Income Tax Appellate Tribunal (ITAT): A Complete Guide

Indian taxpayers can file an appeal with the Commissioner (Appeals) when they are aggrieved by an order of the Assessing Officer. If they are not satisfied with the decision, they can appeal to a higher appellate authority - the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal adjudicates appeals made under the Income Tax Act of 1961 . It serves as the final fact-finding body in tax disputes, offering both taxpayers and the income tax authorities a convenient platform to resolve disputes. In this article, we explore what is an Income Tax Appellate Tribunal, its functions, appealable orders, fees, and the procedure to appeal in detail.

The Income Tax Appellate Tribunal (ITAT) is a quasi-judicial statutory body formed by the Central Government to deal with income tax appeals from taxpayers. Operating under the Ministry of Law and Justice, the ITAT specialises in dealing with appeals under the Direct Taxes Acts. It was established on 25th January 1941 under the provision of Section 5A of the Income Tax Act of 1922. The ITAT operates through different benches in different regions. The Tribunal started with six members constituting three benches in Delhi, Kolkata, and Mumbai. Today, the ITAT has 63 benches in 27 locations, covering most cities that have a seat of the High Court. The President of the Income Tax Appellate Tribunal has the power to constitute a bench from the members of the ITAT with each bench having one accountant and one judicial member. In some instances, the ITAT can constitute a special bench with three or more members to dispose of income tax appeals.

Now that we have explained what is the Income Tax Appellate Tribunal, it's time to focus on its core functions and powers. The primary function of the ITAT is to hear income tax appeals from taxpayers as well as other income tax authorities. Appeals of taxpayers against assessment orders or any other order passed by an income tax authority fall within the purview of the ITAT. Similarly, income tax authorities can also file appeals to the Income Tax Appellate Tribunal against orders passed by lower income tax authorities.After the Commissioner of Income Tax (Appeals), the ITAT is the second forum that looks into such income tax appeals. Generally, orders passed by the Income Tax Appellate Tribunal are final and irrefutable, unless a question of law arises for determination. In such cases, the matter is referred to the High Court. It is important to note that ITAT functions under the regional High Court’s jurisdiction and must adhere to the rules of the same. An Income Tax Appellate Tribunal is subordinate to both the region’s High Court and the Indian Supreme Court.To dispense these functions, the Income Tax Appellate Tribunal has been vested with the following powers:

• Powers relating to restoring an appeal: If the ITAT is satisfied that there were mistakes of facts or law when passing an order, it can recall the said order and restore the appeal.
• Powers relating to remanding cases: The ITAT has the power to remand a case to the relevant income tax authority for fresh inquiry.
• Powers relating to restoring ex-parte orders: an ex-parte order is a legal decision that’s rendered in favour of one party if the other party is absent from the proceedings. An ex-parte order passed by the Tribunal can be restored if the ITAT believes that there were ample and valid reasons for the absence of the party.
• Rectification powers: The ITAT can also correct any mistakes in orders passed b even if the mistakes become apparent at a later date from its records.
• Powers relating to punishment: The Income Tax Appellate Tribunal can implement the provisions mentioned in the Contempt of Courts Act 1971 to punish those in contempt of its orders.

The Income Tax Appellate Tribunal outlines a specific set of orders that can be appealed. Appeals against the following orders can be made before the ITAT:

• Orders passed by the Assessing Officer
• Orders passed by the Commissioner of Income Tax
• Orders passed by the Assessing Officer based on the directions of the Dispute Resolution Panel
• Penalty orders passed by the Commissioner
• Orders passed by the Jurisdictional Commissioner
• Application for stay on tax demands
• Recall orders

The Central Board of Direct Taxes (CBDT) has the power to issue orders, instructions, or directions to income tax authorities. The CBDT also holds the power to set monetary limits on the filling of appeals to the Income Tax Appellate Tribunal. In a circular issued on 8th August 2019, the CBDT enhanced the monetary limits for filing appeals to the Income Tax Appellate Tribunal, High Court, and Supreme Court. As per this circular, the new monetary limits applicable on ITAT are as follows:

