Post Assessment Work & Appeals before CIT (Appeals) under Income Tax Act Organized by: Agra Branch of CIRC 26 th December,2018. C.

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1 Post Assessment Work & Appeals before CIT (Appeals) under Income Tax Act Organized by: Agra Branch of CIRC 26 th December,2018 C.A Prarthana Jalan

2 How Was The Experience Of E-Assessments? C.A Prarthana Jalan

3 Assessment Orders Acceptable to Assessee or Non Acceptable to Assessee C.A Prarthana Jalan

4 ORDER IS ACCEPTABLE Read the order carefully Computation Check Interest Component Check File application for rectification of error u/s 154 of the I.T Act. C.A Prarthana Jalan

5 Penalty notice reply. Pay the demand/stay application. Pending 143(1) or 154 to pursue again Proper Filing of file & Ack of E-proceedings Professional Fees Collection C.A Prarthana Jalan

6 STAY OF DEMAND OFFICE MEMORANDUM [F.NO.404/72/93- ITCC], DATED CBDT hikes standard rate of disputed tax payment to 20% to get stay of demand from AO C.A Prarthana Jalan

7 SCOPE OF LITIGATION IN AGRA

8 APPEAL Appeal - a remedy for redressal of grievances against unjust, erroneous, undesirable or invalid Orders passed by an Authority. No inherent right to appeal but conferred by the Statute.

9 This right is conferred by the statute, hence subject to the terms and conditions specified therein. An appeal is a continuation of assessment proceedings. The right to appeal is a substantive right which gets crystallized when assessment proceedings are initiated C.A Prarthana Jalan

10 Appellate Forum: AUTHORITHY Commissioner (Appeals) (First Appeal) u/s 246 A Income Tax Appellate Tribunal (ITAT) (Final Fact Finding Authority) 253 High Court (only if substantial question of law is involved) 260A Supreme Court of India 261 C.A Prarthana Jalan

11 MONETORY LIMIT: AUTHORITHY TAX EFFECT Income Tax Appellate Tribunal (ITAT) (Final Fact Finding Authority) 20 lakhs High Court (only if substantial question of law is involved) 50 lakhs Supreme Court of India 1 crore C.A Prarthana Jalan

12 Orders which can be appealed against before CIT (Appeals) As per section 246A, some of the common orders which can be appealed against are as under : an order where the assessee denies his liability to be assessed under the Act; an intimation u/s. 143(1); processing of TDS return u/s. 200A; order u/s. 143(3) (except an order passed in pursuance of directions of the Dispute Resolution Panel) or 144; order denying tax determined;

13 order computing loss; order whereby the status of an assessee is changed; order u/s. 115WE(3) or 115WB Fringe benefit tax order u/s. 115WG tonnage tax order u/s. 147 or 150 reopening the assessment (except an order passed in pursuance of directions of the Dispute Resolution Panel); order u/s. 153A (new search proceedings); an order of assessment or reassessment u/s. 92CD(3) i.e. an order to give effect to advance pricing agreement;

14 order of rectification u/s. 154 or 155 (except where it is in respect of an order giving effect to General Anti Avoidance Regulations (GAAR)); order u/s. 163 treating the assesse an agent of a non-resident; an order under sub-sections (2) and (3) of section 170 i.e. liability of predecessor fastened on successor;; an order u/s. 171 i.e assessment after partition of HUF; an order u/s. 237 i.e. refunds;

15 an order under sub-section (6A) of section 206C i.e. liability in case of person not collecting tax at source; order of block assessment where search initiated or requisition made on or after 1/1/1997; order levying penalty u/s. 158BFA(2); order u/s. 201 order of penalty u/s. 221, 271, 271A, 271B, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FB, 272AA or 272BB C.A Deependra Mohan

16 Whether an order u/s. 263 passed by the Commissioner of Income Tax can be appealed against before CIT(A)?

17 No. As the Commissioner of Income Tax and the CIT(A) are of the same rank, an appeal against an order u/s. 263 would not lie before the CIT(A) but would lie before the Tribunal, which is a superior authority C.A Prarthana Jalan

18 Whether an order passed u/s. 143(3) r.w.s. 263 can be appealed against before CIT(A)?

19 Yes. An order passed by an AO giving effect to the CIT s order u/s. 263 is appealable. C.A Prarthana Jalan

20 Non-Appealable Order Order of refusal to grant stay of demand. Order to levy interest u/s 234 A, 234 B, 234C. Certificate granted u/s. 197(1). C.A Prarthana Jalan

21 Interest charged u/s. 220(2). Orders passed u/s 264 rejecting Revision Petition. Orders with agreed additions (No one can be aggrieved by own admission) C.A Prarthana Jalan

22 Appeals which cannot be filed with CIT (A) An Order passed by the CIT u/s 12 AA, or 80 G (5) (vi) An Order passed by the CIT u/s 263 or u/s. 271 or an order passed by him u/s 154 amending his order u/s 263. Order passed by Chief Commissioner or Director General or a Director u/s 272 A C.A Prarthana Jalan

23 Time Limit for filing of Appeal: The appeal shall be presented within 30 days of the following date, that is to say: Where the appeal relates to any TDS U/S 195(1), from the date of payment of tax. Where the appeal relates to any assessment or penalty; the date of service of the notice of demand. In other cases; the date on which such intimation of the order is served. C.A Prarthana Jalan

24 The day on which the Order appealed against was served is to be excluded If the assessee was not furnished with a copy of the order, the requisite time for obtaining a copy of such order shall be excluded.

