OF Tax Appeal Ranjan Kumar Bhowmik roma Former Member National Board of Revenue An appeal lies to the Appellate Joint Commissioner of Taxes (AJCT) or to the Commissioner (Appeals), as the case may be, against the order of the Deputy Commissioner of Taxes (OCT). Section 153 gives the right of appeal only to the tax payer and not to the department. Therefore, income tax department cannot appeal against any order of the DCT. But the Inspecting JoinlAdditional Commissioner of Taxes (WJCTIACT) has the power u/s 120 to revise any order passed by the DCT ifit is erroneous and prejudicial to the interest of the revenue. Commissioner of Taxes working in the territorial zone can also exercise his revisional power u/s 121A and pass such order not being an order Prejudicial to the interest of the assessee. Therefore, no appeal would lie if a right of appeal is not given at our tax law because appeal is not an inherent right. The sequence of appeal is given below through a flow chart: DISPUTE RESOLUTION PROCESS CT(Appeals) (For company and its | directors) ‘Taxes Appellate Tribunal (Both assesseeandincome tax department can go) Reference application to Honourable High Court (Only at quesyjon of law) Iternativ Dispute Resolution {ADR) Honourable Appellate Division if certified as ft for appeal)L 1. First appeal to the AJCT/AACT/Commissioner (Appeals) Only assessee can fie 1* appeal to the Appellate Joint Commissioner of Taxes (AJCT) or Appeliate Acditional Commissioner of Taxes (AACT) or Commissioner (Appeals) as per jurisdiction. The Junsdicton is usually mentioned at the bottom of the demand notice issued by the DCT. Normally, ACT and Commissioner (Appeals) deal with company cases along with the directors of the company ‘and the AJCT deals with other individual cases. {Appeal to the Commissioner (Appeals) also ies against the order made by the CT UIS 10 or UIS {1201s to be noted here thatthe right of appeal is given to the assessee, Where an assessment is made on the representative or on the agent of a non-esident, the person beneficially eniled to the = {S nevertheless an assessee within the meaning of section 153 and has therefore a right to Ee (a) When 1s appeal can be filed i ‘Appeal can be filed by the assessee ‘against the following order of the DCT: (2) Assessment of income; (b) Computation of tax liability or refund; (©) Setoff and Carry forward of losses; (@) Imposition of any penalty or interest {e} Charge and computation of surcharge or any other sum () Tax credit; (9) Payment of a refund. Appeal can also be filed to the Commissioner. (Appeals) against :.. iollowing order: @ Assessment Order uls 10. (il) Order to revise the order of the DCT u/s 120, (a) Procedure to file 1 Appeal The following procedure should be followed to file 1 appeal: () Appeal shall be filed af the form prescribed at Rule-27 and Rule-27A wi duly signed and verified. (i) Appeal fee of TK. 200/- is to be paid before submission of appeal (i) Tax as per return uls 74 isto be pald at the time of fling retum. However, appeal authority can admit an appeal even admitted tax paid before submission of appeal. (iv) Appeal shall have to be filed within 45 days from the date of service of demand Notice except in case of appeal against the disallowances of the foreign tax credit as per 7 schedule Para-7. However, appeal authorities can entertain an appeal after condoning the delay if he is convinced that assessee has sufficient reason for failure of fle appeal in time. Demand notice should be served properly otherwise assessee will get unlimited time. The Power to condone such delay is discretionary. Provision for time limitation of 45 days will not attract if demand notice ‘was not served with assessment order (I.T.88) and Tax computation form (|,7.30), in which case assessee will get ‘Tax Appeal prepared by Ranjan Kumar Bhowmik FCMA updated upto 06/02/2021 Page 2-|Zg _ Unlimited time for fling appeal. So, without |,7,88 and 1.7.30 the service of demand notice is not complete. In computing the 45 days, the time required for obtaining a certified copy of such order should be excluded Where the 45 days expires on day which s a holiday, the appeal may be made automatically on the day next following such holiday (b) Disposal of appeal cases by the appeal authority The followin: should be followed by the appeal authority to dispose of an appeal: () Notice of hearing is to be given to both appellant and the concemed DCT. (i) Appeal authority can make enquiry and call for such particulars as he may require before disposing of an appeal. He can also give instruction to the DCT for further enquiry. (ii) Appeal atti can allow new or additional ground of appeal if he is satisfied that the omission of that ground was not willful or unreasonable. (iv) Appeal authority will not admit any documentary evidence which was not produced before the DCT unless he is satisfied that appellant was prevented by sufficient cause from producing such evidence before DCT. (v) Appeal authority in his judgment can give following decision when an appeal filed against assessment order: a. confirm b. reduce c. Enhance d._ Set aside with the direction to make fresh assessment. (only on the ground that notice was not served properly) e. Annul Enhancement of assessment