VIP Road Chartered Accountants Association

Introduction and Overview

Appeal is a remedy for redressal of grievances before higher court or higher forum. It is a proceeding to rectify an erroneous decision of a court or judicial/quasi-judicial authority by submitting the question to a higher court or higher authority. Appeal is a continuation of a suit or proceedings wherein the entire proceedings are again left open for consideration by the appellate authorities which has the power to review the entire evidence subject, of course, to the prescribed statutory limitations. There is no inherent right of appeal. Appeal is a creation of statute and therefore is subject to the limitations and restrictions placed by the statute.

The Income-tax Act, 1961 provides for four appellate forums: Commissioner of Income-tax (Appeal) [C.I.T.(A)], Income-tax Appellate Tribunal (Tribunal), High Court and Supreme Court. The Tribunal is the final fact finding authority. The High Court and the Supreme Court deal with the questions of law only. In this issue of the Income-tax Review only the appeals before the first two appellate authorities has been covered. The appellate structure under other direct tax laws, such as wealth tax, gift tax, interest tax is broadly similar. Therefore, the discussion is focused on the provisions of the Income-tax Act, 1961.

Appeal is a continuation of a suit or proceedings. Appeal embraces all proceedings whereby a higher court is called upon to review, revise, affirm, reverse or modify the decision of the lower court. In the case of revision, whatever powers the revisional authority may have, it has no power to reassess and reappreciate the evidence unless the statute expressly confers on it that power. The next article in this issue deals with the ‘Nature and Fundamentals of appellate proceedings and orders’.

Both the appellate authorities, C.I.T.(A) and the Tribunal are fact finding authorities and the Tribunal is the final fact finding authority. The powers of the C.I.T.(A) are coterminous with that of the Assessing Officer. The next two articles on ‘Commissioner of Income-tax (Appeals)’ and ‘Income-tax Appellate Tribunal’ deal with the powers of these two appellate authorities. C.I.T.(A) has specific power of enhancement. Question arises as to whether the Tribunal has such power of enhancement. These issues have been covered in these two articles. Other powers such as, the power to admit new claim or ground, to set aside, to allow withdrawal of appeal, to initiate penalty proceedings, etc., has also been dealt with in these two articles. Appeal being a creation of statute must have a clear authority of law. The articles deal with the orders that are appealable and also who can file the appeal. The grounds of appeal is the basis for deciding an appeal. Some times additional grounds are also required to be raised. These two articles also deal with the grounds and additional grounds of appeal. The powers of the authorities are to be exercised for achieving the duties. The articles also deal with the duties of the appellate authorities.

The article on ‘The Income-tax Appellate Tribunal’ also deals with the constitution of the Tribunal and formation of different benches of the Tribunal. Against the order of the C.I.T.(A) both the assessee and the Assessing Officer have right of appeal. If one party has preferred an appeal, then the other party can redress his/its grievances by filing ‘cross objection’, within 30 days from the date of receipt of the copy of memorandum of appeal. It is an alternative to cross appeal. This article deals with the nature and scope of cross objection. Even if the respondent has not filed cross-appeal or cross objection, the Respondent has the right to defend the order of the C.I.T.(A) on alternative grounds. This right of the Respondent has also been considered in this article. Section 254(2) of the Act, provides specific power of rectification to the Tribunal. The Tribunal has the power to restore an ex parte order. The article deals with these powers also. The procedure in the Tribunal is mainly governed by the Income-tax Appellate Tribunal Rules. The article deals with all the relevant provisions of the Rules.

The procedure to be followed in an appeal carries special importance. The drafting of the statement of facts and grounds of appeal has a material bearing on the outcome of the appeal. Therefore, a separate (next) article has been written on ‘Drafting and Procedure in Appeals’. The article covers the special care that is required to be taken while drafting the statement of facts and grounds of appeal and also cross objections. The article also explains the procedure to be followed in appeal and the time for filing the appeal. The article covers the power of condonation of delay. The article also covers the probable defects in the appeal and remedy. The article also deals with the procedure for bringing the legal heirs on record.

Appeal being the continuation of the original proceedings is normally decided on the basis of the evidence available in the original proceedings. It may be that some evidence already available has remained to be produced in the original proceedings. Some relevant evidence may come into existence subsequently. In such situation the right of an assessee to lead additional evidence carries much significance. The power and duty of the appellate authority to admit additional evidence in the interest of justice also is of importance. All these aspects are covered in the next article on ‘Additional Evidence’.

In an appeal an assessee disputes the validity of an addition. Such an addition results in disputed demand. During the pendency of the appeal it is expected that no coercive steps are taken for recovering the disputed demand. However, in actual practice it is not so. Earlier, the last few months of the financial year were meant for collection drive and the coercive steps were mainly taken in the last three months. In the recent past, there is no season for coercive recovery but it is a continuous process. Therefore, the remedy by way of stay of recovery of demand carries more importance. Under section 220(6) the assessing officer is empowered to keep the demand in abeyance till the disposal of the first appeal. The Commissioner of Income-tax (Appeals) has inherent power to grant stay of the recovery of the disputed demand during the pendency of the appeal before him. The Tribunal has inherent power to stay the recovery proceedings during the pendency of appeal before it. The Tribunal Rules also provide for such power. The Commissioner of Income-tax also has powers to stay the recovery proceedings during the pendency of appeals. All such powers are considered in the next article on ‘Stay of Recovery’.

The success in an appeal mainly depends on as to how you prepare and present your case. It is not enough that you have a good case on merits. Even a good case may be lost if not prepared properly or not presented properly. Therefore, it is some times said that the result of the appeal mainly depends on as to who argues the case, i.e. how he prepares and how he presents the case. The next article on ‘Preparation for Hearing’ deals with the points material for preparation of hearing before the C.I.T.(A) as well as the Tribunal.

In an appeal, the representative has to persuade and convince the appellate authority that you are justified in your claim and that you are entitled to the relief in law. The art of representation lies in the art of persuasion. In this respect the representative should know as to what he should and what he should not do. All the advise in this respect is dealt with in the next article on ‘Art of Representation’.

The principles of law of precedence should be kept in mind while deciding any point of law by any judicial/quasi-judicial authority. In the next article on ‘Binding Nature of Tribunal Orders’, the binding effect of Tribunal orders on the subordinate authorities has been considered. The article also takes into account the binding effect on the co-ordinate benches and the smaller benches. The article also covers the binding effect of the orders of the special bench.

In the last article gist of some relevant case laws concerning appeals has been covered.

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