Appeals & Revision

Manner of Filing Appeal to JCIT(A)

• Form and Mode of Filing

o The appeal shall be filed in Form 35.

o Appeals are to be filed through the e-filing portal in accordance with the e-Appeal Scheme, 2023, which came into effect on 29-05-2023 and mandates faceless disposal.

o If the return was e-filed using a digital signature, the appeal must be verified using a digital signature.

o If the return was e-filed using Electronic Verification Code (EVC), Form 35 must be verified using EVC.

o If the return was filed in paper form, Form 35 may be filed either electronically or in paper format.

• Preconditions for Admission of Appeal -The JCIT(A) shall not admit an appeal if:

o The return has been filed but the tax due on the returned income has not been paid.

o The return has not been filed, and the amount equivalent to the advance tax liability has not been paid, unless the JCIT(A) admits the appeal for recorded reasons.

However, the Assessing Officer may, under Section 220(6), treat the assessee as not being in default in respect of the disputed demand during the pendency of the appeal.

• Verification and Supporting Documents

o Form 35 must be verified by a person authorised to verify the return.

o The appeal should be submitted in duplicate with:

➢ Memorandum of appeal,

➢ Statement of facts,

➢ Grounds of appeal,

➢ Copy of the order appealed against,

➢ Original notice of demand (if any).

• Filing Fee - The appeal must be accompanied by proof of fee payment as follows:

• Time Limit for Filing Appeal

o Assessment or Penalty Orders: Within 30 days from the date of service of the notice of demand.

o Other Cases: Within 30 days from the date of service of the order.

o Exclusions from the 30-day Time Limit

➢ The date of service is excluded as per Section 268.

➢ If the order copy was not provided with the notice, the time taken to obtain it is excluded.

➢ Where an assessee has applied for immunity from penalty under Section 270A, the period from the date of application to the date of service of the rejection order shall be excluded.

• Condonation of Delay - The JCIT(A) may condone delay in filing the appeal beyond 30 days, if he is satisfied that there was sufficient cause. A request for condonation, citing reasons and supporting documents, must be submitted along with Form 35.

e-Appeals Scheme, 2023 - Appeals before JCIT (A)

• Scope and Applicability - This scheme applies to appeals covered under Section 246. CBDT may exclude certain classes of cases from this scheme.

• Authorities under the Scheme - JCIT(A) is the appellate authority. Assisted by income-tax officers, staff, executives, or consultants as designated by the Board.

• Procedural Framework

o Assignment of Appeals - Appeals are randomly allocated by the Principal DGIT (Systems) or DGIT (Systems) with CBDT approval.

o Condonation of Delay - JCIT(A) may condone delay in appeal filing after the expiry of the time limit under Section 249, with reasons recorded.

o Notice for Submission - JCIT(A) issues a notice to the appellant to file submissions by a specified date, with a copy to the Assessing Officer (AO).

o Further Enquiries and Reports - JCIT(A), upon admitting the appeal, may:

➢ Call for additional information, document or evidence from the appellant or any other person;

➢ Seek AO’s report on the grounds of appeal or submissions;

➢ Request AO to conduct further inquiry under Section 250(4) and submit a report.

o Additional Grounds of Appeal

➢ May be admitted where the order appealed is under Section 143(1), Section 200A, or passed by CPC.

➢ In other cases, comments of AO are sought before admission.

➢ Grounds are admitted if the omission was not willful or was due to sufficient cause.

➢ JCIT(A) must record reasons for admitting or rejecting such grounds.

o Additional Evidence

➢ JCIT(A) may admit additional evidence where the order appealed is under Section 143(1), Section 200A, or issued by CPC.

➢ Elsewhere, AO’s report on admissibility is required.

➢ Admission or rejection must be reasoned and recorded.

➢ If admitted, the AO is allowed to examine the evidence/witnesses or produce rebuttal evidence or witnesses and furnish a report.

o Production of Documents or Witnesses - AO may request JCIT(A) to direct the appellant to produce specific evidence or examine witnesses.

o Enhancement of Assessment or Penalty - If intending to enhance the assessment, penalty, or reduce the refund:

➢ JCIT(A) shall issue a show-cause notice with reasons.

➢ Appellant must respond within the prescribed time.

o Final Order - This shall be in writing, stating points for determination, decision, and reasoning. A digitally signed order is sent to Appellant, PCCIT/CCIT/PCIT/CIT, AO, and a penalty initiation notice is issued where applicable.

• Penalty and Rectification Proceedings

o Penalty Proceedings

➢ Initiated for non-compliance with any notice or direction;

➢ A show-cause notice is issued;

➢ Based on the reply and material, JCIT(A) may pass a digitally signed penalty order or drop the proceedings with reasons.

o Rectification of Mistake

➢ On application by appellant, any other person, AO, JCIT(A) may rectify mistakes apparent from the record;

➢ Opportunity is granted to the affected party before rectification;

➢ Order is passed digitally and sent to the relevant parties.

• Personal Hearing and Communication Protocol

o Personal Appearance - Not required in faceless proceedings. However, the appellant may request a personal hearing, which shall be:

➢ Allowed by JCIT(A);

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

o Mode of Communication—All communications between JCIT(A) and the appellant/authorised representative shall be exchanged by electronic mode wherever feasible, and internal communications with AO, PCCIT/CCIT/PCIT/CIT, shall be exchanged exclusively through electronic mode. Electronic records are authenticated by JCIT(A) through digital signature or by others through digital signature, EVC, or login via registered account.

All communication is authenticated through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The appellant’s response is deemed authenticated once acknowledged via the registered account.

