APPEAL TO THE INCOME TAX APPELLATE TRIBUNAL

Introduction
The Commissioner of Income-Tax (Appeals) is the first appellate authority and the
Income Tax Appellate Tribunal (ITAT) is the second appellate authority. Appeal to the
ITAT can be filed by any of the aggrieved party either by the taxpayer or by the
Assessing Officer.
The ITAT is constituted by the Central Government and functions under the Ministry of
Law. ITAT consists of two classes of members Judicial and Accountant. In this part
you can gain knowledge about various provisions relating to appeals to the ITAT.
Appealable orders in case of appeal by the taxpayer
A taxpayer can file an appeal to the ITAT in respect of following orders:
Rectification order passed by the Commissioner of Income-Tax (Appeals) under
section 154; or
Order passed by the Commissioner of Income-Tax (Appeals) under section 250,
section 270A, section 271, section 271A or section 272A; or
An order passed by a Principal Commissioner of Income-Tax or Commissioner of
Income-Tax under section 12AA (it relates to registration application made by a
charitable or religious trust).
An order passed by a Principal Commissioner of Income-Tax or Commissioner of
Income-Tax under section 80G(5)(vi) (it relates to approval of a charitable trust
for donations made to it which would be eligible for deductions in the hands of
the donor).
An order passed by a Principal Commissioner of Income-Tax or Commissioner of
Income-Tax under section 263 (it relates to revision of the order of Assessing
Officer which is considered as prejudicial to the interest of revenue).
An order passed by a Principal Commissioner of Income-Tax or Commissioner of
Income-Tax under section 154 for rectification of order passed under section 263 .
An order of penalty passed by a Principal Commissioner of Income-Tax or
Commissioner of Income-Tax under section 270A, under section 271 or under
section 272A
An order of penalty passed by aPrincipal Chief Commissioner or Chief
Commissioner or a Principal Director General a Director General or aPrincipal
Director or Director under section 272A.
An order passed by the Assessing Officer under section 115VZC(1) (i.e., order of
excluding the taxpayer from tonnage tax scheme).

[As amended by Finance Act, 2016]

 An order passed by the Assessing Officer under section 143(3) or under section
147 or under section 153A or under section 153C in pursuance of the direction of
Dispute Resolution Panel or a rectification order passed under section 154 in
respect of such order.
An order passed by the Assessing Officer under section 143(3) or under section
147 or under section 153A or under section 153C with the approval of the
Principal Commissioner of Income-Tax or Commissioner of Income-Tax as
referred to in section 144BA(12) (i.e., assessment after invocation of General
Anti-avoidance Rules) or an order passed under section 154 or under section 155
in respect of such order (applicable from 01-04-2016) .
An order passed by the Commissioner of Income-tax (Exemption) under section
10(23C)(vi) or Section 10(23C)(via) [it relates to filing of application by
educational institute or hospital (other than those which are wholly or
substantially financed by the Government or whose aggregate annual receipt do
not exceed Rs. 1 Cr.) for the purpose of grant of exemption under section
10(23C)(vi) or section 10(23C)(via), respectively.]
Appealable orders in case of appeal by the Commissioner
If the Principal Commissioner of Income-Tax or Commissioner of Income-Tax objects to
the order passed by the Commissioner of Income-Tax (Appeals) under section 154 or
section 250, then he may direct the Assessing Officer to make an appeal to the ITAT
against the orders of the Commissioner of Income-Tax (Appeals). This is called as
departmental appeal, i.e., the Income-Tax department moving to ITAT against the order
of the Commissioner of Income-Tax (Appeals).
The departmental appeal shall beallowed only in cases where the tax effect involved in
the appeal exceeds Rs. 10,00,000. In other words, the Commissioner of Income-Tax can
direct the Assessing Officer to file an appeal to the ITAT against the order of the
Commissioner of Income-Tax (Appeals) only in those cases in which the tax effect
exceeds Rs. 10,00,000 [refer Circular No. 21/2015, Dated 10-12-2015].
Appeal not to be filed by the department in certain cases
The Commissioner of Income-Tax cannot direct the Assessing Officer to file an appeal to
the ITAT against the order of the Commissioner of Income-Tax (Appeals) in those cases
in which the tax effect does not exceeds Rs. 10,00,000
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
of income in respect of the issues against which appeal is intended to be filed (hereinafter
referred to as disputed Issues). However, the tax will not include any interest thereon,
except where chargeability of interest itself is in dispute. In case the chargeability of
interest is the issue under dispute, the amount of interest shall be the tax effect. In cases
where returned loss is reduced or assessed as income, the tax effect would include

