Income Tax Appellate Tribunal: All You Need to Know

What is Income Tax Appellate Tribunal?

(ITAT) The Income Tax Appellate Tribunal is a quasi-judicial body that hears income tax appeals from taxpayers who do not agree with any order passed by the Income Tax Authority. ITAT also hears appeals from the Income Tax Authorities against the order passed by the subordinate Income Tax Authorities.

It was set up in January 1941 and specialized in dealing with matters relating to direct taxes. The ITAT functions under the regulation of the jurisdictional High Court and is assistant to the High Court. The ITAT is also the final fact-finding authority, and its decisions are final on factual matters.

The ITAT consists of different benches for different regions, each having an accountant member and a judicial member. The President of the ITAT constitutes a bench from among the members of the ITAT. In some cases, a special bench with three or more members may be constituted to dispose of income tax appeals.

What are the Functions of ITAT?

The primary function of the Income Tax Appellate Tribunal is to hear income tax appeals from taxpayers and the income tax authorities; it is the second forum after the Commissioner of Income Tax. The ITAT functions under the supervision of the jurisdictional high court and is subordinate to the high court.

The orders passed by the ITAT are final unless a substantial question of law arises for determination by the High Court. The ITAT should follow the precedent set by the jurisdictional high court. The ITAT aims to provide speedy and inexpensive justice to taxpayers and the revenue department.

Which are the Appealable Orders?

Orders that can be appealed before the Income Tax Appellate Tribunal are as follows:

• The orders passed by the Assessing Officer.
• Any Penalty order passed by the Commissioner
• The orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)]
• The orders passed by the Assessing Officer as per the directions of the Dispute Resolution Panel(DRP)
• Any orders passed by the jurisdictional Commissioner.
• Application for a stay on recovery of demands of tax.
• Any other Applications for the recall of orders.

What are the functions & powers of the ITAT?

Functions of ITAT

Given below are some important functions of ITAT -

• The primary function of ITAT is to hear income tax appeals from taxpayers as well as other tax authorities.
• It hears appeals from taxpayers against assessment orders or any other orders passed by the Income Tax Authority.
• Income tax authorities can also file appeals before the ITAT against the orders passed by lower income tax authorities.

The Income Tax Appellate Tribunal has various powers to deal with income tax matters.
Let us explain the powers of the ITAT:

• Power to restore the appeal: The ITAT can recall any order passed by it if it is satisfied that it was passed under a mistake of fact or law or in ignorance of any material fact.
• Power to recall the Order: The ITAT can recall the order if it is believed that there was enough cause for the non-appearance of the appellant or his authorized representative.
• Power of Remand: The ITAT can remand a case to the income tax authority for fresh adjudication or further inquiry if it considers it necessary or expedient for the ends of justice.
• Power to restore ex-parte order: The ITAT can restore an ex-parte order passed by it, if it is believed that there was sufficient cause for the absence of the party when the order was passed.
• Power of Rectification: The ITAT can rectify any mistake apparent from the record in any order passed by it, either on its own motion or on an application made by any party.
• Power to punish for contempt: The Income Tax Appellate Tribunal has the power to punish for contempt of its orders under the Contempt of Courts Act 1971.

What are the monetary limits applicable for appeals?

The income-tax authorities are subject to the orders, instructions, or directions issued by the CBDT. The CBDT also has the power to set monetary limits for regulating the filing of appeals or applications.

Monetary Limits set by the CBDT are the following:

• Before the ITAT – Rs 50 lakh.
• Before the High Court – Rs 1 crore.
• Before the Supreme Court – Rs 2 crore.

The monetary limits apply to the tax effect in a specific case. 'Tax effect' refers to the difference between the tax on the assessed income and the tax on the returned income (i.e., income reported by the taxpayer without any assessment adjustments). The Assessing Officer should calculate the tax effect separately for each assessment year. While these limits guide the filing of appeals, it's important to evaluate the merits of the case before submitting an appeal request.

How to file an appeal before the ITAT?

If you are aggrieved by an order passed by a Commissioner of Income Tax (Appeals), you can file an appeal before the Income Tax Appellate Tribunal (ITAT). To file an income tax appeal before the ITAT, you need to follow these steps:

1. Prepare a form of appeal in Form No. 36 and a form of memorandum of cross-objections in Form No. 36A. You can download these forms from the ITAT website or obtain them from the ITAT registry.
2. Pay the prescribed fee for filing the appeal. The fee depends on the amount of tax disputed and whether you are an individual or a company. You can pay the fee by demand draft or online through the ITAT website.
3. Submit four copies of the memorandum of appeal, statement of facts, fee receipt, and other relevant documents to the ITAT registry within 60 days from the date of receipt of the order appealed against. You must also serve a copy of the appeal and documents to the respondent, i.e., the Commissioner of Income Tax (Appeals) whose order is challenged.
4. After verifying your appeal, the ITAT will assign a number to it and notify you of the date and place of the hearing. The status of the appeal can be checked online through ITAT website.
5. Appear Before the ITAT on the hearing date and present your case. You can either represent yourself or engage a chartered accountant, an advocate, or any other authorized representative to argue on your behalf.
6. After hearing both sides, the ITAT will pass an order disposing of your appeal. The order will be communicated to you and the respondent within four months from the end of the month in which the appeal was heard.

ITAT Appeal Time Limit

A taxpayer can file an appeal with the Income Tax Appellate Tribunal (ITAT) within 60 days of receiving the communication of the order from the Income Tax Department. This communication is also the subject matter of the appeal.

What is the Appeal Filing Fees?

People appealing to the ITAT have to pay a nominal income fee which is based on their income. Here are the income-based fee categories for filing an appeal with ITAT -

Note: A standard fee of Rs.500 is applicable on appeals relating to any other matter.

Memorandum of Cross-Objections

Respondents to an appeal before the Income Tax Appellate Tribunal (ITAT) may file a memorandum of cross-objections within 30 days of receiving notice from the ITAT. Cross-objections are to be filed using Form No. 36A, and no fee is required. The ITAT may, at its discretion, accept cross-objections filed beyond the 30-day deadline based on the specific circumstances of each case.

Representations Before the ITAT

Both the appellant and respondent can appoint an authorised representative to appear on their behalf during a hearing before the ITAT. Section 288 of the Income Tax Act, 1961 lists the individuals eligible to act as authorised representatives. However, in cases involving a personal examination on oath, the taxpayer must appear in person and cannot be represented by someone else.

Presentation of Evidence

No party can file an additional evidence before the ITAT. The ITAT requires any document or affidavit or seeks to examine any witness and the ITAT might allow the production of documents, examination of persons and other documents.

Orders by the ITAT

The ITAT bench hears the appeal and passes an order to decide the matter. If one or more parties fail to appear on the scheduled hearing dates, the ITAT may dispose of the appeal ex-parte. However, if the absent party later appears and provides a valid reason for their non-appearance, the ITAT may set aside the ex-parte order and reopen the case.

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