• Transfer of Appeal and Remand Cases

o Transfer of Case - Appeal may be transferred to another JCIT(A) under Section 120 at any stage of proceedings.

o Remand Cases - If an order of JCIT(A) is set aside and remanded by the ITAT or Court, it is reassigned under this Scheme for further action.

• Administrative Framework

o Functions of the PCCIT (NFAC) – The PCCIT (NFAC), with Board approval, shall perform the following functions:

➢ Allocation/transfer of cases;

➢ Coordination with PDGIT/DGIT(Systems) for appeal allocation processes;

➢ Approval of notice and letter formats;

➢ Issuance of SOPs, including for Video Conferencing; and

➢ Other procedural roles assigned by the Board.

o Power to specify format, mode, procedure, and processes - The PDGIT/DGIT (Systems), in consultation with the PCCIT (NFAC), with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of JCIT(A) in an automated environment, including:

🞍 Service of notices, orders, or other communications;

🞍 Receipt of information or documents in response;

🞍 Issuance of acknowledgements for responses received;

🞍 Provision of e-appeal facilities (login, status tracking, downloads);

🞍 Access, verification, and authentication of submissions during appeal proceedings;

🞍 Centralised receipt, storage, and retrieval of information or documents; and

🞍 Other functions assigned by the Board.

Appeal before the Commissioner (Appeals)

• Appealable Orders before CIT(A) - The following orders are specifically appealable before CIT(A):

o Intimations under Section 143(1) where adjustments are objected to;

o Assessment orders under Sections 143(3), 144, 147, 150, 153A, or 158BC;

Note: Appeals cannot be filed against orders passed in pursuance of DRP directions or under GAAR.

o Orders under Section 92CD;

o Order for TDS/TCS matters, including intimations under Sections 200A, 206CB, 206C(6A), and orders under Section 201;

o Penalty orders under Chapter XXI, Section 158BFA(2) and Section 221;

o Rectification orders under Sections 154 or 155 that enhance liability or reduce refund.

o Other orders under Sections 239A, 163, 170(2)/(3), 171, 115VP, or 237;

o Order passed where the assessee has denied liability to be assessed under the Income-tax Act;

o Where the application to the DRC has not been allowed to proceed; or

o Order passed by an AO, other than a Deputy Commissioner, in cases directed by the Board considering the nature, complexity, or other relevant aspects.

• Transfer of Pending Appeals - Pending appeals may be transferred:

o From CIT(A) to JCIT(A), where filed against orders appealable to JCIT(A) and pending as on 01.04.2023.

o From JCIT(A) to CIT(A), if deemed appropriate by the Board or authorised income-tax authority.

In both cases, the appellant shall be given an opportunity of being reheard. The authority receiving the appeal may proceed from the stage it was before the transfer.

• Appeal Filing Process - Appeals must be filed electronically in Form 35 within 30 days from the date of service of the order or demand notice. The filing and disposal of appeals shall be governed by the Faceless Appeal Scheme, 2021, notified with effect from 28.12.2021. Appeals are disposed of electronically, without interface, except for serious fraud, major tax evasion, sensitive & search-related cases, and Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or international tax cases.

• Procedure before CIT(A)

o Notices are issued to fix a hearing date and place.

o CIT(A) may adjourn hearings and conduct or direct enquiries.

o Additional grounds may be admitted if the omission was not willful or unreasonable.

o Orders must be in writing, stating points of determination, decisions, and reasons.

o Appeals should, if possible, be disposed of within 1 year from the end of the financial year in which the appeal was filed, and an order should be issued within 15 days of the last hearing.

• Priority Disposal of Appeal - The CBDT has issued guidelines [Office Letter F.No. 279/Misc./M-102/2021-ITJ, dated 07.03.2024] for priority/out-of-turn disposal of pending appeals at the level of CIT(A) in genuine and exceptional circumstances, which are given below:

o cases having demand exceeding Rs. 1 crore;

o cases where VIP/PMO references were received;

o cases with Court directions;

o cases where senior citizens/super senior citizens request;

o Other cases of genuine hardship.

Final approval for such disposal lies with Principal CCITs, CCITs, or DGITs based on recommendations of the jurisdictional Principal CIT or Principal CIT(Central) or CIT(IT).

• Communication of Order and Stay of Demand - CIT(A) shall communicate the order to both the assessee and the CCIT or CIT.

• Stay of Demand- the assessing officer can grant stay of demand till the disposal of appeal by CIT(A) if the assessee makes payment of 20% of the disputed demand [Office Memorandum No. 404/72/93-ITCC dated 29.02.2016].

• Right to be Heard and Filing of Additional Evidence - The assessee and AO have the right to be heard personally or through authorised representatives. Further, filing new evidence before CIT(A) is restricted unless specific exceptions are satisfied.

The CIT(A) must record written reasons for admitting any additional evidence. Before doing so, the CIT(A) shall provide the Assessing Officer an opportunity to examine or cross-examine the evidence or witness produced by the assessee or produce evidence or a witness in response.

• Power of CIT(A) - The Commissioner (Appeals) is vested with the following powers while disposing of an appeal. However, before enhancing an assessment or penalty or reducing a refund, a show-cause opportunity must be provided to the assessee:

o Relating to Assessment Order - CIT(A) may confirm, reduce, enhance, or annul the assessment. He cannot set aside the assessment or refer the case back to the Assessing Officer for fresh assessment except where an appeal is filed against an assessment order made under Section 144.

o Relating to Penalty Order - CIT(A) may confirm, cancel, increase, or reduce the penalty imposed.

o Relating to Other Matters - In any other appealable matter, CIT(A) may pass such order as deemed fit.

o Power to Levy Penalty - CIT(A) may impose penalty under the following provisions:

➢ Section 270A (under-reporting/misreporting of income)

➢ Section 271A (failure to maintain or retain books of account)

➢ Section 271AA (failure to maintain documentation for international transactions)

➢ Section 271AAB (undisclosed income detected during search)

➢ Section 271AAC (tax on undisclosed income)

➢ Section 271AAD (false or omitted entries)

➢ Section 271G (failure to furnish documents for international transactions)

➢ Section 271J (incorrect information in reports or certificates)

➢ Section 272A (failure to cooperate with tax authorities or file TDS/TCS statements)

o Power to Consider Additional Matters - CIT(A) may decide on any issue arising from the original proceedings, even if not raised by the appellant.

o Power to Admit Additional Evidence - CIT(A) may admit additional evidence under permitted circumstances. This does not restrict his powers to:

➢ Direct the production of documents or examination of witnesses; or

➢ Enhance, confirm, reduce, or annul the assessment or penalty order, either suo motu or at the Assessing Officer’s request.

