal before Commissioner of Income-tax
(Appeals) and Income-tax Appellate Tribunal.
The Income-tax Rules, 1962 ( the Rules) only provides that
an appeal to the Commissioner (Appeals) shall be made in Form
No. 35 and that the form of verification shall be signed and verified
by the person who is authorised to sign the return of income under
section 140 of the Income-tax Act, 1961 (the Act) (Rule 45) .
However, Income-tax (Appellate Tribunal ) Rules, 1963 ( the Tribunal
Rules) specifies as to the contents of the memorandum of appeal.
Rule 8 mandates that every memorandum of appeal shall be written
in English and shall set forth, concisely and under distinct heads
the grounds of appeal without any argument or narrative and such
grounds shall be numbered consecutively. Rule 47 of the Rules
prescribes Form No. 36 for an appeal to the Income-tax Appellate
Tribunal (the Tribunal) and Form No. 36A for filing memorandum
of cross-objections. Both the memorandum of appeal and memorandum
of cross-objections are to be verified by the person specified
in Rule 45 as narrated above. Form No. 35 requires to set out
a statement of facts along with the ground of appeal. No statement
of fact is required to be filed with the memorandum of appeal
to be filed with the Tribunal. This is for the reason that the
annexures to the memorandum of appeal to be filed before the Tribunal
includes Form No. 35 in which statement of facts are narrated.
Therefore, it is necessary to present the statement of facts in
such a manner so as to clearly bring out the issues in the assessment/penalty
proceedings leading to the order under challenge. Rule 22 of the
Tribunal Rules provides that memorandum of cross-objection shall
be numbered as an appeal and all the rules so far as may be, shall
apply to such appeal. A specimen draft of grounds of appeal is
as under:"On the facts and in the circumstances of the case and
in law the Assessing Officer (or ‘ the Commissioner of Income–tax
(Appeals)’ where an appeal is filed before the Tribunal against
the order of Commissioner (Appeals)) erred in …….without appreciating
…………".A prayer should be made for deletion or addition/disallowance
after taking relevant ground as under : "The Appellant prays that
the addition/ disallowance of Rs. _________ made in respect of/out
of ……………. be deleted."And at the end the Appellant should crave
leave for variation or withdrawal of grounds of appeal as under:"The
Appellant craves leave to add, amend , alter vary and / or withdraw
any or all the above grounds of Appeal."If the statement of facts
/grounds of appeal are separately annexed then the same should
be signed by the Appellant.
Procedure in appeal
-
As stated hereinabove,
an appeal to the Commissioner (Appeals) is to be filed in Form
No. 35 and to the Tribunal in Form No. 36. Cross-objections are
to be filed in Form No. 36A. As per notes to the Form
No. 35 the memorandum of appeal, statement of facts and the grounds
of appeal must be in duplicate and should be accompanied by a
copy of the order appealed against and the notice of demand in
original, if any. However, it is advisable that an assessee prepares
three identical sets of appeal papers which would include the
order for the sake of convenience so that he can file two sets
with the Commissioner (Appeals) and take the acknowledgment on
the third. The memorandum of appeal should be accompanied by the
prescribed fee. The schedule of fee is given hereinafter. Further,
where the appeal is filed against an order imposing penalty under
section 271(1)(c) of the Act , a copy of assessment order must
also be attached. Rule 9 of the Tribunal Rules provides that every
memorandum of appeal to be filed before the Tribunal shall be
in triplicate and shall be accompanied by two copies (at least
one of which is a certified copy) of the order appealed against,
two copies of the order of the assessing officer, two copies of
the grounds of appeal, before the first Appellate authority and
two copies of statement of facts, if any, filed before the said
Appellate Authority. In a case of appeal against the order of
penalty, the memorandum of appeal shall also be accompanied by
two copies of the assessment order. Where an assessment order
is passed under section 143(3) rws 144B or under section 143(3)
rws 144A or under section 143(3) rws 147, the memorandum of appeal
shall also be accompanied by the two copies of the draft assessment
order under section 144B or directions under section 144A or the
original assessment order as the case may be. The memorandum of
appeal before the Tribunal shall also be accompanied by the prescribed
fees. However, it is advisable that four identical sets consisting
of memorandum of appeal in Form No. 36, order of Commissioner
(Appeals), Form No. 35 with annexures and the assessment/penalty
order from which the appeal arises are prepared for the sake of
convenience so that three sets could be filed before the Tribunal
and an acknowledgment can be taken on the fourth. It may be noted
that, explanation to Rule 9 clarifies that "certified copy " will
include the copy which was originally supplied to the assessee
as well as photostat copy thereof duly authenticated by the assessee
or his authorised representative as a true copy. The Supreme Court
in CIT vs. Calcutta Discount Co. Ltd., (1973) 91 ITR 8 (SC)
observed that in considering an appeal the Appellate Authority
should deal with the substance of the matter at issue and not
be unduly influenced by mere procedural technicalities, for example,
whether the memo of appeal was or was not in proper form etc.