25 Condonation of delay Application for condonation of delay must be made specifying that there was a Sufficient Cause for delay. The CIT(A) can condone delay in filing of appeal under section 249(3) if satisfied that delay was due to sufficient cause. The CIT has discretionary powers of condonation which should be exercised judiciously. C.A Prarthana Jalan

26 Anil Kumar Nehru vs. ACIT (Supreme Court) dated 3 rd December,2018, delay of 1662 days condoned It is a matter of record that on the identical issue raised by the appellant in respect of earlier assessment, the appeal is pending before the High Court. In these circumstances, the High Court should not have taken such a technical view of dismissing the appeal in the instant case on the ground of delay, when it has to decide the question of law between the parties in any case in respect of earlierassessment year. For this reason we set aside the order of the High Court; condone the delay for filing the appeal and direct to decide the appeal on merits.

27 The CIT should have a pragmatic and liberal approach. [Collector Land Acquisition Vs Mst. Katiji 167 ITR 471 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.

28 The Courts have also held that the mistake of an Advocate or Chartered Accountant is a reasonable cause for delay in filing an appeal. [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.)].

29 Appeal Fee: Particulars Amount (Rs.) Total income computed by AO Rs 250/- Upto Rs. 1,00,000/- Between Rs. 1,00,000/- to Rs. Rs 500/- 2,00,000/- Above Rs. 2,00,000/- Rs 1000/- Cases not covered above Rs 250/- Loss Minimum Fees C.A Prarthana Jalan

30 C.A Deependra Mohan

31 Check list for filing a CIT appeal o On receipt of order and notice of demand, note the date of service of order and notice of demand. o Find the point of grievance. Prepare a reconciliation of return income and assessed income. o List out the additions made, disallowances, whether a notice was issued u/s. 143(2) for assessment and the order passed are within the prescribed time limit

32 o o o Pay appropriate appeal-filing fees. Grounds of appeal should be simple, concise, aptly worded, and serially numbered issue-wise. Statement of facts should highlight each and every fact, since there is only one opportunity for filing the statementof facts.

33 o Ensure to incorporate all additions, disallowances made in the assessment order from different angles i.e. put alternative claims with the words Without prejudice to above. o After raising all the grounds of appeal, crave leave to add, to amend, alter, modify, delete, etc. any of the grounds of appeal without which the CIT(A) may not allow to take some additional grounds or evenwithdraw the appeal.

34 o Ensure that the audit memo, grounds of appeal, statement of facts, etc. are signed and verified by the person who is authorised to sign the return of income u/s 140 of the Income-Tax Act. o Ensure that the appeal is filed with the jurisdictional CIT (A) as mentioned on the rear side of the demand notice.

35 MODE OF FILING OF APPEAL Manual Or Electronic C.A Prarthana Jalan

36 Documents to be filed with the Appeal Covering letter addressed to the CIT (A) Form 35 (In duplicate) Statement of Facts (In duplicate) Grounds of Appeal (In duplicate) Copy of order against which appeal preferred (In duplicate) Original notice of demand (u/s 156) Copy of challan for payment of Appeal Filing Fees Power of Attorney C.A Prarthana Jalan

37 To digitise the Appeal function, the Income Tax Department/ CBDT has decided to make electronic filing (e- Filing) of appeals before CIT(Appeals) as mandatory for persons who are already required to file the return of income electronically C.A Prarthana Jalan

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53 Requirement Of Digital Signatures : (a) If the return form has been furnished electronically under the Digital Signatures, then form no. 35 will also have to be filed electronically under Digital Signatures. (b) If the return has been furnished electronically without Digital Signatures, then form no. 35 will have to filed electronically through the electronic verification code. (c) Where the e filing of form no. 35 is not mandatory, but is being e filed optionally, then it can be filed either under Digital Signatures or through Electronic Verification Code (as per convenience).

54 Withdrawal of Appeal: Appeal once filed cannot be withdrawn by the appellant. However the appellate authority in its discretion may allow withdrawal of appeal and dismiss the same as not pressed.