• Faceless Appeal Scheme, 2021 [Notification No. 139/2021, dated 28-12-2021] - The Central Government is empowered to introduce a scheme for electronic filing and disposal of appeals by CIT(A) to enhance efficiency, transparency, and accountability by:

o Minimising physical interface during appellate proceedings;

o Optimising resource utilisation through scale and specialisation; and

o Implementing dynamic jurisdiction for appeal disposal.

In exercise of its powers, the CBDT initially notified the Faceless Appeal Scheme, 2020 for the electronic disposal of appeals by CIT(A). This scheme was later superseded by the Faceless Appeal Scheme, 2021, effective from 28-12-2021.

Manner of Filing Appeal to CIT(A)

• Form and Mode of Filing

o The appeal shall be filed in Form 35.

o Appeals are to be filed through the e-filing portal in accordance with the Faceless Appeal Scheme, 2021, which came into effect on 28-12-2021 and mandates faceless disposal.

o If the return was e-filed using a digital signature, the appeal must be verified using a digital signature.

o If the return was e-filed using Electronic Verification Code (EVC), Form 35 must be verified using EVC.

o If the return was filed in paper form, Form 35 may be filed either electronically or in paper format.

• Preconditions for Admission of Appeal -The CIT(A) shall not admit an appeal if:

o The return has been filed but the tax due on the returned income has not been paid.

o The return has not been filed, and the amount equivalent to the advance tax liability has not been paid, unless the CIT(A) admits the appeal for recorded reasons.

However, the Assessing Officer may, under Section 220(6), treat the assessee as not being in default in respect of the disputed demand during the pendency of the appeal.

• Verification and Supporting Documents

o Form 35 must be verified by a person authorised to verify the return.

o The appeal should be submitted in duplicate with:

➢ Memorandum of appeal,

➢ Statement of facts,

➢ Grounds of appeal,

➢ Copy of the order appealed against,

➢ Original notice of demand (if any).

• Filing Fee - The appeal must be accompanied by proof of fee payment as follows:

• Time Limit for Filing Appeal

o Assessment or Penalty Orders: Within 30 days from the date of service of the notice of demand.

o Other Cases: Within 30 days from the date of service of the order.

o Exclusions from the 30-day Time Limit

➢ The date of service is excluded as per Section 268.

➢ If the order copy was not provided with the notice, the time taken to obtain it is excluded.

➢ Where an assessee has applied for immunity from penalty under Section 270A or prosecution under Section 276C/276CC, the period from the date of application to the date of service of the rejection order shall be excluded.

• Condonation of Delay - The CIT(A) may condone delay in filing the appeal beyond 30 days, if he is satisfied that there was sufficient cause. A request for condonation, citing reasons and supporting documents, must be submitted along with Form 35.

Faceless Appeal Scheme, 2021 - Appeals before CIT (A)

• Scope and Applicability - Under this Scheme, appeals are disposed of for specified territorial areas, persons, classes of persons, incomes, or cases. As clarified by CBDT Circular F. No. 279/MISC./M-44/2018-ITJ, dated 23-03-2021, all income-tax appeals shall be finalised in a faceless manner, except for those involving:

(a) Serious frauds;
(b) Major tax evasion;
(c) Sensitive and search-related matters;
(d) International Tax and cases under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

• Faceless Appeal Centres - The CBDT may establish the following for implementing this scheme:

🞍 National Faceless Appeal Centre (NFAC) - Facilitates centralised conduct of e-appeal proceedings. All communication between the Commissioner (Appeals), appellant, Assessing Officer, or any other party shall be routed through NFAC.

🞍 Appeal Units - Responsible for disposing of faceless appeals and undertaking the following functions:

➢ Admission of additional grounds;

➢ Conduct of further inquiries;

➢ Directing further inquiry or information collection on admitted grounds via NFAC or AO;

➢ Providing the appellant with an opportunity of being heard;

➢ Analyzing submitted materials; and

➢ Performing any other function required under the Scheme.

🞍 Authorities in the Appeal Units - Each Appeal Unit shall consist of:

➢ One Commissioner (Appeals); and

➢ Income-tax authorities, ministerial staff, executives, or consultants as deemed necessary by the Board.

• Procedural Framework

o Assignment of Appeals - The NFAC shall assign each appeal to a Commissioner (Appeals) within a specific Appeal Unit through an automated allocation system.

o Condonation of Delay - CIT(A) may condone delay in appeal filing after the expiry of the time limit under Section 249, with reasons recorded.

o Notice for Submission - CIT(A) through NFAC issues a notice to the appellant to file submissions by a specified date, with a copy to the Assessing Officer (AO).

o Further Enquiries and Reports - CIT(A) through NFAC, upon admitting the appeal, may:

➢ Call for additional information from the appellant or any other person;

➢ Seek AO’s report on the grounds of appeal or submissions;

➢ Request AO to conduct further inquiry under Section 250(4) and submit a report.

o Issuance of Notice and its response - The Commissioner (Appeals) may issue a notice through NFAC to the appellant, Assessing Officer, or any other person, seeking relevant information or documents. The response or report must be filed within the specified or extended time.

o Additional Grounds of Appeal - The appellant may file additional grounds of appeal through NFAC, stating reasons for omission in the original appeal.