means increase in tne amount of total income or tax. It can be done only after giving the assessee a reasonable opportunity of being heard. If the AJCT or Commissioner (Appeals) does not enhance the total income but by means of reduction under one head and an increase under another head allows the assessment to remain the same or reduces it, it can not be said to have enhanced merely because income under one head has been increased Where the assessee’s income has been assessed under more than one head, even if the assessee's appeal is confined to the income assessed under only one of the heads, the AJCT or Commissioner (Appeals) may enhance the assessment by increasing the amount assessed under another head of income in respect of which the assessee has not appealed. The reason is that income tax is only one tax and when the assessee goes in appeal then exposes the assessment as a whole. But appeal authority has no power to enhance the assessment by assessing entirely new sources of income outside the subject matter of the assessment appealed against. He has no jurisdiction to travel beyond the subject matter of the assessment and his power of enhancement relates only to that income which has been subjected to the process of assessment. On the other hand it is not open to the assessee who has preferred an appeal to withdraw it so prevent the Appellate Joint Commissioner of Taxes (AJCT) or Commissioner (Appeals) from enhancing the assessment,{c) Appeal authority in his judgment can give the following decisions when an appeal filed against penalty order: (i) confirm (li) set-aside (only on the ground that notice was not served properly) (il) cancel (iv) reduce (v) enhance (only after giving reasonable opportunity of being heard) (d) In any other case, appeal authority can pass such order as they think fit, But the AJCT or Commissioner has no power to review his own order in any case but he is empowered U/S 173 to rectify any mistake apparent from record, (e) Appeal shall be disposed of by the appeal authority with 150 days from the end of the month of which the appeal was filed and such order shall be communicated to the appellant, DCT and Commissioner of Taxes within 30 days. If the appeal is not disposed of within the period of limitation the appeal so filed shall be deemed to have been allowed. Procedure to file 2nd appeal to the Taxes Appellate Tribunal (@ Both assessee and DCT (with prior approval of his Commissioner) can prefer 2x appeal against the 1s appeal order (Including an order imposing penalty u/s 128 by the AJCT or Commissioner (Appeals). An order of the AJCT or Commissioner (Appeals) refusing to condone delay (if there’ is any application for condonation for delay) and refusing to admit, or rejecting after hearing, an appeal as time barred, will be treated as an order passed in the appeal and a 2"4 appeal would lie to the tribunal. Appeal shall be filed at the form prescribed at Rule-28 with duly signed and verified by the appellant. Tribunal fee of TK.1000/- is to be paid before submission of 2™4 appeal (this fee is Not applicable when appeal is filed by the DCT). Assessee has to pay tax @ 10% of the difference between the tax as per appeal order and tax as per section 74, However, authority to reduce such tax has been given to the Commissioner of Taxes if assessee applies for this. Appeal shall be filed to the Taxes Appellate Tribunal within 60 days from the date of receiving 1 appeal order. In case an additional member is appointed by the President for hearing a case because of the difference of opinion of the 2 members, the time limitation to dispose of the case will be 8 months instead of 6 months.3, Plsposal of anneal by tho Taxos Appoliate Tlpunal 1 he following procedure should be followed by the Taxon Appollate Tribunal; (a) (b) () @ () () (9) (h) Notice of hearing Is to bo given to both appaliant and the department, Even if the Appellant does not appear on tho day tiked for hoaring, the Tribunal is bound to decide the appoal on merit and cannot demise tho appoal for default, Trlbunal may call for such Particulars as they may require of can give instruction to the DCT for further Inquiry, Tribunal will give Judgment as they think fit, The powor lo pass such order as the Tribunal thinks fit can be exercised only In relation to the matters that arise in the appeal. It Is not open to the Tribunal to adjudicate or give a finding on a question which Is not In dispute and which does not form tho subject mattar of the appeal, The Tribunal would be entitled to enhance tho assossment as It stands after the ‘appeal order In case of appeal by the department or in caso of cross appeal, But when the appeal Is filed by the assessee and there Is no cross appeal by the department, It is not open to the Tribunal to give a finding advarse to the assesses, Since a reference application to the High Court division lies only on a question of law, the Tribunal Is the final fact-finding authority, Appeal shall be disposed of by the Appellate Tribunal within 6 months from the end of the month of filing appeal; otherwise appeal go flled shall be deemed to have been allowed, Such order should be communicated within 30 days for the date of order, Where a case Is heard by 2 members and