[As amended by Finance Act, 2016]

notional tax on disputed additions. In case of penalty orders, the tax effect will mean
quantum of penalty deleted or reduced in the order to be appealed against.
The Assessing Officer shall calculate the tax effect separately for every assessment year
in respect of the disputed issues in the case of every taxpayer. If in the case of a taxpayer
the disputed issues arise in more than one assessment year, appeal can be filed 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. No appeal shall be filed by department in
respect of an assessment year or years in which the tax effect is less than the monetary
limit specified above.
In other words, henceforth, appeals can be filed by Commissioner of Income-tax only
with reference to the tax effect in the relevant assessment year. However, in case of a
composite order of any High Court or appellate authority, which involves more than one
assessment year and common issues in more than one assessment year, appeal shall be
filed in respect of all such assessment years even if the tax effect is less than the
prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of
the year(s) in which tax effect exceeds the monetary limit prescribed.
In case where a composite order/judgment involves more than one taxpayer, each
taxpayer shall be dealt with separately.
Adverse judgments relating to the following issues should be contested on merits
notwithstanding that the tax effect entailed is less than the monetary limits specified
above or there is no tax effect.
a) Where the Constitutional validity of the provisions of an Act or Rule is under
challenge, or
b) Where Boards order, Notification, Instruction or Circular has been held to be
illegal or ultravires, or
c) Where Revenue Audits objection in the case has been accepted by the
Department.
d) Writ matters
e) Matters pertaining to other direct taxes, i.e., other than Income-Tax
f) Where the tax effect is not quantifiable or not involved, such as case of
registration of trust or institution under section 12A.
g) Where the addition relates to undisclosed foreign assets/bank accounts.
Time- limit for presenting appeal
Appeal to ITAT is to be filed within a period of 60 days from the date on which order
sought to be appealed against is communicated to the taxpayer or to the Principal
Commissioner of Income-Tax or Commissioner of Income-Tax (as the case may be).
The ITAT may admit an appeal even after the period of 60 days if it is satisfied that there
was sufficient cause for not presenting the appeal within the prescribed time.

[As amended by Finance Act, 2016]

Form and signature
The appeal to ITAT shall be filed in Form No. 36. In case of appeal by the taxpayer, the
form of appeal, the grounds of appeal and the form of verification are to be signed and
verified by the person authorised to sign the return of income under section 140. In other
words, the Form of appeal is to be signed by the following persons:
1. In case of appeal by the individual taxpayer, by the individual taxpayer
himself or by a person duly authorised by him who is holding a valid power of
attorney
2. In case of a Hindu Undivided Family by the Karta of the family or if Karta is
absent from India or is not capable for signing, by any other adult member of
such family.
3. In case of a company by the Managing Director or if Managing Director is not
available or where there is no Managing Director by any director of the
company.
4. In case of a firm by the Managing Partner or if Managing Partner is not
available or where there is no Managing Partner by any partner (not being a
minor)
5. In case of a LLP by the Designated Partner or if Designated Partner is not
available or where there is no Designated Partner by any partner.
6. In case of a Local Authority by the Principal Officer thereof
7. In case of a Political Party by the Chief Executive Officer of such party
8. In case of any other Association by the Principal Officer thereof or by any
member of the Association.
9. In case of any other Person by that Person or by some person competent to act
on his behalf.
Memorandum of cross objection
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.
Documents to be submitted with appeal

[As amended by Finance Act, 2016]

 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.

In case of appeals to the ITAT on or after 1-10-1998 (irrespective of the date of initiation
of assessment proceedings), the following fees are payable:
Fees for filing the appeal

Where assessed income (*) is :

up to Rs. 1,00,000 Rs. 500

more than Rs. 1,00,000, but up toRs. 2,00,000 Rs. 1,500

more than Rs. 2,00,000 1% of assessed income ($)

(*) Assessed income means total income as computed by the Assessing Officer.
($) Subject to a maximum of Rs. 10,000
Fees for filing the appeal in other cases

Where application is under section 254(2) Rs. 50

Where subject-matter of appeal relates to any other matter Rs. 500

[As amended by Finance Act, 2016]

Where application is for stay of demand Rs. 500

Where Appeal is filed u/s 253(2)or a memorandum of a NIL

Cross objection referred u/s 253(4)

