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CHART FOR APPEALS UNDER CHAPTER XX

PARTICULARS CIT(A) TRIBUNAL HIGH COURT

INCOME TAX Sec. 246 to 251 Sec. 252 to 255 Sec. 260A & 260B

1.Orders Appealable Mentioned u/s.246A Mentioned u/s. 253. Mentioned U/s. 260A

2.Time Limit of Filing the

Appeal.

Within 30 Days from the

date of Receipt of Notice of

Demand.

Within 60 Days from the

date of Service of CIT(A)'s

order.

Within 120 days from the

date of Communication of

Appellate Tribunal order.

3.Prescribed Form No. Form No. 35.

(As per Rule 45)

Form No. 36.

(As per Rule 47(1))

As per High Court original

side Rules.

4.Who can file Appeal Aggrieved Assessee Aggrieved Assessee or

Commissioner.

Aggrieved Assessee or

Commissioner.

5.Fees Payable Rs.250/- where the

Assessed Income is Rs.1

lakh or less; more than Rs.1

lakh but less than Rs.2

lakh-Rs.500/- and more

than Rs.2 lakh-Rs.1000/-

Rs.500/- where the

Income assessed is

Rs.1 lakh or less,

Rs.1,500/- where the

income assessed is

more than Rs.1 lakh

but less than Rs.2 lakh

and 1% of assessed

income, subject fee

maximum of Rs.10,000/-

where the income

assessed income is more

than 2 lakhs.

Ad-volarem fee leviable on

the amount in dispute, i.e.

the difference between the

amount of tax actually

assessed and the amount of

tax admitted by the

assessee as payable by him,

subject to a maximum of

Rs.10,000/- (only by

assessee). {As per Article

16A to Schedule I of the

Bombay Court Fees Act}.

6.Documents to be Filed. Form No.35, Grounds of

Appeal, Statement

of Facts, Copy of Order

against which appeal is

preferred, Notice of

Demand and original

challan of filing fees.

Form No.36, Grounds of

Appeal, Copy of Order

against which appeal is

preferred,

& Documents filed

before the CIT(A)

as referred in the

column.

Memo of Appeal;

Statement of facts, orders

of the lower authorities and

documents relied upon the

Tribunal and lower

authorities.

7. Documents to be

Submitted in :

Duplicate.

Triplicate.

Duplicate. One copy to be

served on Respondent.

8.Place of Filing. CIT(A) as mentioned

in the Notice of

Demand.

Registrar of the Appellate

Tribunal.

Respective High Court.

Cross Objection.

1.Prescribed Form No.

--- Form No. 36 A.

(As per Rule 47(1))

Rule 22 of order XLI of

CPC

2.Time Limit for filing the

Cross Objection.

--- Within 30 days of the

receipt of the notice of

appeal filed by other party.

Within 30 days form date

of service of the appeal.

3.Fees Payable. --- No Fees Payable. ---

Stay Application

1. Fees Payable

--- Rs.500/-

(w.e.f.1/10/1998) [per

application as per the

decision of the Tribunal]

---

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2. Documents to be filed. --- Stay Petition, Rejection

order for stay by CIT &

Assessing Officer Affid-

avit, orders of lower

authorities & documents

furnished to them.

---

Miscellaneous Application

1) Fees Payable

--- Rs.50/-

(w.e.f. 1/10/98)

---

2) Documents to be filed --- Miscellaneous Application

Petition, order of the

Tribunal, Affidavit

---

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PREPARATION & REPRESENTATION OF APPEAL

Shri Ajay R. Singh

Advocate

INTRODUCTION

Article 265 of the Constitution of India, provides as under : “Taxes not to be

imposed save by authority of law – No tax shall be levied or collected except by

authority of law”.

Representation before the Assessing officer and first appellate authorities are

foundation to the appeal. For making a good representation we should know the

facts, law and procedure.

Right of Appeal is a creature of Statute. A person has no inherent right of appeal

and hence, it cannot come under the category of fundamental rights. An appeal is a

continuation of assessment proceedings. Assessment proceedings complete when

appeal against order of assessment is decided by Tribunal CIT vs. Mayur

Foundation (2005) 274 ITR 562(Guj.)

A. FIRST APPEAL: Section 246 confers the right to appeal before the

CIT(A) in respect of orders specified u/s. 246A of the Income-tax Act, 1961.

The relevant Rules are provided in Rules 45 to 47 of Income Tax Rules,

1962.

1. WHO CAN FILE APPEAL? - AGREED ASSESSMENT

1.1 "Every Assessee aggrieved" by any of the orders mentioned in Section 246

of the I.T. Act, 1961 has a right to prefer an appeal. In Rameshchandra &

Co. v. CIT 168 ITR 375 (380) (Bom), it has been held that where an

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assessee has made a statement on facts, there can be no grievance if he is

taxed on the basis of that statement. As there is no grievance, there can be

no appeal. When an Assessing Officer states in the Order that the Assessee

agreed for addition, he cannot file an appeal unless he challenges the

observation of the Assessing Officer by filing Affidavit - Western India

Automobiles v. CIT 112 ITR 1048 (Bom).

1.2 Assessee should make application u/s.154 of the Act, challenging the

observation of the Assessing Officer and should also file an appeal

specifically urging that he has not agreed for additions and the same should

be supported by an Affidavit.

1.3 It has been held by High Courts that even a third party has a right of appeal

if, as a result of an order he is saddled with a liability for any tax or other

sum – (See Section 2(7) of the Act)

Kikabhai Abdulali Vs. ITAT Bombay 32 ITR 762 (Bom); Benoy Kurian vs.

Agrl. ITO 234 ITR 617 (Ker); CIT v. N. Ch. R. Row & Co. 144 ITR 557

(Cal), CIT vs. Ambala Flour Mills. (1970) 78 ITR 256 (SC).

- Where the assessee is dead, through legal representative;

Rajah Manyam Meenakshamma vs. CIT (1956) 30 ITR 286 (AP)

- A coparcener, where the assessee has claimed to be a HUF:

Chandumal Pannalal vs. CIT (1965) 58 ITR 711 (Cal.)

1.4 The Hon’ble Bombay High Court in case of Nirmala L. Mehta vs. A.

Balasubramanin CIT (2004) 269 ITR 1 (Bom) held that there cannot be any

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estoppel against statute. Article 265 of the Constitution of India provides

that no tax shall be levied or collected except by authority of law. [Also see

Balmukund Acharya 310 ITR 310 (Bom)].

1.5 Order Giving effect to Appellate order : Appealable :

An order giving effect to the appellate order bears the same characteristic as

the original order against which appeal was filed.

a) CIT vs. Industrial Machinery Manufacturing P. Ltd.

(2006) 282 ITR 595 (Guj.)

b) Bakelite Hylam Ltd. vs. CIT (1988)171 ITR 344(AP)

c) Where the Department denies its liability to pay interest on refund of self

assessment tax, the issue is appealable : Sec. 244A

Dy. CIT vs. BSES Ltd. (2008) 113 TTJ 227 (Mum)(para 19.6)

DIRECT TAX CODE : Clause 178:

The scope of appealable orders under the revised DTC has been provided with a

Specific list under 21st Schedule of the code.