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Appeal fees
A fees payable for filing the
appeal are given hereunder as Annexure to the chart regarding
filing of appeals under the Income-tax Act. However, it may be
noted that the Hyderabad Bench of the Tribunal in Andhra Pradesh
State Electricity Board vs. ITO (1994) 49 ITD 552 (Hyd) have
held that even where total income is computed at a loss and such
loss exceeds Rs.1 lakh, the fees payable would be as per the slab
prescribed for the income more than Rs. 1 lakh and therefore fees
are to be determined on the basis as if loss determined is income.
The Mumbai Bench of the Tribunal in Chiranjilal S. Goenka vs.
WTO (2000) 66 TTJ (Mum) 728 have held that the stay application
for more than one year or for more than one order for the same
assessment year can be made on payment of fees of Rs. 500/- only.
Further, the Mumbai Bench of Tribunal in Amruta Enterprises
vs. Dy. CIT (2003) 84 ITD 172 (Mum) have held that the quantum
of penalty under section 271(1)(c) cannot be linked with the assessed
income and therefore the fees payable is as per the provisions
of section 253 (6)(d). Also, in Narendra Valji Shah vs. ACIT
(ITA/3545/M/99 dated 24-5-2000). The Tribunal (Mumbai Bench
C) held that the levy of penalty u/s. 271B is not in any way related
to the total income and hence fees would be Rs. 500/- as contemplated
in section 253(6)(d). A similar view was taken in Chromatte
India Ltd. vs. ITO (ITA/3486-87/M/02 dated 12-2-2002) where
the Tribunal held that in an appeal against an order u/s 263 the
fees are to be paid as per section 253(6)(d). Also, in Mrs.
Nimu R. Thodani vs. Jt. CIT (ITA/5437/M/97 dated 1-2-2000)
the Tribunal held that in cases filed with respect to interest
under sections 234A, 234B, 234C or any other interest appeal fee
would be Rs. 500/- as per section 253(6)(d) because interest is
in no way related to the assessed income but is linked with tax
payable. The ratio of the said decisions will also apply to the
appeals to be filed before Commissioner (Appeals).
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Who can sign the appeal
memo
As stated hereinabove, the form of
appeal is to be signed and verified by the person who is authorised
to sign the return of income under section 140 of the Act. As
such the appeal to be filed by an individual must be signed and
verified (i) by the individual himself, (ii) where he is absent
from India, by the individual himself or by some person duly authorised
by him in this behalf (a valid Power of Attorney should be attached
with the appeal) (iii) where he is mentally incapacitated from
attending to his affairs, by his guardian or any other person
competent to act on his behalf., and where, for any other reason,
it is not possible for the individual to sign the appeal, by any
person duly authorised by him in this behalf (a valid Power of
Attorney should be attached with the appeal). Therefore, unless
any of such exceptional circumstances be present, an appeal in
order to be valid, has to be signed by the individual himself.
In case of the Hindu undivided family, the appeal is to be signed
by the Karta and where the Karta is absent from India or he is
mentally incapacitiated from attending to his affairs, the appeal
is to be signed and verified by any other adult member of such
family. If the Hindu undivided family has no major member as Karta,
appeal may be validly signed by any male adult member of the family
who is in receipt of the income. [pl. see Shridhar Uday
Narayan vs. CIT (1962) 45 ITR 577(All)]. "Adult "is a person
who has attained the age of discretion which in India is 16 years.