➢ NFAC forwards the additional grounds to the AO for comments.

➢ The AO must respond within the specified or extended time.

➢ Comments are shared with the Commissioner (Appeals); if no comments are received, this is also informed.

➢ The Commissioner (Appeals) may admit the additional ground if satisfied that the omission was neither willful nor unreasonable.

➢ Rejection must be supported with written reasons in the appeal order.

o Additional Evidence - The appellant may submit additional evidence through NFAC, along with justification under Rule 46A(1). If submitted:

➢ NFAC forwards the evidence to the Assessing Officer for a report on admissibility.

➢ The AO submits the report within the specified or extended time.

➢ NFAC sends the report to the Commissioner (Appeals).

➢ Commissioner (Appeals) may admit or reject the evidence, recording reasons in the appeal order.

➢ If additional evidence is admitted, the Commissioner (Appeals) issues a notice through NFAC to allow the AO to examine or cross-examine the evidence/witness produced by the appellant, or submit rebuttal evidence or witness. AO must respond within the specified or extended time. NFAC forwards the report to the Commissioner (Appeals) or informs of non-submission of report.

o Production of Documents or Witnesses - AO may request CIT(A) through NFAC to direct the appellant to produce specific evidence or examine witnesses.

➢ The Commissioner (Appeals) prepares a notice and sends it to NFAC.

➢ NFAC serves the notice to the appellant or witness.

➢ The response must be submitted within the specified or extended time.

➢ NFAC forwards the response to the Commissioner (Appeals) or informs of non-compliance.

o Enhancement of Assessment or Penalty - If intending to enhance the assessment, penalty, or reduce the refund:

➢ CIT(A) shall issue a show-cause notice with reasons through NFAC.

➢ Appellant must respond within the prescribed time, and NFAC shall forward the same to CIT(A).

o Final Order—This shall be in writing, stating points for determination, decision, and reasoning. A digitally signed order is sent to NFAC, along with a penalty initiation notice, if applicable. NFAC shall communicate such an order to the appellant, PCCIT/CCIT/PCIT/CIT, and AO for required action.

If penalty initiation is recommended in the order, the NFAC shall serve a notice on the appellant to show cause why penalty should not be imposed.

• Penalty and Rectification Proceedings

o Penalty Proceedings

➢ Initiated for non-compliance with any notice or direction;

➢ A show-cause notice is issued;

➢ Based on the reply and material, CIT(A) may pass a digitally signed penalty order or drop the proceedings with reasons.

➢ NFAC shall communicate the order for imposing or dropping the penalty to the appellant, or any other person, and the AO for required action.

o Rectification of Mistake

➢ CIT(A) may rectify mistakes apparent from the record on application by the appellant or any other person, the Commissioner (Appeals), who has passed the appeal order, or the AO;

➢ Opportunity is granted to the affected party before rectification;

➢ Order is passed digitally and sent to the relevant parties through NFAC.

• Personal Hearing and Communication Protocol

o Personal Appearance - Not required in faceless proceedings. However, the appellant may request a personal hearing through NFAC, which shall be:

➢ Allowed by CIT(A);

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

o Mode of Communication—All communication between the NFAC, the National Faceless Assessment Centre, the AO, and the Appeal Unit is by electronic mode. Electronic records are authenticated by CIT(A) through digital signature or by others through digital signature, EVC, or login via registered account.

All communication is authenticated through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The appellant’s response is deemed authenticated once acknowledged via the registered account.

• Transfer of Appeal and Remand Cases

o Transfer of Case - Appeal may be transferred to another CIT(A) under Section 120 at any stage of proceedings.

o Remand Cases—If an order of CIT(A) is set aside and remanded by the ITAT, High Court, or Supreme Court, NFAC reassigns it under this Scheme for further action.

• Power to specify format, mode, procedure, and processes - The PCCIT (NFAC) or the PDGIT(NFAC), with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of NFAC and the Appeal Unit in an automated environment, including:

o Service of notices, orders, or other communications;

o Receipt of information or documents in response;

o Issuance of acknowledgements for responses received;

o Provision of e-appeal facilities (login, status tracking, display, downloads);

o Access, verification, and authentication of submissions during appeal proceedings;

o Centralised receipt, storage, and retrieval of information or documents;

o General administration and grievance redressal mechanism in the respective Centres and units; and

o Filing of additional grounds of appeal or additional evidence.

Appeal before Income Tax Appellate Tribunal (ITAT)

The Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income Tax Act. Appeals against orders passed by the Joint Commissioner (Appeals) or Commissioner (Appeals) lie before the ITAT. Its decision is final on questions of fact, but an appeal may be made to the High Court on questions of law.