The revised DTC provides that if a rectification application is not disposed off

within six months, the assessee can prefer an appeal to CIT(A).

2. PROCEDURE : GROUNDS OF APPEAL & STATEMENT OF

FACTS:

2.1 An appeal should be filed within a period of 30 days of the service of the

Assessment order alongwith notice of demand. The same should be concise

without any argumentative or narrative. Language should not be very harsh.

The grounds should highlight the main controversy in issue. The grounds

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should not be vague, general or too lengthy. Specific ground to be taken for

each and every issues involved.

2.2 The Statement of Facts should be filed before the Commissioner (Appeals)

wherein facts can be narrate. It is advisable to file elaborate statement of

facts covering all issues and wherever possible, alongwith details filed

before Assessing Officer and the case laws. Filing of detailed statement of

facts, along with supporting case laws will help the Assessee, especially

when appeals are disposed off by the first appellate authority ex-parte. If

certain factual errors are there in the order the same must be raised in the

grounds of appeal and statement of facts.

2.3 DELAY IN FILING APPEAL: An application for condonation of delay

alongwith affidavit stating the reasons for delay should be filed alongwith

the appeal. The Hon’ble Calcutta High Court in Charki Mica Mining Co.

Ltd. vs. CIT (1978) 111 ITR 193 has held that the limitation period

commences from the date of receipt of notice of demand by the Assessee

and not from the date of receipt of Assessment order.

2.4 In Collector of Land Acquisition v. Mrs. Katiji & Others 167 ITR 471

(SC) the Hon'ble Supreme Court has held that the Courts should have

pragmatic & liberal approach in admitting the appeal beyond the period of

limitation. Also see N. Balkrishnan Vs. M. Krishnamurthy (1998) 7 SCC

123, State of Nagaland vs. Lipuk A.O. 2005 (183) E.L.T. 337 (SC),

Earthmetal Electricals (P.) Ltd. vs. ITO (2005) 4 SOT 484 (Mum) and

Bombay Mercantile Co-op. Bank vs. CBDT (2010) 45 DTR 377 (Bom).

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2.5 Legal Principle culled out from various decision on condonation of

delay are.

a. The expression ‘sufficient cause’ must receive a liberal

construction so as to advance substantial justice and generally

delays in preferring the appeals are required to be condoned in

interest of justice.

b. The primary function of any quasi-judicial body is furtherance of

administration of substantial justice.

c. Pragmatic justice oriented approach is required and not the

technical detection of explanation of every days delay.

d. Length of delay is immaterial.

e. A litigation does not stand to benefit by resorting to delay,

therefore a justice oriented approach is required by courts.

f. Since explanation of assessee did not smack mala fide or was not

put forth as a dilatory strategy, delay in filing appeal was to be

condoned.

g. In every case of delay there can be same lapses on the part of the

litigant concerned, but that alone is not enough to shut the door

against him.

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h. Refusing to condone delay can result in a meritorious matter being

thrown out at the very threshold and cause of justice being

defeated.

i. In matters of condonation of delay a highly pedantic approach

should be eschewed and a justice oriented approach should be

adopted and a party should not be made to suffer on account of

technicalities.

Direct Taxes Code : - Clause 179(3)(b), Power of CIT(A), 183(7),

Power of Tribunal Clause 192 (6)(b).

As per the new code Appellate authorities have no power to

condone the delay beyond one year. There may be delay due to

mistake of tax consultant, or due to any genuine reason. As there is

no power to condone the delay, the assessee may have to approach

the High Court by way of Writ.

3. PAYMENT OF TAX MANDATORY BEFORE FILING APPEAL.

3.1 Section 249(4) provides that no appeal shall be entertained unless at the time

of filing the appeal the assessee has paid the taxes due on the returned

income or where no return is filed, an amount equal to the amount of

advance tax which was payable by him. The tax due does not include

interest element. CIT vs. Manoj Kumar Beriwal (2009) 316 ITR 218

(Bom);

3.2 Case Laws: Once the assessee has complied with the provisions Appeal be

heard on merit:

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i) Subbiah Nadur & Sons vs. ACIT 84 ITD 55 (Chennai)

ii) Mr. Purshottam G. Budhwani vs. ACIT

ITA No. 354/M/2009, dt. 21/1/2010, Bench “C”

iii) J.K. Chaturvedi vs. Astt. CIT 2004 (3) SOT 456 (Ahd.)

iv) Anant R. Thakore vs. ACIT (2006) 5 SOT 298 (Mum)

4. CAN AN APPEAL BE SIGNED BY AN ADVOCATE / CHARTERED

ACCOUNTANT / AUTHORISED REPRESENTATIVE

4.1 As per Rule 45 of the Income Tax Rules, 1961, the form of appeal i.e. Form

No. 35, the Grounds of Appeal & the form of Verification appended thereto

shall be signed & verified by the person who is authorised to sign the

return of income under section 140 of the I.T. Act, 1961. Thus it can be

inferred that only in the case of an individual or a company which is not

resident in India, the return can be signed by a person who holds a valid

power of attorney, which shall be attached to the return.

4.2 In the following cases, it has been held that an appeal signed by an

Advocate/C.A. is valid -Mrs. Leezo Salidan v. CIT 16 TTJ 243 (Bom)

Pyrkashim Stores v. CIT 9 ITD 93 (Bom) Hariledge v. ITO 29 Taxman 122

(Bom) (Tribunal) RajendraKumar Maneklal Sheth (HUF) v. CIT 213 ITR

715 (Guj).

4.3 Defect in Appeal:

Defect in Appeal can be rectified by an amendment. The Assessee

should be given an opportunity to rectify the defect:

a) Malani Trading Co. vs. CIT (2001) 252 ITR 670 (Bom)

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b) BDA Ltd. vs. ITO (TDS) (2006) 281 ITR 99 (Bom) (Aurangabad

Bench)

c) CIT vs. Calcutta Discount (1973) 91 ITR 8 (SC)

d) Sheonath Singh vs. CIT (1958) 33 ITR 591 (Cal.)

e) Prime Securities Ltd. vs. ACIT (2009) 317 ITR 27 (Bom)

5. Hearing: Assessee should file written submission and paper book at time of

hearing.

5.1 The CIT(A) has power to make such further inquiry as he thinks fit or may

direct the A.O. to make further inquiry and report to him. Assessee is

entitled to reply to the remand report.

5.2 The CIT(A) has to pass a speaking order dealing with each grounds of

appeals. The CIT(A) should pass the order on merits even though heard

exparte / or assessee did not appear. - CIT vs. Chennaippa 74 ITR 41

(SC).

5.3 The CIT(A) cannot apply Multiplan (India) Ltd. 38 ITD 320, decision and

dismiss the assessees appeal exparte for non appearance. Gujarat Themis

Biosyn ltd v/s. Jt CIT 74 ITD 339 (Ahd).

6. ADDITIONAL EVIDENCE

If the assessee is been prevented by good, sufficient or reasonable cause or

adequate time is not allowed such fresh evidence can be placed before the

appellate authority by making a Application U/R. 46A.

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- Effect of Rule 46A – Opportunity to A.O. to examine document and

evidence. Rule embodies provision of natural justice: CIT vs. Shree

Kangra Steel Pvt. Ltd. (2010) 320 ITR 691 (HP)

6.1 The Commissioner (Appeals) would not be justified in rejecting additional

evidence produced before him – Smt. Prabhavati S. Shah v. CIT 231 ITR 1

(Bom); Dwarika Prasad v. ITO 63 ITD 1 (Patna)(TM).