an additional member Is appointed for hearing the case because of the difference of opinion of the 2 members, the period shall be 8 months Instead of 6 months, Tribunal has no power to review Its own order but they are empowered by section 173 to rectify any mistake apparent from record, Tribunal has power to permil an appeal to be withdrawn, Decision shall be given In accordance with the opinion of the majority of its members, tls the duty of the members of the Tribunal who heard the appeal in the first Instance to formulate clearly the point on which they differ and It Is only thereafter that a teference can be made to a third member, After the decision of the third member on the point referred to him the case should go back to the original Bench, since the third member has not given the Jurisdiction to decide and dispose of the appeal, In this way decision will be based on the opinion of the majority of the members, In case an additional member Is appointed by the President for hearing a case because of the difference of opinion of the 2 members, the time limitation to dispose of the case will be 8 months Instead of 6 months.4, Procedure to file reference application to High Court Division of the Supreme Court (2) Both assessee and the Commissioner of Taxes (with prior permission from NBR) can file reference application to High Court Division of the Supreme Court only against any question of law arising from the order (including an order under section 173) of the Taxes Appellate Tribunal. An order of the Tribunal dismissing an appeal as time barred or refusing to condone delay is obviously an order of the Tribunal and consequently a reference lies against it. Where assessee is the applicant the Commissioner of Taxes will be the respondent and where the Commissioner of Taxes, 's the applicant, the assessee will be the respondent (>) Application shall be filed within 90 days from the date of receipt of the Tribunal order at the form prescribed at Rule-29 with duly signed and verified. (c) Fee of Tk, 2,000 is to be paid before submission of application. However, no fee is needed if application is made by the Commissioner of Taxes. (d) Where the assessee is the applicant then 15% or 25% of the difference between the tax as per return and the tax as per tribunal order isto be paid followingly I Particulars Rate Rate to be applied | i.| If tax demand is below Tk. 1,000,000 | 15% | On the difference between ii) If tax demand is more than Tk. 1,000,000 [25% | the taxes as per Tribunal order and tax as per return. However, NBR has the power to waive or modify the requirement of such payment (¢) Application shall be in triplicate and accompanied by the following document U) @ () Certified copy of Tribunal Order (i) Certified copy of Appeal Order (ii) Certified copy of Assessment Order (iv) Any other document relevant to the question of law which was submitted to the DCT or to the AJCT orto the Tribunal After getting hearing notice from the High Court Division, the respondent shall have to submit the reply in writing at least 7 days before the date of hearing. ) Tax as per Tribunal order shall be payable notwithstanding the pendency of a reference in the High Court Division. The High Court Division may in a proper case stay of recovery proceedings til the disposal ofthe reference. 5. Disposal of reference application by the High Court Division (2) Acdivision bench of not less than 2 Judges will hear the case as per section 98 of the (b) (c) Code of Civil Procedure, 1908.{f the judges are equally divided the question on which there is the difference of judicial opinion may be referred to another judge or to a larger Bench and the decision of the majority of the judges would prevail. The High Court Division will decide the question of law and deliver its judgment containing the grounds on which the decision is founded. The judgment of the High Court Division as a whole is binding between the parties in the particular case. If the judgment expounds a wrong construction of the Ordinance, an appeal against it is ‘open and there is no other procedure by which it can be corrected. The cost of the reference shall be in the discretion of the Court. Tax Appeal preparelby Ranjan Kumar BhownikcFCMA wpdated upto 06/02/2021 Page 6* 8. Procedure to file appeal to the Appellate Division of the Supreme Court An appeal shall lie to the - ' APpellate Division against the judgment of the High Court Division provided the Hh Cut rat Cres he case to be af one fr appeal fo the Apple Divison of he Supreme te High Court Division would Certify the case as a fit one for appeal and grant leave to appeal to Appellate Division if a Substantial question of law is involved or if the question is otherwise of great Public or private importance, the High Court Division refuses to Certify a case to be a fit one for appeal to the Appellate Division, an FBalleation may be made to the Appelt Dvision for special leave to appeal against the decison ofthe High Court Division in special ceumstances, Disposal of appeal by the Appellate Division of the Supreme Court ‘The appellate division will hear and dispose of the appeal as per provision of Code of Civil Provedure, 1908 ASSESSMENT PROCEDURE AND SOURCE OF DISPUTE. “Assesment , Appeal ‘Tribunal order ‘PP! Honourable High Source Court of Law Dispute Prosecution cesem Revision Power of Commissioner of Taxes under section 121A While section 120 empowers the Inspecting Joint Commissioner of Taxes and Inspecting Additional Commissioner of Taxes to exercise revsional power in favour of revenue, section 121A empowers the Commissioner of Taxes of the tertoril zone to exercise revisional power in favour of the assessee. REVIEW TO COMMISSIONER + Dispute No order prejudicial to assessee. Review order within 60 days (sec 121A) Review against + No review if appeal pending before any appeal authority ornot withdrawn or right to appeal is not waived. DCT’s Assessment within 60 days.9. 