• Appealable Orders before ITAT - Appeals can be filed by both the assessee and the Commissioner/Principal Commissioner. The Commissioner may, if he objects to any order passed by the JCIT(A) or CIT(A) under Sections 250 or 154, direct the Assessing Officer to file an appeal only where the tax effect exceeds the prescribed monetary limits. An assessee aggrieved by the following orders may appeal to the Appellate Tribunal.

o Orders of the Joint Commissioner (Appeals):

➢ Orders under Section 250 or rectification under Section 154;

➢ Penalty orders under Sections 270A, 271A, 271AAC, 271AAD, 271J.

o Orders of the Commissioner (Appeals):

➢ Orders under Section 250 or rectification under Section 154;

➢ Penalty orders under Sections 158BFA, 270A, 271A, 271AAB, 271AAC, 271AAD, 271J, 272A.

o Orders of Tax Authorities:

➢ AO’s order under Section 115VZC(1);

➢ PCIT/CIT orders under Sections 12AA, 12AB, 80G(5)(vi), 263, 270A, 272A or 154 (amending any such order);

➢ PCCIT/CCIT/PDGIT/DGIT/PDIT/DIT orders under Sections 263, 272A or 154 (amending any such order);

➢ Orders under Section 10(23C)(iv) to (via).

o Assessment orders based on directions of DRP under Sections 143(3), 147, 153A, 153C, and related rectifications under Sections 154.

o Assessment orders invoking GAAR under Sections 143(3), 147, 153A, 153C, with approval under Section 144BA(12), and related rectifications under Sections 154/155.

• Appeal Filing Process—An appeal to ITAT must be filed in Form 36 within 2 months from the end of the month in which the order is communicated. A memorandum of cross-objections in Form 36A can be filed within 30 days of receiving notice of the appeal.

• Constitution of Benches – The Power and Functions of the ITAT may be exercised and discharged by Benches constituted by the President of the Tribunal.

o Its President constitutes benches of ITAT and generally comprises one Judicial Member and one Accountant Member.

o Cases involving total income not exceeding Rs. 50 lakh may be disposed of by a single member authorized by the Central Government.

o The President may also constitute Special Benches of three or more members for complex cases.

o If the Bench members differ on any point, the matter is decided by majority opinion. However, if the member's decision is equally divided, the President refers the matter to one or more additional members, and the decision is made by the majority, including the original and additional members.

• Stay of Proceedings - On application, the Tribunal may grant a stay on recovery proceedings for a specified period. The appeal must be disposed of within that stay period.

• Grounds of Appeal - The appellant may not urge grounds not outlined in the memorandum unless permitted by the Tribunal. The Tribunal is not restricted to stated grounds, but must give affected parties an opportunity to be heard on any new grounds considered.

• Time limit for Disposal of Appeal - The Tribunal may dispose of the appeal within 4 years from the end of the financial year in which the appeal was filed.

• Order of the ITAT - ITAT may pass any appropriate order after granting an opportunity of hearing to both parties. The cost of appeal is at the discretion of the Tribunal. The order is communicated to both the assessee and the PCIT/CIT.

• Rectification of Mistake - Rectification application can be made within 6 months from the end of the month in which the order was passed.

o Mistakes must be apparent from the record, not involving long-drawn arguments or debatable points of law.

o Rectification is allowed only after giving the assessee an opportunity to be heard.

o Where the assessee applies for rectification, such application shall be accompanied by a fee of Rs. 50.

• Filing of Additional Evidence - Additional evidence is not generally allowed. However, the Tribunal may allow it if it is required to enable the order to pass, or the Income-tax Authorities did not provide a fair opportunity to the assessee to adduce evidence.

• Faceless Disposal of Appeals by ITAT - The Central Government is empowered to notify a scheme for faceless ITAT proceedings to improve transparency and efficiency.

• Powers of ITAT - The Tribunal may regulate its own procedure and exercise powers vested in income-tax authorities under Section 131. Proceedings before the ITAT are deemed judicial proceedings, and the ITAT is deemed a civil court.

Manner of Filing Appeal to ITAT

• Form and Time Limit of Filing

o Appeals to ITAT must be filed in Form 36 within 2 months from the end of the month in which the impugned order is communicated to the assessee or the PCIT/CIT, as applicable.

o A memorandum of cross-objection is to be filed in Form 36A within 30 days from the date of receipt of notice of appeal filed before the ITAT.

o The ITAT may condone delay in filing if it is satisfied that there was sufficient cause.

o A memorandum of cross-objection can be filed even if no appeal has been filed by the party submitting the memorandum. It is treated as an appeal filed before the ITAT and disposed of accordingly.

• Documents to be Submitted and Verification

o As per Rule 9 of Income-tax (Appellate Tribunal) Rules, 1963, every memorandum of appeal must be filed in triplicate and accompanied by:

➢ 2 copies (one certified) of the order appealed against,

➢ 2 copies of the AO’s order,

➢ 2 copies of the grounds of appeal before the first appellate authority,

➢ 2 copies of the statement of facts, if filed earlier,

o ITAT may accept appeals not accompanied by all or any of the documents at its discretion.

o Any party intending to rely on documents or statements referred to in the assessment or appellate orders must submit a paper book in duplicate, indexed and paginated. Filed at least 1 day before the hearing, and a copy of it must be served to the opposite party at least seven days before.

o Additional Documents (Case-Specific)

➢ Appeal against Penalty Order: Memorandum of appeal must be accompanied by 2 copies of the assessment order.

➢ Appeal against assessment under Section 143(3) read with 144A: Memorandum of appeal must be accompanied by 2 copies of the directions of the Deputy Commissioner.

➢ Appeal against assessment under Section 143 read with 147: Memorandum of appeal must include two copies of the original assessment order, if available.

o All appeal-related documents must be signed by a person authorised to verify the return of income. Verification required for:

➢ In case of Appeal: Form 36, grounds of appeal, verification form;

➢ In case of Memorandum of Cross Objection: Form 36A, grounds of cross objection, verification form.

• Filing Fee - The appeal must be accompanied by proof of fee payment as follows:

• Faceless Appeal before ITAT - The Central Government is empowered to formulate a scheme for the filing of departmental appeals before ITAT to enhance efficiency, transparency, and accountability by:

o Optimising resource utilisation through scale and specialisation; and

o Team-based appeal mechanism to ITAT with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Appeal before the High Court

The High Court functions as the third appellate authority under the Income Tax Act. An appeal against the order passed by the Income Tax Appellate Tribunal (ITAT) lies before the High Court. However, such an appeal can be filed only when the High Court is satisfied that the case involves a substantial question of law.