A person attains majority at the age of 18 years. In a case of
a company an appeal is to be signed and verified by the Managing
Director thereof or where for any unavoidable reason, such Managing
Director is not able to sign, by any Directors thereof or where
there is no Managing Director by any Director thereof. The Calcutta
High Court in National Insurance Co. Ltd vs. CIT (1995) 213
ITR 862 (Cal) held that the return signed by a Director and
not by the Managing Director was invalid in absence of any explanation.
A company which is being wound up or for whose assets any person
has been appointed as a receiver, the appeal is to be signed and
verified by the liquidator referred to in section 178(1). In case
of a firm the appeal is to be signed by the Managing Partner thereof
or where for any unavoidable reason, such Managing Partner is
not able to sign, by any partner thereof not being a minor or
where there is no Managing Partner as such, by any partner thereof
not being a minor. In other cases, it is the principal officer
who has to sign the appeal. The Bombay Bench of the Tribunal in
Mrs. Leezo Salidan vs. CIT 16 TTJ 243 (Bom) , Pyrkashim Stores
vs. CIT 9 ITD 93(Bom) and Hariledge vs. ITO 29 Taxman 122
(Bom) as also the Gujarat High Court in Rajendrakumar Maneklal
Sheth( HUF) vs. CIT (1995) 213 ITR 715 (Guj) have held that
the appeal signed by an advocate / Chartered Accountant is valid.
The correctness of this decisions is however not free from doubt.
However, there are divergent views on the issue as to whether
the defect in signature would render the appeal a nullity. The
Allahabad High Court in Court of Wards, Naraindas Narsinghdas
vs. CIT in (1950)18 ITR 204 (All) has held the appeal to be
invalid whereas a Calcutta High Court in Sheonath Singh vs.
CIT (1958) 33 ITR 591 (Cal) has held it to be an irregularity
which can be rectified. Please also refer to Gouri vs. CIT
(1959) 37 ITR 220 (Pat), Gianchand Virbhan vs. CIT (1960) 39 ITR
414 (Pat), and V.K. Padmalochan Sahu (1974) 95 ITR 113
(Ori) whose views are those in line with that of Calcutta
High Court. The Madras High Court in Arunachalam Chettiar vs.
CIT (1962) 45 ITR 407 (Mad) and Andhra Pradesh High Court
in Chelamala Setti Adeyya vs. CGT (1964) 54 ITR 339 (AP)
held that failure to attach notice of demand to memorandum of
appeal is mere irregularity which can be subsequently rectified.
[Also see Gyan Manjari Kuari vs. CIT (1944) 12 ITR 59 (Pat);
Ag IT v. Keshab Chandra Madanlal (1950) 18 ITR 569, 573(SC)].
The Bombay High Court in Malani Trading Co. vs. CIT (2001)
252 ITR 670 (Bom) have held that merely because there is defect
in the memo of appeal, dismissal of appeal without giving opportunity
to cure said defect will be improper. Where revenue filed appeal
without including therein grounds of appeal and statement of facts
as required and Tribunal did not issue defect memo, the Gauhati
Bench of the Tribunal in Asst. CIT vs. Rayang Timber Products
(P) Ltd. (2002) 82 ITD 73 (Gau)(TM) held that appeal was to
be deemed to have been accepted and it had to be further presumed
that Tribunal had already exercised its discretion under sub-rule
(3) of rule 9 of ITAT rules in favour of appellant.
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Presentation of appeal
A memorandum of appeal to the
Commissioner (Appeals) must be presented to the office of the
Commissioner in person or by an agent or sent by Registered Post
addressed to the Office of the Commissioner (Appeals). A memorandum
of appeal to the Tribunal must be presented by the Appellant in
person or by an agent to the Registrar at the Head Quarters of
the Tribunal at Bombay or to an Officer authorised in this behalf
by the Registrar or sent by Registered Post addressed to the Registrar
or to such officer. Vide order No. 1 of 1973 dated 1.10.1973,
the Registrar of the Tribunal has authorised Asst. Registrars
of the Appellate Tribunal situated at different places to be the
authorised Officer to receive the appeals or applications as per
Rule 7 of the Tribunal Rules. In the case the applicant apprehends
that it is last day of the limitation for presentation of his
appeal and application, he may present it to the Assistant Registrar
at his residence or any other place wherever he may be or to Member
of the Tribunal at his residence or wherever he may be. If an
appeal is send by post it shall be deemed to have been presented
on that day on which it is received by the office of the Commissioner
(Appeals) or the Tribunal (pl.see Rule 6(2) of the Tribunal
Rules and F.N.Roy vs. Collector of Customs AIR 1957 (SC) 648 –
postal authorities are not considered as a agents of the addressee
but are the agents of the sender).