6.2 Under Rule 46A(4) the CIT(A) on its own discretion can ask the assessee to

produce documents or evidence. Additional evidence gathered by the

CIT(A) on his own is not required to be produced before A.O. for his

comments.

a) ITO vs. Indl. Roadways (2008) 305 ITR 219 (Mum(AT).

b) ACIT vs. Prime Telesystems Ltd. (2007) 11 SOT 361 (Del.)

c) Dy. CIT vs. Thoresen Chartery Singapore (2009) 118 ITD 416 (Mum)

d) ITO vs. Jitender Mehra 53 ITD 396 (Del.)

e) CIT vs. K. Ravindranathan Nair (2004) 265 ITR 217 (Ker.)

6.3 Permission to bring additional document can be granted in exercise of

discretion of Court to achieve ends of justice. (Smt. Shantibai K. Vardhan &

Ors. Vs. Ms. Meera G. Patel & Anr. AIR 2009 (NOC) 904 (Mum)

- Filing of Translated copy of document in Court is not additional

evidence. (Prahlad Singh vs. Suraj Mal & Ors AIR 2009 Raj. 53)

7. RAISING ADDITIONAL GROUNDS

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7.1 Sub-section 5 of Section 250 gives power to the Commissioner (A) to allow

the appellant to raise additional ground if he is satisfied that the omission of

that ground was not wilful or unreasonable.

a) Jute Corp. of India Ltd. vs. CIT 187 ITR 688 (SC) (FB)

b) Heinrichde Frics GMBH vs. Jt. CIT 281 ITR 18 (Mum)(AT)

8. JURISDICTION POINT.

8.1 The Assessee can raise the jurisdiction point at any time. - Union of India

v. Rai Singh Dal Singh 88 ITR 200 (SC), CIT v. Dumravan Cold Storage

& Refrigerators Services 97 ITR 137 (Pat), The Assessee can raise the

jurisdictional point before the Tribunal also inrespect of reassessment

proceedings. As it is a question of law which goes to the root of the matter.

Inventors Industrial Corporation Ltd. vs. CIT 194 ITR 548 (Bom).

Invalid jurisdiction cannot be corrected by Sec. 292B [Saraf Gramodyog

Sanshtan 108 ITD 115 (Agr.)]

9. MAKING A CLAIM FOR THE FIRST TIME BEFORE APPELLATE

AUTHORITY

9.1 If there was evidence or material on record, then only a claim made for the

first time be entertained by the Appellate Authority. CIT v. Western Rolling

Mills Pvt. Ltd. 154 ITR 54 (Bom).

9.2 The Board have issued instructions from time to time in regard to the

attitude which the Officers of the Department should adopt in dealing

with assessees in matters affecting their interests and convenience.

Circular No.14(XL-35) of 1955, C.No.13(207)-IT/50, dated 11th April,

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1955, states that the Officers of the Department must not take advantage of

ignorance of an assessee as to his rights.

9.3 However the decision of S.C. in the case Goetze (India) Ltd vs. CIT 284

ITR 323 (SC) has held that it was open to the assessee to raise new points of

law before the Tribunal. The Tribunal has such powers u/s. 254 of the Act.

9.4. A.O. is bound to assess the correct income and for this purpose the

Assessing officer may grant relief’s / refund sou motu or can do so on being

pointed out by the assessee in the case of assessment proceedings for which

assessee has not filed a revised return.

Case Laws After Considering Goetze (India) Ltd. (Supra)

a) Chicago Pneumatic India Ltd. vs. Dy. CIT

(2007) 15 SOT 252 (Mum) (273)

b) In CIT v Jai Parabolic Springs Ltd (2008) 306 ITR 42 (Delhi), the court held

that the Tribunal has the power to decide the issue..

c) In CIT vs. Ramco International (2009) 221 CTR 491 (P & H) held that claim

u/s. 80IB was admissible even without a revised return.

9.5 However, the A.O. cannot entertain a claim for deduction otherwise than by

filing a revise return.

9.6 In case where assessment is not pending and the time available for filing a

revised return is also expired, the only remedy is to seek extension of time

u/s. 119(2) from the Board for filing a delayed return in case of genuine

hardship.

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(See Bombay Mercantile Co-op Bank vs. CBDT (2010) 45 DTR 377

(Bom).

The assessee can also file rectification application u/s. 154 on facts of the

case or make a application to CIT u/s 264.

Direct Tax Code: Clause 180 sub-clause (6) allows the appellant to go into

new ground of appeal if he is satisfied that the omission was not willful or

unreasonable.

10. POWERS OF THE CIT(A)

10.1 Power to Stay the Recovery Proceedings

. In following cases it has been held that the CIT(A) has the power to Stay

the Recovery Proceedings. Prem Prakash Tripathi v. CIT 208 ITR 461

(All). Tin Mfg. Co. India Ltd. v. CIT 212 ITR 451 (All). Paulsons Litho

Works v. ITO 208 ITR 676 (Mad); Agricultural Produce Market

Committee vs. CIT (2005) 279 ITR 371 (Pat.), Smita Agrawal (Ind.) vs.

CIT (2009) 184 Taxman 59(All) The Hon’ble S.C. in the case of ITO vs.

M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC) held that power to grant

stay is incidental or ancillary to its appellate jurisdiction.

The guidelines to the Income Tax authorities while deciding stay application

is provided by Bombay High Court in.

- KEC International Ltd. vs. B.R. Balakrishnan & Ors.

(2001) 251 ITR 158 (160) (Bom)

- Mahindra & Mahindra Ltd. vs. UOI 1992 (59) ELT 505 Bom.

- Strictures were passed against dept for disposing stay application

without proper reasons. Paramount Health Services v/s. ACIT

(2010) 37 DTR 377 (Bom)

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10.2 Power of Enhancement

The CIT(A) has power to confirm, reduce, enhance or annual the

assessment; confirm or cancel or vary or enhance or to reduce the penalty

and may pass such orders in the appeal as he thinks fit.. However the CIT(A)

should give reasonable opportunity of hearing to the assessee. The filing of

an appeal may lead to grave consequences of enhancement of assessment.

10.3 The CIT(A) powers u/s. 251 are vide enough to include the power to

examine all matters covered by the assessment order and to correct the

assessment. The Powers of CIT(A) are conterminous with those of the

Assessing Officer.

166 ITR 494 (MP) Indermal Natwarlal vs. CIT

206 ITR 574 (Guj) CIT vs. Ahmedabad Crucible Co.

131 ITR 451 (SC) Kapoorchand Shrimal vs. CIT

305 ITR 310 (Chennai) AT Ansaldo Energia SPA vs. Astt. DIT

10.4 However the jurisdiction of the appellate authority u/s. 251 is strictly

confined to the Assessment order of the particular year under appeal as held

in ITO vs. Murlidahr Bhagwan Das 52 ITR 335 (SC), Sun Metal Factory I

Pvt Ltd v/s. ACIT (2010) 124 ITD 14 (Chennai).