55 Although the assessee has no power to withdraw the appeal filed before the CIT(A) but the CIT(A) or Appellate Authority is satisfied that there will be no prejudice to revenue may allow to withdraw. [Bhartia Steel & Engineering Co. P. Ltd. Vs. ITO 97 ITR 154(Cal)]

56 Production of additional evidence (Rule 46A): Appellant is not entitled to produce additional evidence except in the following circumstances: Where the AO refused to admit the said evidence which ought to have been admitted. Where appellant was prevented by sufficient cause from producing evidence called upon by the AO.

57 Where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal. Where AO passed the impugned order without giving sufficient opportunity to appellant to adduce evidence relevant to any ground of appeal.

58 The CIT (A) must record in writing the reasons for admission of additional evidence. Before considering the additional evidence, the CIT(A) must : Allow the AO a reasonable opportunity to examine the evidence or document or to cross examine the witness produced by the appellant, or To produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.

59 Section 250: Procedure in Appeal Notice to AO and Assessee fixing a day and place of hearing. Following shall have right to be heard: a) the appellant in person or through his AR b) the AO or his AR. CIT (A) has powers to adjourn the hearing from time to time.

60 Before disposing of the appeal, the CIT (A) has power to make further inquiry or may direct the AO to further inquire and report i.e. remand report. Additional ground may be allowed, at the time hearing of an appeal, if satisfied that the omission was not willful or unreasonable.

61 Section 251: Powers of CIT (A) To confirm, reduce, enhance or annul the assessment; or In an appeal against the order of assessment in respect of which the proceedings before the settlement commission abates under section 245 HA, confirm, reduce, enhance or annul the assessment. In Penalty matters, to confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;

62 In any other case he may pass such orders in the appeal as he thinks fit. Power to consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised by the appellant.

63 Power of Enhancement O The CIT(A) can enhance assessment in respect of matters which could be considered by ITO, but which he failed to consider. However, the CIT(A) has to restrict himself to the material before the ITO. O Where the A.O. on the basis of material before him had failed to make due enquiry, the CIT(A) has powers to cause such enquiry, and make the enhancement.

64 Incentive To CIT(Appeals) CBDT in the Central Action Plan 2018 has sought to offer incentives to CITs(A) for passing quality orders. The incentives have been offered where the CIT(A) in appellate proceedings, passes an order where :- (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCIT, or (c) penalty u/s 271(1) has been levied by the CIT(A)

65 Limitations No power to review except power of rectification u/s No power to consider validity of Act or Rules [CIT Vs. Straw Products Ltd. 60 ITR 156 (SC)]

66 Commissioner (Appeals) has no power to set aside an order and refer the case back to AO for fresh assessment [w.e.f ] Commissioner (Appeals) cannot award costs to parties.

67 Appeal Order and appeal effect: After conclusion of hearing the CIT (A) will issue a order of the appeal. If it is in favour of the A, either in full or partial, he has to file a request with AO for appeal effect. In case of against the A, he has to decide to file second appeal file an appeal before jurisdictional ITAT within 60 days.

68 Presentation before the CIT(A) o Study the assessment order in depth and carefully and understand the facts of the case and the background involved in each addition. o Study all the replies filed before the AO during the assessment proceedings o Identify the weak points in relation to each additions made.

69 Examine whether any additional evidence is to be taken. If so, draft an appropriate application under Rule 46- A. o Prepare paper book with index containing all written submissions filed, evidences in support of assertions made in the written submissions. o Prepare exhaustive written submissions relevant to each ground of appeal. Highlightthe important submissions in bold or italics.

70 Make special efforts in emphasizing as to how and why the AO was wrong based on actual facts and legal issues. Controvert the stand taken by the AO duly supported by documentary evidences, legal position and decided cases by the courts.

71 o Reliance be placed on the decisions of the Apex Courts, Jurisdiction High Court and ITAT. o Revenue authorities have to follow decision of jurisdictional High Court. o [CIT Vs. G. M. Mittal Stainless Steel (P) Ltd. (2003) 130 Tax man 67 / 263 ITR 255 (SC)] o Care need to be taken while placing reliance on case laws. Examine the cases for and against. As far as possible, distinction be made between the cases which are against.

72 Distinguish the cases relied upon by the AO. o Maintain calm and be peaceful and confident. o Have proper knowledge of all facts of the case. Reply to the queries raised by the CIT (A) be offered promptly and to the point.

73 o Do not get provoked with the seemingly irrelevant queries by the CIT(A). o Avoid unnecessary arguments and altercations in case if the CIT(A) is not satisfied with your arguments.

74 Thank You!! Wishing You All A Very Happy & Prosperous New YEAR CA Prarthana Jalan prarthanajalan@gmail.com #

APPEAL BEFORE CIT(A) CA TORAL SHAH

APPEAL BEFORE CIT(A) CA TORAL SHAH Meaning of Appeal The expression appeal has been defined in Black s law dictionary as A proceeding undertaken to have decision reconsidered by a higher authority. The