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Time for filing an
appeal
An appeal to the Commissioner
(Appeals) should be filed within a period of 30 days of the service
of the order against which the appeal is preferred. The Calcutta
High Court in Charki Mica Mining Co. Ltd. vs. CIT (1978) 111
ITR 193 (Cal) has held that the period of limitation for filing
an appeal to the Commissioner (Appeals) is to be computed from
the date of the receipt of demand by the assessee and not from
the date of receipt of assessment order by the assessee. An appeal
to the Tribunal should be filed within a period of 60 days from
the date on which the order sought to be appealed against is communicated.
Where the assessment order was served on
the person who was not an authorised agent of the assessee, and
later on, the assessee applied for and obtained a copy of the assessment
order for purpose of filing an appeal, it was held that the time
limit for filing the appeal should be reckoned from the date on
which the assessee obtained the copy of the assessment order and
notice of demand and not from the earlier date of service of the
assessment order – CIT vs. Prem Kumar Rastogi (1980) 124 ITR
381 (All). Also see, Jayalakshmi Cloth Stores vs ITO (1981)
132 ITR 764 (AP), Rasipuram vs. CIT (1956) 30 ITR 687 (Mad) and
Malayalam Plantations Ltd vs. CIT (1959) 36 ITR 205 (Ker). Where
postal acknowledgment in file of Assessing Officer did not bear
signature of any person and so also it did not bear any date of
service, it was reasonable to believe that the assessee was not
served with the order of assessment and the demand notice and in
such case appeal filed by the assessee on 10-8-1980 against the
order of assessment for the assessment year 1981-82 could not be
said to be barred by limitation. (Badri Singh Thakur vs. ITO
(1995) 78 Taxman 206(Jab).
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Delay in filing
an appeal
Section 249 (3) gives a power
to the Commissioner (Appeals) to condone the delay in filing the
appeal to the Commissioner (Appeals). Similarly, section 253(5)
empowers the Tribunal to admit an appeal or permit the filing
of memorandum of cross-objection after the expiry of the relevant
period if it is satisfied that there was sufficient cause for
not presenting it within that period. When an application for
condonation of delay in filing an appeal is preferred, it is statutory
obligation of the appellate authority to consider whether sufficient
cause for not presenting the appeal in time was shown by the appellant
– Shrimant Govindrao Narayanrao Ghorpade vs. CIT (1963) 48
ITR 54(Bom). An assessee has a statutory right to present
an appeal within prescribed period without any order being required
from the Appellate Authority for admission of the appeal. But
after the expiry of the prescribed period, an appeal can be entertained
only if it is admitted by the appellate authority after condoning
the delay [CIT vs. Mysore Iron & Steel Ltd. (1949) 17 ITR
478, 480 (Bom)]. But the power to condone the delay is discretionary
and the discretion must be judicially exercised. (J & K
Small Scale Industries Development Corpn Ltd., v. Dy. CIT (1949)
71 ITD 367 (Asr). The Supreme Court in Collector of Land
Acquisition vs. Mrs. Katiji & Others (1987)167 ITR 471(SC),
held that Court should have pragmatic and liberal approach.