Direct Taxes Code Clause 181

Clause 181 provides for extending the power of CIT(A), while disposing an

appeal to consider and decide any matter which has not been considered by

the Assessing officer.

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11. Dispute Resolution Panel Sec. 144C:

A. Introduction

11.1 Speedy resolution of tax disputes had been a long-standing task of foreign

investors doing business in or with India. Although the stated objective of

the government over the past several years has been to reduce complexities

and to accelerate disposal of tax disputes, there was little visible action.

11.2 The Finance Act, 2009 inserted a new section 144C in the Income-tax Act

providing an alternate mechanism to resolve tax disputes of the foreign

companies expeditiously. The Finance Minister, declared in the parliament

that “The dispute resolution mechanism presently in place is time consuming

and finality in high demanding cases is attained only after a long drawn

litigation till the Supreme Court.

Flow for foreign investment is extremely sensitive to a prolonged

uncertainty in tax-related matter. Therefore, it is proposed to amend the

Income-tax Act to provide for alternate dispute resolution mechanism which

will facilitate expeditious resolution of disputes in a fast track basis”.

11.3 Presenting the Budget for 2009-10 in the Parliament the Union Finance

Minister has stated in para 96 of the Budget Speech that "in order to further

improve the investment climate in the country we need to facilitate the

resolution of tax disputes faced by foreign companies within a reasonable

time. This is particularly relevant for such companies in the information

technology sector. I therefore propose to create an alternative dispute

resolution mechanism within the Income-tax Department for resolution of

transfer pricing disputes. To reduce the impact of judgmental errors in

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determining transfer price in international transactions it is proposed to

empower the Central Board of Direct Taxes to formulate ‘safe harbour’

rules".

B. Provisions Explained : Sec. 144C :

11.4 The Finance (No. 2) Bill has inserted special provisions through clauses 49,

55, 71 and 72 of the Bill to incorporate new provisions in the Income-tax

Act to give effect to the above proposal. According to the new scheme of

section 144C to be made effective from 1st October, 2009.

11.5 The scheme of DRP is available only to a foreign company and to any

person who has entered into an international transaction and whose

assessment has been referred to the Transfer Pricing Officer.

11.6 The new scheme provides that whenever an assessing officer proposes to

make variations in the income or loss returned by a foreign company, he

shall forward a draft of the proposed order to the foreign company. The

foreign company on receipt of the draft order shall either accept the variation

made by the assessing officer or file objections to variations with the DRP

within 30 days of the receipt of the draft order.

11.7 The DRP shall issue directions within nine months from the end of the

month in which draft order is forwarded to the assessee.

11.8 Thereafter the AO is obliged to pass the final assessment order within 30

days from the end of the month in which such directions are received.

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11.9 In pursuance to the above provisions the CBDT has issued Income-tax

(Dispute Resolution Panel) Rules 2009, vide notification no. 84/2009[S.O.

2958(E)/F. No. 142/22/2009-TPL] dated 20-11-2009. Vide order No. 173

/2009 (F.No. A-35011/46/2009-AD VI) dt. 30/11/2009. The rules, inter-alia,

contain provisions relating to Constitution of the Panel, Procedure for filling

objections, Hearing of objections, Power to call for or permit additional

evidence, Issue of directions, Passing of Assessment Order, Rectification of

mistake and Appeal against Assessment Order etc.

11.10 The Dispute Resolution Panel may before issuing any directions to the

Assessing Officer pursuant to the objections received by it against the draft

order make such further enquiry as it thinks fit or cause any further enquiry

to be made by any income-tax authority and report the result of the same to

it. The Dispute Resolution Panel may confirm, reduce or enhance the

variations proposed in the draft order. However, the Dispute Resolution

Panel shall not set aside any proposed variation or issue any direction for

further enquiry and passing of the assessment order. Every direction of

Dispute Resolution Panel shall be binding on the Assessing Officer and

should be complied with by him.

Opportunity of hearing

11.11 The Dispute Resolution Panel is required to provide opportunity of hearing

to the assessee and the Assessing Officer before issuing the orders and

directions. It is sought to be explicitly made clear that no direction

prejudicial to the interest of the assessee should be issued without hearing

the assessee so as to comply with the requirements of natural justice.

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Likewise no direction prejudicial to the interest of the Revenue shall be

issued without hearing the Assessing Officer.

11.12 Further, the new scheme does not provide for filing any appeal by the tax

department against the order passed in pursuance of directions issued by the

DRP. In other words, the directions issued by the DRP are final and binding

on the revenue. However, the assessee has the liberty to file appeal before

ITAT against orders passed in pursuance of directions issued by DRP.

11.13 The scheme of DRP will certainly help in curtailing the time in tax litigation

at least upto CIT (A) level. Under the law prior to amendment, it could

easily take one to two years for deciding the first appeal. Under the new law

this time will be curtailed to a maximum of 10 months.

11.14 This provision will help in curtailing the pendency of cases before ITAT. As

a consequence of this provision, the foreign companies may be able to settle

all tax disputes upto ITAT level in about fifteen months time after passing of

the draft order.

C. STAY

11.16 The DRP scheme will also help foreign companies in the matter of stay of

disputed demands. Prior to amendment, the assessing officers raise demand

of tax when they make addition to the income filed by a foreign company.

The foreign company has to get a stay of demand from the AO or the CIT

even if the demand is disputed and appeal in this respect has been filed. The

procedure for granting stay of demand is cumbersome and highly

discretionary.

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11.17 Under the new scheme, the demand will be created only after incorporating

DRP’s directions. Against such demand, the stay can be granted by Income -

tax Tribunal which is a judicial authority. In this manner, the powers of

granting stay of demand have effectively seen shifted from administrative

body (e.g. AO etc.) to a judicial body. This will certainly bring in relief to all

the foreign companies in mitigating their hardship relating to disputed

demands.

D. DRP must not pass ‘loconic’ orders but must deal with assessee’s objections

GAP International Sourcing India Pvt. Ltd. vs. DCIT (ITAT Delhi) dt.

26/12/2010 (source : www.itatonline.org )

- DRP must give ‘cogent and germane reasons’ in support of Sec. 144C

directions.

Vodafone Essar Ltd. vs. Dispute Resolution Panel (Delhi H.C.) dt.

27/12/2010 (source : www.itatonline.org ).

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B. PROCEEDINGS BEFORE THE I.T.A.T

1. INTRODUCTION

“The Supreme Court in Ajay Gandhi & Anr. Vs. B. Singh & Ors.: (2004)

265 ITR 451 (SC) observed : “The Tribunal exercises judicial functions and

has the trappings of a Court”.

In the case of J.C. Augustine vs. ACIT (2009) 312 ITR 60(AT)(Coch) the

Cochin Bench had observed that ITAT was not an income tax authority for

the purpose of Income Tax Act.

2. TIME LIMIT FOR PREFERRING APPEAL

2.1 An appeal should be filed within Sixty days of the receipt of the order

of the Commissioner (A) in the prescribed Form No. 36. In case of delay in

filing the appeal, an Application for condonation of delay alongwith the

affidavit of the assessee and supporting document must be filed alongwith

the appeal.

3. GROUNDS OF APPEAL

3.1 As per Rule 8 of the Appellate Tribunal Rules, every memorandum of

appeal shall be written in English. The same should be concise without

any argument or narrative.