• Filing of Appeal before the High Court

o An appeal may be filed by the PCCIT/CCIT/PCIT/CIT (“Commissioner”), or by the assessee aggrieved by the order passed by the ITAT.

o The appeal must relate to a matter involving a substantial question of law.

o The Department may file an appeal only in cases where the tax effect exceeds the monetary limits prescribed by the CBDT.

• Manner and Time Limit for Filing Appeal

o The appeal is to be filed as a Memorandum of Appeal, clearly stating the substantial question(s) of law involved in the case.

o Appeal to the High Court must be filed within 120 days from the date on which the order of ITAT is received by the Commissioner or assessee, as applicable.

o The High Court may condone delay in filing the appeal if it is satisfied that there was sufficient cause for not filing the appeal within the prescribed time.

• Formulation of Question of Law

o If the High Court is satisfied that a substantial question of law arises, it shall formulate the question(s) and the appeal shall be heard on such question(s) only.

o During the hearing, the respondent may argue that the case does not involve the stated question(s) of law.

o The Court may consider additional question(s) of law not formulated earlier, provided reasons for doing so are recorded.

o The High Court may also decide an issue not determined by ITAT, or correct a finding wrongly determined by ITAT due to an incorrect legal interpretation.

• Judgment by the High Court - The High Court shall render its decision on the question(s) of law and deliver a reasoned judgment. It may award such cost as it deems fit.

• Fees for Filing Appeal - The fee for filing an appeal before the High Court shall be governed by the relevant law relating to Court fees for filing of appeals to the High Court.

• Hearing by Division Bench

o Appeals before the High Court are heard by a bench of 2 or more judges.

o If judges differ in opinion, the matter is decided by the majority opinion.

o If there is no majority, the disputed point is referred to one or more additional judges and decided based on the majority of all judges who heard the case.

• Effect of High Court Judgment - The Assessing Officer shall give effect to the High Court’s decision on the basis of a certified copy of the judgment.

Appeal before the Supreme Court

The Supreme Court is the fourth and final appellate authority under the Income Tax Act. An appeal against the order of a High Court lies with the Supreme Court. However, no such appeal can be filed unless the High Court certifies that the case is fit for appeal to the Supreme Court.

• Time Limit for Filing Appeal - The Income-tax Act does not prescribe any specific time limit for filing an appeal to the Supreme Court. However, The provisions of the Code of Civil Procedure, 1908 relating to appeals to the Supreme Court apply mutatis mutandis to appeals under the Income-tax Act filed before the Supreme Court.

• Cost of Appeal - The cost of appeal is at the discretion of the Supreme Court, which may award costs to either party as it deems appropriate.

• Effect of the Supreme Court Judgment - Where the Supreme Court reverses or modifies the judgment of the High Court, the Assessing Officer must give effect to such judgment based on a certified copy of the decision. Such effect must be given in the assessment records in accordance with the final decision rendered by the Supreme Court.

• Matter Remanded to Appellate Tribunal - Where the Supreme Court finds that the case record or statement is inadequate for deciding the question of law, it may remand the matter back to the Appellate Tribunal. The Tribunal is required to add or modify the statement of case as directed by the Supreme Court, enabling a proper adjudication of the legal question.

Monetary Limit for Filing of Appeal by the Department

To reduce litigation and focus on complex or high-tax effect matters, the CBDT has prescribed monetary thresholds for the Department’s filing of appeals before appellate forums.

• Prescribed Monetary Limits - The CBDT has specified the latest monetary thresholds [Circular No. 9/2024, dated 17-09-2024] as follows:

These limits apply to appeals, Special Leave Petitions (SLPs), cross objections, and references and are also applicable retrospectively to pending matters. Where appeals are below the limits, the Department may withdraw or not press them.

The existence of monetary threshold does not mandate the filing of an appeal in every eligible case. The decision must be based on merits and overall objective of reducing unnecessary litigation.

• Exceptions to Monetary Limits - The Department may file appeals irrespective of tax effect in the following cases [Circular No. 5/2024, dated 15-03-2024]:

o Constitutional Issues - Challenge to the constitutional validity of an Act, Rule, Notification, Circular, Instruction or Order.

o TDS/TCS Disputes - Matters involving liability to deduct or collect tax at source, including international taxation.

o DTAA or Foreign Assets/Income:

➢ Applicability of tax treaties;

➢ Cases involving undisclosed foreign assets, income, or bank accounts.

o Deferral of Appeals under Section 158AB - Where the identical issue is pending and a final decision favours Revenue, the deferred appeal may be filed regardless of tax effect.

o Non-Quantifiable Tax Effect - E.g. orders under Section 263, registration of trusts/institutions, etc.

o Prosecution Matters - Where prosecution is initiated and the trial is pending in any court, or a conviction order is passed but not compounded.

o Adverse Judicial Comments - Where courts pass strictures or adverse remarks or impose costs against the Department.

o Organised Tax Evasion - including penny stock transactions and accommodation entries.

o Court-Directed Appeals - Where the court mandates the filing of the appeal.

o Writ Petitions - No monetary limit applies.

o Assessment Based on Law Enforcement Information - Information from CBI, ED, DRI, SFIO, NIA, NCB, DGGI, State Law Enforcement Agencies, or GST Department.

o Matters Related to Other Tax Laws - Cases under Wealth Tax, FBT, Equalisation Levy, or laws other than the Income-tax Act.

o Other Cases Specified by CBDT - Any case or class of cases notified by CBDT in the interest of justice or Revenue.