[Also see Raja Jagadambika Pratap Narain Singh vs. CBDT 100 ITR
698 (SC)] The Supreme Court in N. Balkrishnan vs. M. Krishnamurthy
(1998) 7 SCC 123 had condoned a delay of 833 days. It was
observed that condonation of delay is a matter of discretion of
the Court and the only criterion is the acceptability of explanation
irrespective of the length of delay. A subsequent decision of
the Supreme Court/High Court was considered as sufficient cause
for condoning delay in filing the appeal. State of Andhra Pradesh
vs. Venkataramana Chudava & Muramura Merchant (1986) 159 ITR
59 (AP). The Courts have also held that the mistake of an
Advocate or Chartered Accountant is a reasonable cause for delay
in filing an appeal. (pl. see Rafiq C. Munshilal AIR 1981 SC
1400 (1401), Mahavir Prasad Jain vs. CIT (1988) 172 ITR 331 (MP),
Concord of India Insurance Co. Ltd. vs. Smt. Nirmaladevi &
Sons (1979) 118 ITR 507 (SC). Punam Singh vs. ITO (2002) 257 ITR
38 (Chennai) ( Trib). Shakti Clearing Agency P. Ltd. vs. ITO (127
Taxman 49 (Mag) (Raj.). For other reasons, please see Vijayeshwari
Textiles Ltd. vs. CIT (2002) 256 ITR 560 (Mad), Meenakshy Lucky
Centre vs. Jt. CIT (2002) 122 Taxman 266 (Coch) (Mag). Revenues
petition for condonation of delay was dismissed in Asst. CIT
vs. Taggas Industries Development Ltd. (2002) 80 ITD 21 (Cal);
Asst. CIT vs. Punna Textiles Industries P. Ltd., (2002) 122 Taxman
264 (Cal) (Mag), Asst. CIT vs. Mahadeo Agarwalla (2002) 125 Taxman
229 (Cal) (Mad).
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Payment of admitted
tax
As far as appeal before the
Commissioner (Appeals) is concerned, section 249 (4) provides
that no appeal shall be entertained under chapter XX unless at
the time of filing the appeal the assessee has paid (a) the taxes
due on the returned income or (b) where no return is filed, an
amount equal to the amount of advance tax which was payable by
him. The Commissioner (Appeals) is empowered, for any good and
sufficient reason, to exempt the assessee from operation of this
provision in case of (b). Prior to amendment from 1-4-1989 the
Commissioner (Appeals) had power to exercise his power to exempt
in case (a) also. Order refusing to exercise such discretion is
an appealable order – CIT vs. Smt. Nanhibai Jaiswal (1988)
171 ITR 646 (M.P.). Filing of appeal before Tribunal also
falls under chapter XX , hence provisions of section 249(4) are
applicable to an appeal filed before the Tribunal. (V. Baskaran
vs. Asst. CIT (1998) 62 TTJ (Chennai) 698). But the Indore
Bench of the Tribunal in Pawan Kumar Lodha vs. ACIT (2003)
78 TTJ (Ind) 983 held that prepayment of tax does not apply
to appeal filed before the Tribunal. However, it does not apply
to appeals filed to the Tribunal from assessment framed under
Chapter XIV B. [V.S.N. Sudhakaran vs. Asst. CIT (2002) 83 ITD
159 (Chennai); Anil Sanghi vs. ACIT (85 ITD 73 (Del) (SB)].
The Madras High Court in CIT vs. Smt. G.A. Somanth Kamani (2002)
125 Taxman 424 (Mad) held that section 249 (4) cannot be read
down so as to restrict it to appeal against assessment only it
will be applicable in case of appeal against penalty also.
- Appeal is not maintainable
where tax is not deducted at source from payment made to non-resident
and is not paid to the Govt. prior to filing of appeal (ITO vs.
Tata Iron & Steel Co. Ltd. (2001) 71 TTJ (Cal) 323. Crucial
date for deciding the applicability of amended provisions to section
249(4) was the date of issue of notice under section 143(2) and
not date of filing return. (Satyendra Pal Chaudhary vs. Asst.
CIT (2002) 74 TTJ (Mum) 741) . Where despite adjustment of seized
amount full amount of tax due from assessee was not paid before
filing appeal, assessee’s appeal was not maintainable (Bharatkumar
Sekhsaria vs. Dy. CIT (2002) 82 ITD 512 (Mum) . Also see CIT vs.