4. CROSS OBJECTIONS.

If the assessee or the Assessing Officer prefers an appeal to the Tribunal

u/s.253(1) or (2), as the case may be, and the appeal is not rejected under

rule 12 of the ITAT Rules, 1963, a notice is given by the Tribunal to the

respondent informing him of the fact of such filing, also enclosing the

memorandum and grounds of appeal. The respondent can file, u/s.253(4), a

22

memorandum of cross objections in Form No.36A, within 30 days from the

date of receipt of such notice, against any part of the order of the first

appellate authority deciding any issue against him. The cross objection filed

is registered and numbered. It should be heard alongwith the original appeal.

5. In absence of Cross appeal the Respondent still has Right to agitate its

point via R. 27 of Income tax Appellate Tribunal Rules:

Dahod Suhakar Kharid 282 ITR 321 (Guj.)

Dy. CIT vs. Turquoise Invest. 299 ITR 143 (MP)

B.R. Bamsi vs. CIT (1972) 83 ITR 223 (Bom) (245 – 246)

Assam Co. (India) Ltd. vs. CIT (2002) 256 ITR 423 (Gauh.) (Pg. 439-440)

Dy. CIT vs. Bifora Watch Co. 94 ITD 203 (Mum) (TM) Pg. 211 Para 21

5.1 The Tribunal has the discretion to allow any party to an appeal may be the

appellant or the respondent to raise a new point or new contention provided

two conditions are satisfied:

a) No new facts are required to be brought on record for disposing of

such new point.

b) An opportunity is given to the other side to meet the point.

- Respondent can support the order of CIT(A) by taking any ground, though

no cross objection had been filed.

Cable News Network LP, LLLP vs. Asst. Director of Income Tax (2010) 36

DTR 233 (Del.)

6. Fee Payable

A. In case of Appeal against levy of penalty u/s. 271(1)(c) appeal fee is

payable Rs. 500/-

23

Dr . Ajith kumar Pandey v/s ITAT 310 ITR 195(Pat)

(After referring Bidyut Kumar Seth vs. ITO 92 ITD 148 (Kol.)(SB)

B. The term ‘assessed income’ for this purpose, it seems, means assessed

as per the original order, not as per the revised income recomputed in

the order giving effect to the appellate order.

C. Total income is loss it will be caluse (d) of sub-section (6) of Sec. 253

– Rs. 500 Gilbs Computer (2009) 317 ITR 159 (Bom)

D. In appeal against Revision order u/s.263, fees Rs.500/- Kiranjit Singh

2006 101 TTJ 424 (Asr.) ;Chromatic India ltd v/s. ITO, ITA No.

3486/M/01 bench D dt12-2-02

E. Appeal dismissed on ground of limitation only or Dismissal of appeal

on non-maintainable – Fees Rs. 500

Rajkamal Polymers Pvt. Ltd. vs. CIT 291 ITR 314(Ker.)

A. Naresh Babu vs. ITO (2010) 5 ITR 485 (Trib) (Hyd.)

7. Monetary Limits for filing appeal: Tax effect

7.1 CBDT Instruction No.2 dt. 24/10/2005 prescribing Monetary limits for filing

appeal by the Department.

[(2005) 198 CTR 41 (St)]

Tax effect

a) Appeal before ITAT Rs. 2 lacs

b) Appeal before High Court Rs. 4 lacs

c) Appeal before the S.C. Rs. 10 lacs

24

(Also see Instruction No. 5/2008, dated 15/5/2008 wherein it has been

held that for the purpose of tax effect interest will not be included.

Similarly in loss cases notional tax effect should be taken into

account. In cases of penalty order the tax effect will mean quantum of

penalty.)

7.2 In cases involving substantial question of law of importances as well as

cases where the same question of law will be repeatedly arise it should be

considered separately on merits.

Decisions : CBDT instruction binding on Revenue

(2009) 222 CTR 328 (Bom) CIT vs. Polycott Corporation

276 ITR 519 (Bom) CIT vs. Pithwa Engg. Works

(2002) 254 ITR 565 (Bom) CIT vs. Camo Colour Co.

8. Power of Stay : In stay petition a fee of Rs. 500/- is payable.

8.1 Power of the Tribunal to grant stay of recovery is toward tax, interest and

even penalty.

Bhoja Reddy vs. CIT (1998) 231 ITR 47 (AP)(48)

Shiv Shakti Rubber & Chemcial Works vs. ITAT 213 ITR 299 (All)

- Stay Application maintainable despite non filing of stay application before

lower authorities : DHL Express (India) Pvt. Ltd. vs. ACIT

(source : www.itatonline.org )

8.2 Stay is effective for 180 days and further extension of 180 days.

B. Sudhadra vs. ITO 272 ITR 100 (AT)(Hyd.)

Assessee can make fresh application for extension.

25

8.3 Tribunal has power to extend period of stay. Narang Overseas P. Ltd. vs.

ITO (2007) 295 ITR 22 (Bom)

Tribunal should dispose off stay granted appeal within time limit prescribed

u/s. 254(4). Shri Jethmal Faujimal Soni (www.itatonline.org)

9. POWERS OF THE TRIBUNAL

9.1 Every appellate authority has implied and incidental power to grant relief

even if the statute does not provide.

Bulk India Transport 266 ITR 144 (All)

Mohammed Katri 71 ITR 815 (SC)

9.2 To issue appropriate direction :Kapurchand Shrimal 131 ITR 451 (SC)

- Consequential direction in interest of justice.

Matchless Machines & Technology vs. ITO

ITA No. 8/M/2006 DT. 12/12/2008.

9.3 Right of assessee is not restricted to the plea raised by him. It is the duty of

the authority to allow relief on any other ground, if permissible

- Ciba of India Ltd. vs. CIT (1993) 202 ITR 1 (Bom)

- CIT vs. Mahalaxmi Textiles Ltd. (1967) 66 ITR 710 (SC)

26

9.4 Revenue cannot be given second innings to improve its case to make an

addition.

216 ITR 99 (AT) (Ahd.) ITO vs. Gurubachansingh J. Juneja

73 ITD 125 (Del) (TM) ACIT vs. Anima Investment Ltd.

10. Power to Admit Additional Grounds:

10.1 Rule 11 of the ITAT Rules, 1963, provides that the appellant shall not

except, by leave of Tribunal, urge or be heard in support of ground not set

forth in the memorandum of appeal. However, the Tribunal is competent to

allow the appellant to raise at the hearing of the appeal an additional ground

even without a formal amendment of the memorandum of appeal. National

Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC),

10.2 Additional Ground challenging the validity of assessment for want of

jurisdiction can be urged before any authority for the first time. Question of

Law or Limitation is concerned, additional grounds can be raised at any time

- Jute Corporation of India v. CIT 187 ITR 688 (SC); Ahmedabad Electricity

Co. Ltd. v. CIT 199 ITR 351 (Bom); Ramgopal Ganpatrai & Sons v. CIT 24

ITR 362 (372) (Bom); J.S. Parkar v. V. B. Palekar 94 ITR 616(Bom); 262

ITR 385 (Bom) Baby Samuel vs. Astt. CIT, Asha Martime (I) Pvt. Ltd. vs.

