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Appeals

21.1 A tax payer should have an easily and accessible mechanism to appeal against orders that are adverse to him. No tax payer should be burdened with a liability which is not due under the Code. The Code will provide for a hierarchy of authorities who will exercise appellate or revisional jurisdiction as prescribed.

21.2 There will be no change in the appellate structure. Against the order of an Assessing Officer, an appeal will lie to the Commissioner (Appeals). Against the latter order, an appeal will lie to the Income-tax Appellate Tribunal (ITAT), which will be highest fact finding body. An appeal will lie to the High Court against an order of the ITAT if a question of law arises from the decision of the ITAT. Once the National Tax Tribunal is established, it will exercise the powers of the High Court.

21.3 An assessee aggrieved by an order of the Assessing Officer or the Commissioner (Appeals) or the ITAT under the Code may file an appeal to the higher authority within thirty days of the date of the receipt of the order.

21.4 The right to appeal by the Income-tax Department against an order of the Commissioner (Appeals) or the ITAT is retained.

21.5 The power of the High Court under article 226 of the Constitution and of the Supreme Court under article 32 of the Constitution is not affected. The power of the Supreme Court to entertain a special leave petition under article 136 of the Constitution is also not affected.

21.6 The Income-tax Act, 1961, provides for rectification of mistakes apparent from the record in any order made by an income-tax authority. The Code will contain a scheme for rectification of mistakes. The salient features of the scheme are :

(a) The Assessing Officer, the Commissioner (Appeals) or the ITAT may rectify any mistake apparent from the record.

(b) The following circumstances may also give rise to a mistake which may be rectified by the income-tax authority concerned :

(i) a decision of the Supreme Court or the jurisdictional High Court rendered subsequent to the passing of the original order or intimation ;

(ii) a retrospective amendment to the law made subsequent to the passing of the original order or intimation ;

(iii) any finding or direction contained in an order passed in the case of the assessee for any other financial year by—

(A) any authority in any proceeding under the Code by way of appeal, reference or revision ; or

(B) a court in any proceeding under any other law which has a bearing on the liability under the Code ; or

(iv) any finding or direction contained in an order passed in the case of any other assessee for any financial year by an income-tax authority under the Code or by a court in any proceeding under any other law in so far as it has a bearing on the liability under the Code.

(c) The power to rectify can be exercised by an income-tax authority, either suo moto or an application made by the assessee. This power shall not be exercised by the income-tax authority suo moto after the expiry of two years from the end of the financial year in which the order sought to be rectified was made. In a case where the assessee seeks rectification of an order, he shall make an application before the expiry of two years from the end of the financial year in which the order sought to be rectified was made. Such application shall be disposed of by the income-tax authority within six months from the end of the month in which the application was received by the authority. If no rectification order is passed within the period of six months, the application shall be deemed to have been rejected and the assessee will be entitled to file an appeal against such deemed rejection.

21.7 There may be cases where the assessment order may be erroneous and prejudicial to the interest of the Revenue because an issue of fact or an issue of law had not been raised before or considered by the Assessing Officer. In such cases, the Commissioner will be empowered to revise the order of the Assessing Officer, determine the issue of fact or law, and issue consequential directions to the Assessing Officer to modify the assessment order or pass a fresh order in accordance with such determination.

21.8 The Commissioner may revise an order of the Assessing Officer within six months from the date of the order.

21.9 The salient features of the scheme of revision under the Code are as follows :

(a) When the Commissioner revises the assessment order and issues consequential directions to the Assessing Officer, the modified order or the fresh order passed by the Assessing Officer shall be the assessment order in that case.

(b) An assessee may file an appeal to the Commissioner (Appeals) against the modified order or the fresh order passed by the Assessing Officer.

(c) No appeal shall lie to the ITAT against an order of the Commissioner directing revision of an assessment order. An assessee aggrieved by such an order of the Commissioner may take all the grounds in his appeal to the Commissioner (Appeals) against the modified order or fresh order passed by the Assessing Officer including the ground that the Commissioner exceeded or erred in the exercise of his jurisdiction in revising the order of the Assessing Officer.