Submission of paper book

The appellant or the respondent, i.e., the opposite may submit a paper book. A paper
book is to be submitted in duplicate and should contain documents or statements or other
papers referred to in the assessment order or the appellate order on which
appellant/respondent wants to rely.
The paper book should be duly indexed and page numbered.It should be filed at least a
day before the hearing of the appeal. It should be filed along-with the proof of service of
copy of the paper book to the opposite party at least a week before. Each paper in the
paper book is to be certified as true copy by the party filing the same.
The delay in filing the paper book may be condoned in genuine cases of delay.
The ITAT can also on its own direct the preparation of paper book in triplicate by and at
the cost of appellant or the respondent as it may consider necessary for disposal of
appeal.
Additional evidence, if any, should be filed separately and should not form part of the
paper book.
Hearing of the appeal by the ITAT
The ITAT will fix the date of hearing along with the place of hearing the appeal and will
also notify the parties.
A copy of memorandum of appeal is to be sent to the respondent either before or along
with such notice. The ITAT will hear the appeal on the date fixed. The appeal may be
adjourned on other dates and in such a case the appeal will be heard on the respective
dates.
If the appellant is called by the ITAT but fails to appear before the ITAT either in person
or through an authorized representative, the appeal may be disposed of by the ITAT on
merits after hearing the respondent.
Subsequent to ex parte hearing, if the appellant appears before the ITAT and satisfies the
ITAT that there was sufficient cause in his case for non-appearance before the ITAT,
then set aside the ex parte order and restore the appeal. Similar procedure is applicable
where appeal is disposed of in the absence of respondent.
Filing of additional evidence
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

[As amended by Finance Act, 2016]

allow such document to be produced, witness to be examined, affidavit to be filed and
such evidence to be adduced.
Order of the ITAT
The member of bench of the ITAT hears the appeal. After hearing the appeal the ITAT
will pronounce its order and will communicate the order to the taxpayer as well as the
Assessing Officer.
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 lakh may be disposed of by single member Bench.
If the members of the Bench differ in opinion on any point, the decision is taken on the
basis of majority. If members are equally divided in their opinion, the points of difference
are stated by each member and the case is referred by the President of the ITAT for
hearing such points by one or more of other members of the ITAT. Such point or points is
decided according to opinion of majority of the members of ITAT who have heard the
case, including those who first heard it.
Normally, the Bench pronounces its orders in Court.However, where the orders are not
pronounced in the Court, list of such orders showing results of appeal and signed by
members is put up on the notice board of the Bench.
Disposal of appeal
Where it is possible, the ITAT shall dispose off the appeal within a period of four years
from the end of the financial year in which appeal is filed.
Stay application
The ITAT may, on an application made by the taxpayer and after considering the merits
of the application, pass an order of stay in any proceedings relating to an appeal filed
under section 253(1). The stay order will be in operation for a period not exceeding 180
days from the date of such order.The ITAT shall dispose of the appeal within the said
period of stay specified in that order.
If such appeal is not so disposed of within the period of stay specified in the order of stay,
the ITAT may extend the stay period, on an application made in this behalf by the
taxpayer on being satisfied that the delay in disposing of the said appeal is not
attributable to the taxpayer. The extension of stay period can be for a further period or
periods, as the ITAT thinks fit, but the aggregate of the period originally allowed and the
period or periods so extended or allowed shall not, in any case, exceed 365 days and the
Appellate Tribunal shall dispose of the said appeal within the period of stay so extended
or allowed.
If the appeal is not disposed off within the period allowed or within the period or periods
extended, which shall not in any case exceed 365 days, the order of stay shall stand
vacated after the expiry of such period or periods, even if the delay in disposing of the
appeal is not attributable to the taxpayer.
Rectification of Appellate Order
The ITAT may, at any time within 6 months from the end of the month in which the
order was passed, rectify any mistake apparent from record, amend any order passed by it

[As amended by Finance Act, 2016]

if the mistake is brought to its notice by the taxpayer or Assessing Officer. However,
where such amendment has the effect of enhancing an assessment or reducing a refund or
otherwise increasing a liability of the taxpayer, it shall not be made unless the Appellate
Tribunal has given a notice to the taxpayer of its intention to do so and has allowed the
taxpayer a reasonable opportunity

[As amended by Finance Act, 2016]