Dy. CIT 314 ITR 249 (Mum)(AT), Mahindra & Mahindra Ltd. vs. Dy. CIT

(2009) 22 DTR 361 (Mum)(SB)(Trib.)

Leave to raise ground before the Tribunal cannot be rejected simply on the

ground that the payer was oral and not written.

Assam Carbon Products vs. CIT (1997) (1997) 224 ITR 57 (Gauh.)

27

Power to admit Additional Evidences before the Tribunal

10.3 Rule 29 does not confer any right on the parties as such to produce any

additional evidence either oral or documentary before the Tribunal. Such

power has been vested only in the Tribunal to admit fresh evidences &

affidavits, etc. - CIT v. Smt. Kamal C. Mehboobbani 214 ITR 15 (Bom);

Dy.CIT v. Vira Construction Co. 61 ITD 33 (Mum)(TM). Where additional

evidence enables the Tribunal to pass orders or for any other substantial

cause, it can require the parties to do so - Abhay Kumar Shroff v. ITO 63

ITD 144 (Patna)(TM - Jagbir Singh v. ITO 23 ITD 15; Electra (Jaipur)

(P.) Ltd. v. IAC 26 ITD 236; Marubeni India (P) Ltd. vs. CIT (2010) 195

Taxman 76 (Del.)

10.4 Power of Enhancement: The Tribunal is not empowered to do indirectly

what it cannot directly do – V. Ramaswamy Iyengar vs. CIT 40 ITR 377

(Mad); Pathikonda Balasubba Setty (Deceased) vs. CIT 65 ITR 252

(Mys.); Mc Crop Global (P) Ltd. vs. CIT (2009) 309 ITR 434 (SC)

10.5 An appellant cannot be worse off by being in appeal before Tribunal

- Integrated Feeder Containers Services vs. Jt. CIT 2005 (4) SOT 357

(Mum)

- Jt. CIT vs. Sakura Bank Ltd. 100 ITD 215 (Mum)

10.6 Power of Remand:

Under Rule 28 of the ITAT Rules, 1963, the power of remand is only

incidental to its power to hear and dispose of the appeal. But power of

remand cannot exceed the jurisdiction u/s.254(1). Hence, Tribunal cannot

28

exercise the power of remand for purpose of enhancing the tax – V.

Ramaswamy Iyengar vs. CIT 40 ITR 377 (Mad).

On remand Tribunal cannot direct to assess income less then returned

income or at higher than the assessed income.

CIT vs. H.P. State Forest Corp. Ltd. (2010) 36 DTR 181 (HP)

Coca Cola India (P) Ltd. vs. ITO (2007) 290 ITR 464

Bhav Shakti Steel Mines P. Ltd. vs. CIT (2010) 320 ITR 619 (Del.)

11. EX-PARTE ORDER:

11.1 Applications made for restoration of appeals which are dismissed ex-parte

on account of non-appearance, desire to be liberally construed.

Rainbow Agri Ind. Ltd. vs. ITAT (2004) 266 ITR 39 (Bom)

11.2 Tribunal should decide the appeal on merits rather dismissing on ground of

non-appearance of the party. Chemipol vs. UOI 244 ELT 497 (Bom)

12. DUTIES OF TRIBUNAL:

12.1 Tribunal being a final authority as far as facts is concerned, the Tribunal has

to consider and decide all issues that are brought before it and pass reasoned

order / speaking order . The Order should be passed within 3 month from

date of hearing. Shiv Sagar Veg Restaurant vs. ACIT 317 ITR 433

(Bom),CIT vs. Damodar Mangalji Mining Co. (2010) 326 ITR 437

(Bom)

29

12.2 A concession of law made by an assessee or his authorized representative is

not binding.

CIT vs. Archana R. Dhanwatory (1982) 136 ITR 355 (Bom)

ITO vs. Estate of Late K.S. Engineer (2001) 70 TTJ 161 (Mum)

12.3 Special Bench – Member who has already taken a view on a issue it would

be in interest of judicial discipline to rescue himself from the hearing of the

appeal.

CLC & Sons Pvt. Ltd. vs. ACIT (2010) 38 SOT 439 (Del.) (SB)

12.4 Procedure when assessee claims identical question of law is pending before

the High Court or Supreme Court; Titanor Components Ltd. vs. CIT (2009)

184 Taxman 10 (Bom)

12.5 Service of order – Notice – Summons – by Courier Service – Not valid

Carter Hydrolic Power P. Ltd. vs. UOI (2010) 256 ELT 394 (Cal.)

Nirmal Product vs. CEX Jaipur (2010) 254 ELT 538 (Del.)

30

13. BINDING NATURE OF HIGH COURT JUDGEMENTS

Doctrine of binding precedent:

13.1 The doctrine of binding precedent has merit of promoting certainty and

consistency in judicial decisions and enables an organic development of law

‘besides providing assurance to an individual as to the consequence of

transaction, forming part of his daily affairs. UOI vs. Raghubir sing 178 ITR

548 (SC)

13.2 As per the doctrine of precedent, all lower Courts, Tribunals and authorities

exercising judicial or quasi-judicial functions are bound by the decisions of

the High Court within whose territorial jurisdiction these Courts, Tribunals

& authorities functions.

CIT vs. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom)

Consolidated Pneumatic Tool Co. (India) Ltd. vs. CIT (1994) 209 ITR 277

(Bom)

13.3 If the revenue has not challenged the correctness of the law laid down by the

High Court and has accepted it in the case of one assessee then it is not open

to the Revenue to challenge its correctness in the case of other assessee

without just cause.

UOI vs. Satish Panalal 249 ITR 221 (SC) ;

UOI vs. Kaumudini N. Dalal 249 ITR 219 (SC)

CIT v/s. J. K. Charitable trust (2008) 308 ITR 161 (SC)

13.4 One bench cannot differ from the view of another Co-ordinate Bench.

Mercedes Benz India Pvt. Ltd. vs. UOI (2010) 252 ELT 168 (Bom)

ITO vs Baker Technical Services Pvt. Ltd. (2010) 125 ITD 1 (Mum)(TM)

31

14. Miscellaneous Application before Appellate Tribunal

1. Rule

Rule 34A of the Appellate Tribunal Rules 1963 which was inserted w.e.f 25th

July 1991 provides for the procedure for dealing with applications under

Section 254(2). If any factual error has crept in the order it would be better if

an affidavit is filed in support of your application. Ratan Industries P. ltd. vs.

C.C. Ex (2010) 259 ELT 563 (Trib.)(Del.)

1.2 As per Section 254(2), the Tribunal is empowered to rectify within a period

of four years from the date of the order passed by the Tribunal u/s. 254(1),

any mistake which is apparent from the record either suo-motu or on an

application. Application for rectification to be made within 4 years from the

date of the order to be rectified. Delay cannot be condoned.

Arvindbhai H. Shah vs. Asstt. CIT (2004) 270 ITR 125 (AT) (Ahm)(SB)

Rahul Jee and Co. P. Ltd. vs. Astt. CIT (2009) 310 ITR 255 (Del.)(AT)

1.3 In CIT v. Ramesh Electric & Trading Co. 203 ITR 497 (Bom), it has been

held that only mistake apparent from record can be rectified. Failure of

Tribunal to consider arguments is not a mistake apparent from record, which

can be rectified.