Smt. G.A. Samonthakamani (2002) 125 Taxman 424 (Mad). In Shri
Parasram G. Purohit vs. ACIT, ITA No. 2689/Bom/93 Bench ‘B’
Assessment year 1989-90, the Hon’ble Bombay Tribunal, held that
once the tax required to be paid u/s. 249(4) has been paid before
the final date of hearing, it is incumbent to consider the appeal
having been filed on the date of payment. (Decision of Supreme Court
in CIT vs. Filmistan 42 ITR 163 referred to). Where appellant
was ‘notified entity under the Special Court (Trial of offences
relating to Transactions in Securities) Act, 1992 and all properties
had been attached, in view of this fact that the Appellant had requested
the Assessing Officer to approach special Court to release amount
of self assessment tax payable and such request had been made by
Assessing Officer, assessee could be said to have made implied compliance
with the provisions of section 249(4). (Divine Holdings (P) Ltd
vs. Dy. CIT (2001) 119 Taxman 27 (Mum) (Mag) (Also see, Ashwin S.
Mehta (HUF) vs. Asst CIT (2002) 75 TTJ (Mum) 960). Where assessee
filed appeal on 2.4.1976 and 4.11.1997 was last date on which AAC
heard appeal by which time assessee had paid entire tax due, the
Delhi High Court in CIT vs. Rama Body Builders (2001) 250 ITR
825 (Del), AAC was not justified in refusing to entertain appeal
on the ground that tax due had not been paid by 2.4.1976, the date
on which the appeal was filed, [also see S. Venkatesh vs. Asst.
CIT (2000) 112 Taxman 31 (Chennai) (Mag)].
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Death of an assessee
Where an assessee to an appeal
dies or is adjudicated insolvent or in the case of the company
wound up, the appeal will not abate and will continue against
the executor, administrator or other legal representatives of
the assessee or by or against the assignee, receiver or liquidator
as the case may be. In case of a death of assessee, the legal
heirs of the assessee must file copy of death certificate and
an affidavit of they being the legal heirs. A fresh memorandum
of appeal signed by the legal heirs must be filed before the Commissioner
(Appeals) or the Tribunal as the case may be where the assessee
is the appellant so that the legal heirs are brought on record.
CHART REGARDING FILING
OF APPEALS UNDER THE INCOME-TAX ACT, 1961
| Particulars |
CIT |
I.T.A.T |
| Relevant
provisions |
Sections
246A to 251 |
Sections
252 to 255 |
| Appealable
Orders Specified in section |
246A |
253 |
| Time
limit |
30
days |
60
days |
| Prescribed
Form |
Form
No. 35 (Rule 45) |
Form
No. 36 (Rule 47(1) |
| Cross
objection |
— |
Form
No. 36A
(Rule 47(1) Time Limit 30 days) |
| Fees
payable |
As prescribed
– As per Annexure |
|
| Documents
accompanying the Memo of Appeal |
Statement
of Facts, Ground of Appeal. Notice of Demand and copy
of order against which appeal is preferred (In case of
appeal against penalty order assessment order also to
be annexed). |
Grounds
of Appeal order of CIT (A) and Form No. 35 with entire
set filed along with it |
| No.
of copies to be filed |
Duplicate |
Triplicate |
| Filed
with |
CIT(A)
mentioned in Notice of Demand |
The
Asst. Registrar, Income-tax Appellate Tribunal |
|
SCHEDULE OF FEES FOR FILING APPEALS TO
THE COMMISSIONER OF
INCOME-TAX (APPEALS) AND INCOME-TAX APPELLATE TRIBUNAL
| Particulars |
Fees for
filing appeal before CIT (A) |
Fees for
filing appeal before I.T.A.T |
| Under
Income-tax Act, 1961 |
|
|
| Assessed
total income Rs. 1 lakh or less |
Rs.
250 |
Rs.
500 |
| Assessed
total income more than Rs. 1 lakh but not more than Rs.
2 lakhs |
Rs.
500 |
Rs.
1,500 |
| Assessed
total income more than Rs. 2 lakhs |
Rs.
1000 |
1%
of assessed income subject to a maximum of Rs. 10,000 |
| Where
subject matter is not covered under any of above |
Rs.
250 |
Rs.
500 |
| Under
other Direct taxes (Wealth Tax Act/Gift Tax Act etc) In
an appeal under Wealth Tax Act, in the case an appeal
is not relatable to net wealth as computed by A.O |
— |
Rs.
500 |
| Miscellaneous
application u/s. 254(2) |
— |
Rs.
50 |
| Stay
Petition |
— |
Rs.
500 |
|