 MCQ ON APPEAL TO THE INCOME TAX APPELLATE TRIBUNAL

Q1.The Income Tax Appellate Tribunal (ITAT) is the second appellate authority.
(a) True (b) False
Correct answer : (a)
Justification of correct answer :
The Income Tax Appellate Tribunal (ITAT) is the second appellate authority.
Thus, the statement given in the question is true and hence, option (a) is the correct
option.
Q2.Appeal to the ITAT cannot be filed by an Assessing Officer.
(a) True (b) False
Correct answer : (b)
Justification of correct answer :
Appeal to the ITAT can be filed by any of the aggrieved party either by the taxpayer or
by the Assessing Officer.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.
Q3.Rectification order passed by the Commissioner of Income-Tax (Appeals) under
section 154 is the final order and the taxpayer cannot file an appeal to the ITAT against
such order of the Commissioner of Income-Tax (Appeals).
(a) True (b) False
Correct answer : (b)
Justification of correct answer :
A taxpayer can file an appeal to the ITAT in respect of few specific orders. One of them
is the rectification order passed by the Commissioner of Income-Tax (Appeals) under
section 154. In other words, a taxpayer can file appeal to the ITAT against Rectification
order passed by the Commissioner of Income-Tax (Appeals) under section 154.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.
Q4.Departmental appeal means _______.
(a) Appeal filed by the taxpayer against the order of CIT (Appeals) to the ITAT
(b) Appeal filed by the Income-tax department against the order of CIT (Appeals) passed
under section 154 or 250 to the ITAT
(c) Appeal filed by the taxpayer against the order of ITAT to the High Court

[As amended by Finance Act, 2016]

(d) Appeal filed by the taxpayer against the order of ITAT to the Supreme Court
Correct answer : (b)
Justification of correct answer :
If the Commissioner of Income-tax objects to the order passed by the Commissioner of
Income-Tax (Appeals) under section 154 or section 250, then he may direct the Assessing
Officer to make an appeal to the ITAT against the orders of the Commissioner of
Income-Tax (Appeals). This is called departmental appeal, i.e., the Income-Tax
department moving to ITAT against the order of the Commissioner of Income-Tax
(Appeals).
Thus, option (b) is the correct option.
Q5.The departmental appeal is allowed to be proceeded only in cases where the tax effect
involvedinthe appeal exceeds __________.
(a) Rs. 1,00,000 (b)Rs. 2,00,000
(c) Rs. 10,00,000 (d) Rs. 5,00,000
Correct answer : (c)
Justification of correct answer :
The departmental appeal is allowed to be proceeded only in cases where the tax effect
invoiced in the appeal exceeds Rs. 10,00,000. In other words, the Commissioner of
Income-tax can direct the Assessing Officer to file an appeal to the ITAT against the
order of the Commissioner of Income-Tax (Appeals) only in those cases in which the tax
effect exceeds Rs. 10,00,000.
Thus, option (c) is the correct option.
Q6.Appeal to ITAT is to be filed within a period of 60 days from the date on which order
sought to be appealed against is communicated to the taxpayer or the Commissioner of
Income-Tax (as the case may be).
(a) True (b) False
Correct answer : (a)
Justification of correct answer :
Appeal to ITAT is to be filed within a period of 60 days from the date on which order
sought to be appealed against is communicated to the taxpayer or to the Principal
Commission of Income-tax or to the Commissioner of Income-Tax (as the case may be).
Thus, the statement given in the question is true and hence, option (a) is the correct
option.
Q7.The appeal to ITAT shall be filed in Form No. _______
(a) 28 (b) 35
(c) 36 (d) 34E

[As amended by Finance Act, 2016]

Correct answer : (c)
Justification of correct answer :
The appeal to ITAT shall be filed in Form No. 36.
Thus, option (c) is the correct option.
Q8.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.
(a) True (b) False
Correct answer : (a)
Justification of correct answer :
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.
Thus, the statement given in the question is true and hence, option (a) is the correct
option.
Q9.Where assessed income is more than Rs. 2,00,000 then fess for filing an appeal with
the ITAT is __________.
(a) Rs. 500 (b) Rs. 1,000
(c) Rs. 1,500 (d) 1% of assessed income subject to a maximum of Rs. 10,000
Correct answer : (d)
Justification of correct answer :
Where assessed income is more than Rs. 2,00,000 then fess for filing an appeal with the
ITAT is 1% of assessed income subject to a maximum of Rs. 10,000.
Thus, option (d) is the correct option.
Q10.The ITAT shall dispose off the appeal within a period of four years from the end of
the financial year in which appeal is filed.
(a) True (b) False
Correct answer : (a)
Justification of correct answer :
The ITAT shall dispose off the appeal within a period of four years from the end of the
financial year in which appeal is filed.
Thus, the statement given in the question is true and hence, option (a) is the correct
option.

[As amended by Finance Act, 2016]