People appealing to the ITAT have to pay a nominal income-based fee when filing their appeals. This fee depends on the income assessed by the Assessing Officer. Here’s a break-down of the various income-based fee categories applicable on ITAT appeals:

• If total income assessed is less than Rs. 1 Lakh, the applicable fee is Rs. 500
• If total income assessed is more than Rs. 1 Lakh but less than Rs. 2 Lakhs, the applicable fee is Rs. 1,500
• If total income assessed is more than Rs. 2 Lakhs, the applicable fee is equivalent to 1% (not exceeding Rs. 10,000) of the total income assessed.

A standard appeal fee of Rs. 500 is charged on appeals relating to any other matter and on applications for stay on demand.

To file an appeal before the Income Tax Appellate Tribunal, you must follow these steps: Step 1: Download Form 36 and Form 36A from the e-filing website of the Income Tax Department. Form 36 is a form of appeal to challenge orders passed by the Commissioner of Income Tax and Form 36A is a form of memorandum of cross-objections. Step 2: Pay the applicable fee for the appeal online or via a demand draft. As mentioned earlier, this fee depends on the income assessed. Step 3: Submit 4 copies of the memorandum of appeal, fee receipt, statement of facts, and other such relevant documents to the Income Tax Appellate Tribunal Registry. These documents need to be submitted within 60 days of receiving the order you are appealing against. Step 4: Send a copy of the appeal and documents to the respondent whose order is being challenged. Step 5: Post appeal verification, the ITAT will assign a number to the case and notify you of the same. You will also receive notifications about the date and place of the proposed hearing.On the day of the hearing, you have to appear before the Tribunal and present your case either through self-representation or a hired CA, lawyers, or any other authorised person as specified u/s 288 of the Income Tax Act. The ITAT passes an order to decide on the case within 4 months of the appeal hearing.

Assesses and Assessment Officers can file an appeal, cross objection, stay applications, or miscellaneous applications before the ITAT through the new e-filing portal . The ITAT Registry verifies the documents uploaded on the e-filing portal once the e-filed appeal is presented physically in the office of the ITAT. After cross-checking these documents with the physical ones, the Registry accepts the e-filed appeal.The steps for the e-filing process are listed below:

• Visit the e-Filling Portal on the Income Tax Appellate Tribunal website.
• On the e-Filling Login screen, click on the ‘Who You Are’ field and pick ‘Assessee’ or ‘Assessment Officer’ from the drop-down list
• Click ‘Agree’ on the Terms of Use pop-up window
• Input your email ID, mobile number, and PAN/TAN (as applicable).
• Enter the two separate OTPs sent to your mobile number and email ID and click ‘Submit’.
• Select the state and district of the Assessing Officer to locate the ITAT bench with jurisdiction over the area.
• On the next screen, select the appeal or application you wish to file and click ‘Submit’.
• Fill up the corresponding form and upload the necessary documents.
• You will receive a system-generated acknowledgement once the e-filling process is completed.

It is important to note that the e-filing system is not a substitute for the physical filing process, According to the IATA directives, all relevant documents and enclosures must be submitted by appellants to the respective ITAT bench within the prescribed time limit. The e-Filling Portal was introduced to streamline the appeals filing process, ensuring greater efficiency and convenience for appellants. Also Read: E-Filing 2.0: New Income Tax E-filing Portal Explained

As an appellant, you should know the following things about an ITAT order:

• The ITAT bench passes an order after hearing the appeal.
• If the bench members have different opinions on the appeal, the decision is made on the basis of a majority vote.
• If votes are equally divided, the President of ITAT has the deciding vote.

The Income Tax Appellate Tribunal plays a vital role in extending easy and speedy redressals to appellants. As an independent forum, the ITAT aims to streamline justice for the aggrieved assessees. The success of ITAT over the years has prompted the government to set up similar such tribunals for indirect taxes, like the Customs, Excise, Service Tax Appellate Tribunal.Ready to make the most of your money? Start your tax planning journey now!