10. (i) Application shall be made in a plain paper as there is no prescribed form, (i) Review fee of TK. 200/- is to be paid before submission of application. (ii) Tax as per return is to be paid if the application is filed against the order of the DCT and undisputed portion of tax as per 1! appeal order is to be paid if the application is filed against the AJCT or ACT. (iv) Application shall have to be submitted within 60 days from the date the date of receiving order, However, Commissioner of Taxes can entertain an application after condoning the delay if he is convinced that assessee has sufficient reason for failure of submit application in time, However, the power to condone such delay is discretionary. If it is made against the order of the DCT, it is to be made either after the time of appeal (45 days) is over or with an affidavit waiving the right of appeal and if itis made against the order of the AJCT or ACT it is to be made either after the time of 2" appeal (60 days) is ‘over or with an affidavit waiving the right of fling Tribunal. Disposal of revisional application by the Commissioner of Taxes (1) Commissioner of Taxes will hear a case which is passed by any authority subordinate to him, OCT is directly the subordinate to the Commissioner of Taxes, Though AJCT and ACT are not subordinate fo the Commissioner but for the purpose of section 121A, they will be deemed to be the subordinate to the Commissioner so that their order can be revised by the Commissioner of Taxes. (2) Commissioner of Taxes will pass order within 60 days from the date of receiving application failing which application will be deemed to have been allowed fully. (3) Commissioner of Taxes can make enquiry and can also give instruction to the DCT for further enquiry. (4)Commissioner of Taxes shall not pass any order which is prejudicial to the assessee. A prejudicial order'is that order which places the assessee in a different and worse position than before. But an order declining to interfere shall not be deemed to be an order prejudicial to the assessee. Commissioner's revisional power is of an administrative nature and therefore he is not bound to hear the assessee before passing his order. (5) An order passed by the Commissioner of Taxes under section 121A is not appeal able to the Taxes Appellate Tribunal and no reference will lie against such order. Alternative Dispute Resolution (ADR) Any dispute of an assessee lying with any income tax.authority, Taxes Appellate Tribunal or Supreme Court may be resolved through ADR. Assessee can also go directly to the ADR against the assessment or re-assessment done by the DCT. If the case in pending at Appeal, Tribunal or Supreme Court then also an assessee can prefer ADR taking permission from the concemed appeal forum. After obtaining such permission from the appeal forum, the appeal (both from assessee and department) shall remain stayed during the ADR negotiation process,ALTERNATIVE DISPUTE RESOLUTION (ADR) ‘Appeal pending beforeany appellate authority, ‘Tribunal or Court ADR resolution by neutral Facilitator Procedure to file application to ADR:- (1) 4(four) sets of application at the prescribed form will be submitted to the respective appeal authority. (2) Fee Tk. S0o/- per year is to be paid and copy of which is to be attached with the application, (3) Application for ADR is to be filed within 30 days from the date of receiving demand notice or the date of receiving permission from the appeal authority court asthe case may be. (4) Where the case is under process at appealftibunalcour, then the copy of permission is to be attached with the application of ADR. (6) Assessee shall not be eligible for application to ADR if he does not file return of income for the concemed year and does not pay tax as per return. Procedure of disposal by the ADR: - (1) Board will nominate a facilitator from the panel of facilitators and convey it to the applicant, facilitator and the concemed Commissioner of Taxes. Board may, however, change the facilitator if any objection raised by the applicant or by the tax department. (2) Upon receiving the application of ADR, the Facilitator shall forward a copy of the application to the respective DCT and call for his opinion on the grounds of the application and also whether the conditions of return submission and tax payment as per fetum by the assessee have been complied with. (3) If the DCT fails to give his opinion Tegarding fulfillment of the above-mentioned conditions within 5 working days from receiving the copy, the Facilitator may deem that the