• Computation of 'Tax Effect'

The Board has prescribed the following mode for computation of the tax effect [Circular No. 3/2018, dated 11-07-2018].

o General Cases

Tax Effect = Tax on assessed income − Tax on reduced income (assessed income – disputed income)

This includes surcharge and cess but excludes interest. For cases with returned loss assessed as income, the tax effect includes notional tax on the disputed additions.

o Cases Under MAT/AMT (Sections 115JB/115JC) - A combined formula is used, considering both general provisions and MAT/AMT provisions.

o Interest Disputes - Tax effect equals the disputed amount of interest.

o TDS/TCS Cases - Tax effect includes cumulative demand, including interest under Section 201(1A), for a given assessment year.

o Penalty Orders - Tax effect equals the amount of penalty deleted or reduced.

o Composite Orders - In case of a common order involving:

➢ Multiple assessment years: Tax effect to be calculated year-wise;

➢ Multiple assessees: Each assessee is to be considered individually.

Appeal to be filed only for year/assessee where the tax effect exceeds the limit.

• Effect of Non-Filing of Appeal

o Non-filing due to low tax effect does not mean acceptance of the decision by the Department.

o PCIT/CIT must record reasons that the appeal is not filed solely due to the low tax effect as per the CBDT Circular.

o The Department may still file an appeal on the same issue in other years or for other assessees if the tax effect exceeds the prescribed threshold.

• Guidance for Appellate Forums - The Board noted that assessees often claim relief by citing the Department’s non-filing of an appeal in similar cases for any other assessment year or any other assessee, implying acceptance of the Tribunal’s or Court’s decision. The CBDT has directed that:

o Departmental representatives must inform Tribunals and Courts that non-filing in prior years was due to monetary limits.

o Such non-filing should not be treated as precedent.

o Tribunals/Courts must consider the orders, instructions and directions issued by the CBDT and reasons for non-filing in each case.

Stay of Demand

Where an assessee receives a notice of demand following an assessment order and fails to pay the demanded amount within 30 days, or such shorter time as prescribed with approval from the Joint Commissioner, interest and penalty become applicable. However, in genuine hardship cases, the assessee may seek a stay of demand from the Assessing Officer, JCIT(A), CIT(A) or the ITAT.

• Stay of Demand by the Assessing Officer - If the assessee believes that the assessment is excessive or high-pitched, he may file a stay application with the AO. The AO may extend the time for payment, allow payment in instalments, or choose not to treat the assessee as a defaulter during the pendency of the appeal with JCIT(A) or CIT(A).

The Assessing Officer (AO) may grant a stay on the recovery of the demand, subject to payment of 20% of the disputed tax demand [Office Memorandum F. No.404/72/93-ITCC (FTS: 284146) dated 31-07-2017]. This threshold may be increased in the following circumstances:

o Taxpayer has a history of tax litigation with similar issues decided against the assessee;

o Same issue already decided in favour of the Department by a jurisdictional High Court or Supreme Court;

o Tax demand is based on credible evidence collected in search or survey operations.

• Stay of Demand by the ITAT - The assessee may apply to the ITAT for stay of demand. ITAT may grant a stay for up to 180 days, subject to the assessee having deposited or furnished security equivalent to 20% of the tax liability (including interest, penalty, fee, etc.).

If the appeal is not disposed of within 180 days and the delay is not attributable to the assessee, the ITAT may extend the stay. However, the total stay period cannot exceed 365 days in aggregate, and the appeal must be disposed of within the extended stay period. If not disposed of within 365 days, the stay shall be vacated automatically, regardless of whether the delay is attributable to the assessee.

o Procedure for Filing Stay Petition

➢ The stay application must be filed in triplicate, accompanied by a fee of Rs. 500.

➢ Separate applications are required for stay of recovery under different enactments.

➢ Every application shall be neatly typed on one side of the paper, and shall be in English and must include:

o Summary of facts relating to the tax demand;

o Result of the appeal filed before CIT(A);

o Break-up of total demand, undisputed and outstanding amounts;

o Date of filing appeal to ITAT and appeal number (if known);

o Past applications for stay and their results;

o Brief reasons for seeking a stay;

o Details of any security offered;

o Clear and concise prayers;

o Affidavit supporting the contents, sworn by the assessee or authorised agent.

➢ Applications not meeting the above requirements may be summarily rejected.

Revision of Orders Prejudicial to Revenue

Section 263 empowers the PCCIT/CCIT/PCIT/CIT to revise any order passed by the Assessing Officer or Transfer Pricing Officer, if such order is erroneous and prejudicial to the interests of the Revenue. The authorities may call for and examine the records (which are available at the time of examination) of any proceedings under the Income-tax Act.

If an assessee is aggrieved by an order and it is not covered under Section 263, they may apply for revision under Section 264.

• Impact of Revision - The authority may pass an order as circumstances justify, including:

o Enhancing or modifying the assessment;

o Cancelling the assessment and directing a fresh assessment;

o Modifying or cancelling the TPO’s order under Section 92CA and directing a fresh order.

The assessee must be given an opportunity to be heard before the order is passed.

• Orders Eligible for Revision - Revision can be undertaken for the following orders:

o Any order passed by the AO;

o Orders passed based on directions of the Joint Commissioner under Section 144A;

o Orders passed by the Joint Commissioner while acting as AO or TPO under delegated powers;

o TPO’s order under Section 92CA;

o Orders where some matters were not adjudicated in the appeal;

• When is an Order Deemed to be Erroneous? - An order is deemed erroneous and prejudicial if, in the opinion of revisionary authorities:

o Required inquiries or verification were not made;

o Relief was allowed without due inquiry;

o The order violates CBDT’s order, direction, or instruction under Section 119;

o It is contrary to decisions prejudicial to the assessee rendered by the jurisdictional High Court or the Supreme Court in the case of the assessee or any other person.