2. Hearing

The Full Bench of the Delhi High Court in Smart Pvt. Ltd. vs ITAT (1990) 182

ITR 384 took the view that although there was no specific provision for

dealing with an application under Section 254(2) the rules of natural justice

would require that both parties be heard before disposing of the application.

32

The Hon’ble Bombay High Court in the case of Jain Trading Co. vs. UOI

282 ITR 640 (Bom) has held that the assessee should be heard prior to

disposal of the application u/s. 254(2).

3. Tribunal cannot rehear the appeal u/s. 254(2) ;Mahesh Bery vs. Astt. CIT 317

ITR 110 (Kol.)(AT)

4. Review : No power of Review

There is no doubt that the power of review is not an inherent power but must

be conferred by law either specifically or by necessary implication. (See Patel

Thackersy vs. Pradyumansinghji Arjunshingji AIR 1970 SC 1273).

5. Illustrations:

A. Order rejecting Miscellaneous

Application cannot be rectified.

CIT vs. ITAT (1992) 196 ITR 838

(Oris)

76 TTJ 224 – Shristhi Pal vs. ITO

B. Order contrary to pronouncement

constitutes mistake apparent on the

record.

A decision which is rendered contrary

to a pronouncement made in open court

would constitute a mistake rectifiable.

CIT vs. G. Sagar Suri & Sons (1990)

185 ITR 484 (Del).

Tata Communication Ltd. Vs. Jt. CIT

121 ITD 384 (Mum)(SB)

C. Order made under misconception

or misapprehension rectifiable.

Maharaja Martant Singh Ju Deo vs.

CIT (1988) 171 ITR 586 (MP)

D. Failure to consider preliminary

objection or deal with a ground of

appeal rectifiable.

Laxmi Electronic Corporation Ltd. vs.

CIT (1991) 188 ITR 398 (All)

CIT vs. Keshav Fruit Mart (1993) 199

ITR 771 and ITO vs. ITAT (1965) 58

ITR 634

33

E. Failure to consider alternative

argument rectifiable.

CIT vs. ITAT (1988) 172 ITR 158 (MP)

F. Failure to consider material on

record rectifiable.

CIT vs. Mithalal Ashokkumar (1986)

158 ITR 755

G. Order passed on erroneous

assumptions rectifiable.

CIT vs. Shakuntala Rajeshwar (1986)

160 ITR 840 (Del)

H. Order based on a decision

subsequently reversed rectifiable.

Kil Kotagiri Tea and Coffee Estates

Company Ltd. vs. ITAT (1988) 174 ITR

579

Subsequent decision of Supreme

Court, High Court if directly on

point rectifiable

a) Nav Nirman P. Ltd. vs. CIT

174 ITR 574 (MP)

b) CIT vs. Smt. Aruna Luthra

252 ITR 76(P&H) (FB)

c) Motilal Padampat Udyog Ltd. vs.

CIT, 186 ITR 180 (Bom)

d) Poothundu Plantations P. Ltd. vs.

ITO (1996) 221 ITR 557 (SC)

e) CBDT Circular No. 68

Dt. 17/11/1971

J. Non-consideration of relevant

provision of law rectifiable.

Non consideration of a provision of

law which would have material bearing

on the decision is a glaring obvious and

self-evident mistake apparent from the

record. Such a mistake would be

required to be corrected (CIT vs. Quilon

Marine Produce Co. (1986) 157 ITR

448). Modu Finblo vs. 1st WTO (1995)

53 ITD 53 (Pune) (TM) ITO vs. Gilard

Electronics (1986) 18 ITD 176 (JP),

ACIT vs. Sornamy Alkington Ltd.

(1994) 49 ITD 207 (Delhi).

K. Decisions not cited referred to in

order.

Lakhmini Mewal Das vs. ITO (1972) 84

ITR 649. (Cal.)

Inventure Growth & Securities Ltd. vs.

ITAT

(2010) 324 ITR 319 (Bom)

- Naresh K. Pahuja vs. ITO

(2009) 224 CTR 284 (Bom)

34

L. Order can be amended in the light

of retrospective amendment.

M. K. Venkatachalam vs. Bombay

Dyeing and Mfg. Co. Ltd. (1958) 34

ITR 143 that an amendment with

retrospective effect would require an

amendment and rectification

consequent to the retrospective

amendment. See also CIT vs. Eva Raha

(1980) 121 ITR 293 (Gau); CIT vs.

Kelvin Jute Co. Ltd. (1980) 126 ITR

679 (Cal.) Even if a reference has been

made ITO vs. Homi Mehta & Sons (P)

Ltd. (1985) 14 ITD 64 (Bom).

M. Srinivasalu vs. UOI 239 ITR 282

(Kar)

Contrary :

ACIT vs. GTL Ltd. (Mum. ITAT)

(www.itatonline.org)

M. Failure to consider argument

advanced not an error apparent on

the record.

CIT vs. Ramesh Electric and Trading

Co. (1993) 203 ITR 497 (Bom)

The Bombay High Court in

Khushalchand B. Daga vs. ITO (1972)

85 ITR 48 has endorsed the principle

that a Tribunal has an inherent

jurisdiction to rectify a wrong

committed by itself when that wrong

causes prejudice to a party for which

that party was not responsible.

Unfortunately the High Courts attention

had not been drawn to Daga’s case in

Ramesh Electric (Supra).

N. Absence of reasoning no ground

for rectification

248 ITR 577 (P&H) - Popula

Engieneering Co. vs. ITAT – Absence

of adequate reasons in an order passed

u/s 254(1) cannot per se be regarded as

a mistake apparent within the meaning

of 254(2).

However various courts have

repeatedly held that the Tribunal must

pass a speaking order dealing with each

issue and grant relief after applying

provision of law.

35

Shahid Atiq 97 ITD 22(Del.)

CIT vs. Simplex 282 ITR 542 (MP)

Vipul Fashion P. Ltd. vs. Astt. CIT

284 ITR 332 (Guj.)

Shiv Sagar Ve Restaurant

317 ITR 433 (Bom)

O. Violation of natural justice ground

for rectification

257 ITR 440 (Raj) – CIT vs. S.S.Gupta

–

P.

Appeal decided without

considering pending application

rectifiable.

179 CTR 265 (SC) – Jyotsna Suri vs.

ITAT

Q. Reliance on wrong section, order

rectifiable.

261 ITR 49 (Del) – Seth Madanlal

Modi vs. CIT

Also see 267 ITR 450 (Mad) Prithviraj

Chohan vs.. CIT.

R. Non consideration of decision

cited of Co-ordinate Bench

Honda Siel Power Products Ltd. vs.

CIT (2007) 295 ITR 466 (SC)

S. Tribunal passing order without

considering decision of Supreme

Court / High Court is mistake

which can be rectified.

F.F.E Mineral (I) P. Ltd. vs. Jt. CIT

84TTJ 907 (Chen.)

Mohan Meakin Ltd. vs. ITO 89 ITD

179 (Del.)(TM)

Himachal Pradesh Financial Corp. vs.

CIT 233 ITR 450 (MP)

- ACIT vs. Saurashtra Kutch Stock

Exchange Ltd. (2008) 305 ITR 227

(SC)

In rectification proceeding u/s. 254(2) Tribunal cannot look into merits of the

case.

