Income Tax Hand Book On Judicial Matters

1. Income Tax Hand Book On Judicial Matters

2. The Income Tax Appellate Tribunal (ITAT) functions as the second appellate authority under the Direct Taxes Acts, allowing appeals from decisions of the Commissioner of Income Tax (Appeals). Established in 1941, ITAT includes both Judicial and Accountant members. Filing an appeal requires the submission of a scrutiny report by the Assessing Officer (AO), consideration of the tax effect, framing pertinent questions, and proper completion of Form No. 36. Timelines for the appeal process span 55 days from the receipt of the first appellate order to actual filing in ITAT. The structure of ITAT includes various roles, such as the President, Vice Presidents, and departmental members. In corporate insolvency, Assessing Officers should actively engage in Committee of Creditors (CoC) meetings when debts exceed 10% of total liabilities. The Special Leave Petition (SLP) is a crucial legal remedy allowing individuals to appeal to the Supreme Court against lower court decisions. The Supreme Court has broad discretion to grant SLPs based on substantial questions of law or instances of judicial errors. Filing an SLP involves adhering to specific procedural rules and timelines, with requirements such as obtaining a fitness certificate from the High Court and preparing necessary documentation. Key considerations for SLP proposals include ensuring the tax effect is significant, addressing revenue audit objections, and filing within the prescribed timeframe.

3. Chapter-I FUNCTIONS OF ITAT AND ISSUES RELATED TO REPRESENTATION BEFORE ITAT 1. Introduction: – The Commissioner of Income Tax (Appeals) serves as the first appellate authority, while the Income Tax Appellate Tribunal (ITAT) is the second appellate authority. Established in January 1941, the ITAT is a quasi-judicial institution that specializes in handling appeals under the Direct Taxes Acts. Both taxpayers and Assessing Officers can file appeals to the ITAT if they are dissatisfied with the decision of the first appellate authority. The ITAT operates under the Ministry of Law and comprises two types of members: Judicial members and Accountant members.2. Pre-requisite for Filing Appeal before ITAT:- 1. Scrutiny Report: The Assessing Officer (AO) or Range Head must submit a scrutiny report under Section 253 of the Act to the concerned Principal Commissioner of Income Tax (PCIT), as per the Central Board of Direct Taxes (CBDT) Instruction No. 08/2011 [F NO. 279/MISC./M-43/2011-ITJ], dated August 11, 2011. 2. Tax Effect: Consider the tax effect for Income Tax and Wealth Tax cases, along with any exceptions. 3. Framing Questions: Properly frame both question of fact and question of law. 4. Form No. 36: Ensure the correct completion and submission of Form No. 36.

4. 3. Timelines for filing Appeals to ITAT: –

5. 4. Constitution & Departmental setup in ITAT: – • Registrar • Judicial Members • Accountant Members • Vice Presidents • President Departmental Setup. • CIT (DR) – CIT • Sr. AR-JC/Addl. CIT • ITO(HQ) to CIT(DR) or Sr. AR • CIT (DR)(ITAT)(Admin.) • ITO (ITAT)(HQ)(Admin.) • Inspectors • OS/TA/MTS 5. Benches of ITAT: – i. Two Member Bench: a. Typically consists of one Judicial Member and one Accountant Member. ii. Single Member Bench: b. At least one bench headed by either a Judicial Member or an Accountant Member. iii. Special Benches: c. Constituted to decide issues with wider ramifications. iv. Third Member Bench: d. Formed when members of a division bench disagree on a particular issue.

6. 6. Appellate Proceedings Before ITAT: – i. Filing and Review: The appellant files the appeal using Form No. 36, which is then reviewed by the Regis trar of ITAT. The Registrar checks for correctness, completeness, and ensures that all required fees are paid. If any discrepancies are found, notices are issued to the appellant for rectification. ii. Communication: Once the appeal is accepted for further processing, the Registrar sends an appeal memo to the Respondent. At this stage, the Respondent has the option to file cross-objections if deemed necessary. iii. Hearing and Presentation: Cases are listed in the cause list, and the proceedings are scheduled accordingly. During the hearing, the appellant presents facts, arguments, and supporting evidence as outlined in the paper book. Following this, the Respondent presents their rebuttal to the appellant’s contentions. iv. Order and Timeframe: After the completion of arguments and evidence presentation, the Bench declares the case as heard. From this point, the Bench has a mandate to pass an order within 90 days. If there are complexities or clarifications needed, the Bench may extend this timeframe by an additional 30 days. v. Resolution: In cases where the members of the Bench are unable to reach a consensus or decision, the matter may be referred to a third member for resolution. If the case is released, it is listed for a fresh hearing before a new Bench to ensure a fair and thorough consideration of the issues at hand. The third member conducts hearings and must pass an order within 60 days of declaring the case as heard, with an option to extend this timeframe to 90 days for thorough deliberation.

7. 7. Powers & Limitations of ITAT:- • Case Handling: – ITAT has the authority to hear cases and issue orders based on the merits presented. • 2. Admission of Evidence: – ITAT can admit additional evidence if reasons are recorded for doing so. • Fresh Assessments: – ITAT can set aside orders for fresh assessment by the Assessing Officer, either entirely (“de novo”) or regarding specific issues. 4. Review by CIT(A): – ITAT can also set aside orders for a fresh decision by the CIT(A), either entirely or on specific issues. 5. Mistake Correction: – ITAT can correct mistakes apparent from the record based on applications from the parties involved. 6. Limitation on Order Recalls: – ITAT cannot recall orders that have been decided on their merits.Read more at: https://taxguru.in/chartered-accountant/income-tax-hand-book-judicial-matters.htmlCopyright © Taxguru.in