Section 250 Of The Income Tax Act, 1961: All You Need To Know

The Income Tax Act of 1961 lays down various provisions to help taxpayers challenge decisions by assessing officers and seek redressal by filing appeals. Section 250 of the Income Tax Act lays down the procedure for appeals against an order passed by an assessing officer. In this article, we explore the nitty-gritties of Section 250 of the Income Tax Act, its provisions, and new changes in the appeals process.

Section 250 of the Income Tax Act outlines the appeals process available at the disposal of taxpayers in India. This section allows taxpayers who are denied deductions in different cases to make an appeal to the tax authorities. Sec 250 of the Income Tax Act outlines the appeal procedure and powers available to the Commissioner of Income Tax (Appeals), when dealing with a presented appeal. This includes the power and procedures governing litigation of the case or those relating to the passing of an order. Additionally, the provisions of Section 250 of the Income Tax Act offer legal resources to taxpayers who are aggrieved by an order of an Assessing Officer (AO) .

Any taxpayer can file an appeal against assessment orders passed by an income tax officer. The taxpayer may be:

• An individual
• Hindu Undivided Family (HUF)
• Proprietorship or partnership firms
• Corporations
• Any other entity liable to pay income tax

Appeals can be made on various issues including but not limited to quantum of tax liability, assessment of income, disallowances, etc.

Section 250 of the Income Tax Act has several sub-sections, each outlining different regulations and provisions. All the provisions of the section are explained in detail below:

Section 250 (1)

According to the first sub-clause of Section 250 of the Income Tax Act, the Appellate Assistant Commissioner must finalise a date and venue for the hearing of the appeal. Details regarding the same must be shared with the appellant as well as the assessing officer whose order has been appealed.

Section 250 (2)

The next sub-clause highlights who can speak at the scheduled hearing. The following individuals are allowed to present their views at the hearing:

• Appellant (either in-person or through an authorised representative)
• Assessing officer (either in-person or through an authorised representative)

Section 250 (3)

Section 250 sub-clause 3 grants the Commissioner power to adjourn the hearing at certain intervals, as and when deemed necessary.

Section 250 (4)

According to clause 4, the Commissioner has the power to conduct further inquiries into the appeal before dismissing it. She/he may appoint an income tax officer to inquire on the matter and present the results before deciding on the appeal.

Section 250 (5)

Under clause 5, the Commissioner can allow the appellant to present new grounds for the appeal that were not initially included. However, this is permissible only if the Commissioner believes that omission of that ground on the form of Appeals was not intentional or reasonable.

Section 250 (6)

Section 250 sub-clause 6 outlines what happens when an appeal is dismissed. If an appeal is dismissed, the Commissioner must convey so to the taxpayer in writing. This written decision must include the decision, reasons for dismissal, and the underlying rationale.

Section 250 (6A)

Sub-clause 6A of Section 250 of the Income Tax Act outlines the timelines vis-a-vis appeal hearings and decisions. For each appeal, the Commissioner should hear and take decisions on the appeal within one year following the end of the financial year when the appeal was made.

Section 250 (7)

If the Commissioner dismisses an appeal, she/he has to communicate the same to the appellant and to the Principal Commissioner, Principal Chief Commissioner, or Chief Commissioner. Also Read: Section 234B & 234C: Understanding Interest and Penalties on Advance Tax and Its Calculation

The Finance Act 2020 amended various sections of the Income Tax Act of 1961, including Section 250. According to the amendment, the following new sub-clauses were inserted after Section 250 (6A):

Section 250 (6B)

To ensure better transparency, accountability, and efficiency, the Central Government can implement a new scheme by notifying the Official Gazette for the disposal of appeals by the Commissioner. The scheme would:

• Eliminate contact between the appellant and the Commissioner during the appeal procedures, as much as technologically possible.
• Optimise resource utilisation leveraging economies of scale and functional specialisation.
• Introduce an appellate system with dynamic jurisdiction where one or more Commissioners can dismiss appeals.

Section 250 (6C)

The Central Government can give effect to the scheme mentioned under sub-clause 6B by notifying the Official Gazette, while specifying if any provisions of the Act relating to the jurisdiction or procedures for dismissals of appeals shall apply or not. These notifications may also include notifications, exceptions, and adaptations, as needed. However, no direction can be published after 31st May 2022.

Section 250 (6D)

Each notification published under sub-clause 6B and 6C must be presented before both Houses of the Parliament as soon as they are issued.

In-keeping with the newly added sub-clauses of Section 250 of the Income Tax Act, the Faceless Appeals Scheme was introduced and came into effect from 29th September 2020 onwards. The Scheme creates a faceless ecosystem to adjudicate and dispose of appeals to the CIT under Section 250 of the Income Tax Act. According to the provisions of the Scheme, all income tax appeals to the CIT will be finalised in a faceless manner, except appeals dealing with major tax evasion, serious fraud, sensitive and search matters, matters under the International Tax and Black Money Act. All pending and new appeals to the CIT will be heard and disposed of by a dynamic jurisdiction of Appeal Units in Regional Faceless Appeal Centres (RFAC). Appeals will be made to the National Faceless Appeals Centre (NFAC) instead of the Jurisdictional Commissioner (Appeals). The NFAC is the apex body vested with the power to overlook the entire e-appeals process and assign appeals through an automated system to Appeal Centres in various RFACs. Also Read: A Guide to Tax Saving Under Section 10 (10D) of Income Tax

Section 250 of the Income Tax Act plays a vital role in helping taxpayers challenge the decision of tax authorities. Under this section, assessees can appeal against unjust orders passed by assessing officers regarding various issues like tax liability, income computation, and deductions. The existence of Sec 250 ensures that tax assessments are transparent and fair. Moreover, with the introduction of the new Faceless Appeals Scheme, the Indian Government has taken necessary steps to further boost efficiency and transparency in the system. If taxpayers are unsatisfied with the order received, they can file an appeal against it with the Income Tax Appellate Tribunal (ITAT), and later the High Court (if applicable).Ready to make the most of your money? Start your tax planning journey now!