CIT vs. Earnest Exports Ltd. (2010) 323 ITR 577 (Bom).

Once rectification filed by one of the parties is considered and decided by

Tribunal, rightly or wrongly another rectification application on same issue is

not maintainable against the ITAT order.

CIT vs. Aiswarya Trading Co. (2010) 192 Taxman 385 (Ker.)

36

15. Rectification Application u/s. 154 of the Act.

15.1 In the case of T. S. Balaram, ITO vs. Volkart Brothers 82 ITR 50, the

Hon’ble Supreme Court has at page 53 held that :

“A mistake apparent on the record must be an obvious and patent mistake

and not something which can be established by a long drawn process of

reasoning on points on which there may conceivably be two opinions. …”

15.2 In the case of Mepco Industries Ltd., Madurai vs. CIT (2009) 319 ITR

208 (SC) the Hon’ble Supreme Court held that subsequent decision of the

Supreme Court resolving conflict of opinion does not obliterate decision

taken prior to it. Section 154 cannot be invoked to rectify the same.

15.3 Rectification of intimation u/s. 143(1) not permissible after notice u/s.

143(2) is issued.

CIT vs. Gujarat Electricity Board (2003) 260 ITR 84 (SC)

III. APPEAL TO HIGH COURT:

INTRODUCTION.

With effect from 1/10/1998, Section 260A is inserted which provides for

direct appeal before the High Court against any order passed on or after

1/10/1998 by the Appellate Tribunal in an Appeal. The intention can be

understood from the notes on clauses [231 ITR (St.) 207] & memorandum

explaining the provisions in the Finance (No.2) Act, 1998 [231 ITR (St.)

246].

37

Appealable orders

The section 260A provides that an appeal shall lie to the High Court from

every order passed in appeal by the Appellate Tribunal. Thus, there is no

ambiguity as far as the orders passed u/s. 254(1) of the Act are concerned. It

is a mute question whether appeal lies against an order passed by the

Appellate Tribunal u/s. 254(2) or not. The Hon’ble Bombay High Court in

the case of Chem Amit vs. DCIT (2005) 272 ITK 397 (Bom.) has held that the

order passed by the Appellate tribunal u/s 254 (2) is not an order passed in

appeal. Thus, no appeal lies to the High Court u/s 260A of the Act against an

order passed u/s 254 (2). The Hon’ble Bombay High Court further observed

that the ratio laid down by the Appellate court in the case of Durga

Engineering & Foundry Works (2000) 245 ITR (SC) is not applicable to the

appeal filed u/s 260 A. However, writ can be filed against an order u/s.

254(2).

Procedure

The Appeal is heard at two stages, first, admission to consider whether the

issue involved in appeal is a substantial question of law or not. Second, final

hearing when the appeal is finally disposed of. The appellant is supposed to

convince the Court that the issue involved in the appeal gives rise to

‘Substantial question of law’. The Court gives an opportunity to the

respondent to appose the admission of the appeal.

Cross objection

The Rule 22 of order XLI of Civil Procedure Code provides that the

respondent can file a cross objection within 30 days from the date of service

38

of the appeal on him. These provisions are applicable to the appeals filed

under section 260A of the Act. The format of the cross objection should be

as per the provisions of sub-Rule 22 Order XLI of Civil Procedure Code.

1. TIME LIMIT OF FILING APPEAL.

Clause (a) to sub-section 2 to Section 260A provides that an appeal shall be

filed within 120 days from the date on which the order appealed against is

communicated to the appellant.

2. FEES

As far as the Bombay High Court is concerned, Article 16A is inserted in

Schedule I to the Bombay Court Fees Act to provide that an appeal filed

after 1-6-1999 and pending before the High Court against the order passed in

appeal by the Appellate Tribunal, u/s.260A(2) of the I.T. Act, 1961, Ad-

valorem fee would be leviable on the amount in dispute, i.e. the difference

between the amount of tax actually assessed and the amount of tax admitted

by the assessee as payable by him, subject to maximum fee of Rs.10,000/-.

3. SUBSTANTIAL QUESTION OF LAW.

3.1 Sub-section (1) to section 260A provides that if the High Court is satisfied

that the question involved in the appeal is a substantial question of law. The

phrase “Substantial question of law” has been used in the sub-section (1) to

Section 100 of the Civil Procedure Code.

3.2 The term “substantial question of law” is neither defined under the Income-

tax Act, 1961 nor under the civil procedure code. Therefore, the courts

39

would have to determine whether the appeal relates to a question of law or a

substantial question of law.

Santosh Hazari vs. Purushottam Tiwari 251 ITR 84 (SC)

M. Janardhana Rao vs. Jt. CIT 273 ITR 50 (SC)

3.3 Pure question of law can be raised before the High Court though not raised

before the Tribunal.

CIT vs. Jindal Equipments Leasing & Consultancy Services Ltd.

(2010) 325 ITR 87 (Del.)

40

ART OF GOOD REPRESENTATION

1.1 The art of representation is nothing but art of communication or rather the

art of persuasion. You must be able to convince the deciding authority that it

is so.

The art of representation is not confined only to court, but anywhere in life,

in any forum. The art of representation involves some degree of advocacy.

Advocacy is about persuading people, you cannot go through life without,

on occasion needing to persuade. Advocacy is often useful and vital, in

negotiation, in meetings and public lectures. If you do not practice law at

all, principles of advocacy is still a valuable skill, a transferable skill, a

lifelong skill.

1.2 Elements of persuasion

The task is threefold:

a) to be heard; to be interesting; to engage the audience in the

presentation;

b) to get the message across; to select the right content and to emphasise

the key points; and

c) to persuade the audience to accept the view advocated.

Presentation skills are the key to persuasion because presentation carries the

message.

41

1.3 SOME IMPORTANT PRINCIPLE OF GOOD REPRESENTATION:

A. There is no substitute for hard work. One must master the facts and read the

law on the subject.

B. Adhere to dress code and file your letter authority in advance.

C. Observe Decorum in the court.

D. In the opening argument put forth the best points which cannot be disputed

and carry the judge with you.

E. While arguing one must narate the fact chronologically before the court, one

may take assistance of the paper book which is filed. One must avoid

unnecessary and irrelevant papers in the paper book. Thereafter one should

proceed to state the submissions and thereafter support the same with

relevant case law.

F. You must know the Judge mind while you are arguing and tactfully you

must put your points.

G. When the Judge is making a point it is always advisable to listen carefully

understand his view point and then reply.

H. One should keep a smile on his face and should have a good sense of

humour. One must have common sense in a good measure.

I. Do not interrupt the Judge repeatedly, his ego is hurt. It is not advisable to

rub the Judge’s psychology. One has to be fair to the Judge as well as other

side. You must never be unfair to your opponent.

J. You must remember that every man has his ego and when one is sitting on

the judicial chair, the ego becomes still more important and that has to be

respected.

K. One must never lose the temper in the court;

L. You cannot win all the cases and one should not get over identified with the

client or the case.

42

M. One should not insist on displaying one’s oratorical skill or his knowledge,

which would not be relevant for the court. One should know when to stop.

N. Build the Reputation

O. Fluency and clear pronunciation is must.

Thank you

JAI HIND