conditions thereto have been fulfilled,Panel of Facilitators: - NBR will form a panel of facilitators. The following persons shall be eligible for appointment as, a faciitator by the board: - (1) An expert retired income tax official not below the rank of Joint Commissioner of Taxes (2) Aretired official of judicial service not below the rank and status of District Judge. (3) Acchartered accountant practiced income tax for a period not less than 8 years. (4) A Cost and Management Accountant practiced income tax for a period not less than 10 years, (5) An Income Tax Practitioner within the meaning of section 174(2) (f) and practiced income tax for a petiod not less than 20 years. (8) A professional legislative expert not below the rank and a status of Deputy Secretary. (7) A business man expert at income tax law Methodology to be followed by the Facilitator to mitigate the dispute: - (1) The Facilitator will notify in writing both the applicant and the Commissioner of Taxes or the Commissioner's Representative to attend the meeting for settlement of disputes. (2) He may adjourn the meeting from time to time; (3) He may call for records or evidences from the DCT or from the applicant with a view to settle the dispute; (4) Before disposing of the application, he can cause to make such enquiry by any income tax authority as he thinks fit. (6) The Facilitator will assist the applicant assessee and the Commissioner's representative to agree on resolving the dispute or disputes through consultations ana meetings. (6) Dispute may be resolved by an agreement either wholly or in part where both the parties of the dispute accept the points for determination of the facts or laws applicable in the dispute. (7) Where an agreement is reached, either wholly or in part, between the assessee and the Commissioner's Representative, the Facilitator shall record, in writing, the details of the agreement. (8) The recording of every such agreement shall describe the terms of the agreement including any tax payable or refundable and any other necessary and appropriate matter and the manner in which any sums due under the agreement shall be paid and such other matters as the Facilitator may think fit to make the agreement effective. (9) The agreement shall be void if it is subsequently found that it has been concluded by fraud or misrepresentation of facts. (10) The agreement shall be signed by the assessee and the Commissioner's Representative and the facilitator. (11) Where no agreement, whether wholly or in part, is reached or the dispute resolution is ended in disagreement between the applicant-assessee and the concemed Commissioner's Representative for non-cooperation of either of the parties, the Facilitator shall communicate it, in writing recording reasons thereof, within 15 days from the date of disagreement, to the applicant and the Board, the concerned court! Tribunal appellate authority and income tax authority, as the case may be, about such unsuccessful dispute resolution.SAE Status: 2, 1984 op” (12) Where the agreement is reached, recorded and signed according ir nd mode of payment of payable duce igned accordingly containing time ar communicate the sane eee Tefund, as the case may be, the Facilitator shall aguenent sse0 and the concemed DCT for compliance with the (18) No agreement shall bo deemed to have been reached it agreement within 2neatea en reached if the Facilitator fails to make an m the end of the month in which the application is fled. (14) Where there isa suocessful agreement, he Facltator shall communicate the copy ofthe Sareement to all the parties within 18 days from the date on which the Facilitator and the parties have signed the agreement Effect of agreement: . (1) Where an agreement is reached, It shall be binding on both the parties and it cannot be Challenged in any authority, Trlbunal or court either by the assessee or by the department, (2) Every agreement shall be conclusive as to the matters state therein and no matter Covered by such agreement shall be reopened. Limitation for appeal where agreement is not concluded, - (1) Where an agreement is not reached wholly or partially, the assessee may prefer an appeal -— (2)to the Appellate Joint Commissioner of Taxes or Appellate Additional Commissioner of Taxes or Commissioner of Taxes (Appeals) as the case may be, where the dispute arises against the order of the DCT. (b) to the Taxes Appellate Tribunal where the dispute arises against the order of the Appellate Joint Commissioner of Taxes or Appellate Additional Commissioner of Taxes or Commissioner of Taxes (Appeals), as the case may be; and (c)to the Court from where the assessee-applicant has got permission to apply for ADR. (2) In computing the period of limitations for fling appeal the time elapsed between the filing of the application and the decision or order of the ADR shall be excluded. Fees to be paid to Facilitator The facilitator is entitled to receive fees from both the assessee and the Govt. The quantum of fees is to be computed followingly: - 20% of disputed tax Whicheveris lower) 50% of fees are to be paid or but not less than byth 750,000): neaaaTT y the assessee and 50% by the Govt. or Govt. approved agency within 30 days from resolving the dispute. The end