• Time Limit for Passing the Revisionary Order - The revision order must be passed within 2 years from the end of the financial year in which the original order was passed. However, no time limit applies where the revision is done to give effect to a direction of the order of the ITAT, High Court or Supreme Court.

While computing the limitation period, time taken for rehearing under Section 129, and time under stay by the court are excluded.

• Right to Appeal - An assessee aggrieved by a revision order under Section 263, including any rectification order under Section 154 made in respect of such revision, can file an appeal before the Income-tax Appellate Tribunal (ITAT).

Revision in Favour of Assessee

Section 264 empowers the PCCIT/CCIT/PCIT/CIT (“Commissioner”) to revise any order passed by a subordinate authority either Suo motu (on their own motion), or on an application filed by the assessee. The revision may be undertaken only in favour of the assessee and cannot result in any order prejudicial to the assessee.

• Orders Eligible for Revision – The Commissioner may revise only those orders which are passed by a subordinate Assessing Officer.

• Orders not Eligible for Revision - Orders that cannot be revised under Section 264 include:

o Orders appealable before CIT(A), JCIT(A), or ITAT where:

➢ The time limit for filing the appeal has not expired; or

➢ The assessee has not waived his right to appeal.

o Orders that have been made the subject of an appeal to the JCIT(A), CIT(A), or ITAT.

o CBDT, vide Circular No. 367, dated 26-07-1983, clarified that if the appeal is dismissed as withdrawn, incompetent, or time-barred, it shall not be considered the 'subject of an appeal', and revision under Section 264 may still be possible.

• Time Limit for Making Application—The application must be made within 1 year from the date of communication of the order or the date of knowledge, whichever is earlier. Condonation of delay is permitted if sufficient cause is shown. The application filed under Section 264 must be accompanied by a fee of Rs. 500.

• Time Limit for Passing the Revisionary Order - The revision order must be passed within 1 year from the end of the financial year in which the assessee makes the application. If revision is initiated suo motu, the order must be passed within 1 year from the date of the original order. A revision order under this provision is not appealable to the ITAT.

However, no time limit applies where the revision is done to give effect to a direction of the order of the ITAT, High Court or Supreme Court.

While computing the limitation period, time taken for rehearing under Section 129, and time under stay by the court are excluded.

Faceless Revision of Orders

The Central Government is empowered to make a scheme for revision of orders prejudicial to the interest of revenue or other orders to enhance efficiency, transparency, and accountability by:

o Minimising physical interface during revisional proceedings;

o Optimising resource utilisation through scale and specialisation; and

o Team-based revision of orders with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Faceless Effect of Orders

The Central Government is empowered to make a scheme to give effect to the orders passed by the JCIT(A), CIT(A), ITAT, High Court, or Supreme Court or revisionary orders passed under Sections 263 or 264 to enhance efficiency, transparency, and accountability by:

o Minimising physical interface during appellate or revisional proceedings;

o Optimising resource utilisation through scale and specialisation; and

o Team-based giving of effect to orders with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Dispute Resolution Committee (DRC)

The Dispute Resolution Committee (DRC) provides a mechanism for specified taxpayers to resolve disputes arising from assessment orders or TDS/TCS-related orders through a faceless process.

• Constitution and Composition of DRC - Constituted by the Central Government for each region under the jurisdiction of the Principal Chief Commissioner of Income-tax. Each DRC comprises:

o 2 retired IRS officers (who held the rank of CIT or higher for at least 5 years); and

o 1 serving officer, not below the rank of Principal CIT/CIT, nominated by the CBDT.

o Members are appointed for a term of 3 years and can be removed for valid reasons, with due opportunity of hearing.

• Eligible Applicants (Specified Persons) - A person is eligible to approach the DRC if he is not:

o Subject to detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974;

o Prosecuted and convicted under:

➢ Indian Penal Code (IPC), 1860;

➢ Unlawful Activities (Prevention) Act, 1967;

➢ Narcotic Drugs and Psychotropic Substances Act, 1985;

➢ Prohibition of Benami Transactions Act, 1988;

➢ Prevention of Corruption Act, 1988;

➢ Prevention of Money Laundering Act, 2002.

o Prosecuted or convicted under the Income Tax Act or the IPC;

o Convicted in a prosecution by the Income Tax authority;

o Notified under Section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;

o Subject to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, proceedings for the relevant year.

• Orders Eligible for Resolution before DRC - An application can be filed with DRC in respect of the following orders:

o Intimation under Section 143(1) where adjustments are objected to;

o Assessment or reassessment order except an order passed in pursuance of DRP directions;

o A draft assessment order referred to in Section 144C(1);

o Order for TDS/TCS matters, including intimations under Sections 200A(1), 206CB, 206C(6A), and orders under Section 201;

o Rectification order under Section 154 that enhances the assessment or reduces loss.

• Eligibility Criteria for Dispute Resolution - An assessee may approach DRC if:

o Aggregate variation proposed or made in the order does not exceed Rs. 10 lakh;

o Return of income has been filed for the relevant assessment year, and the returned income does not exceed Rs. 50 lakh;

o The order is not based on search (Section 132), requisition (Section 132A), survey (Section 133A), or information received under an agreement referred to in Sections 90/90A;

o For TDS/TCS cases, variation means the amount on which tax was not deducted/collected.

• Procedure and Filing

o Application to be filed in Form 34BC on the Income-tax e-filing portal;

o Application fee: Rs. 1,000;

o Proceedings shall be conducted under the e-Dispute Resolution Scheme, 2022, effective from 05.04.2022.

• Time Limits for Application

o Orders passed on or before 31.08.2024: File by 30.09.2024, if the appeal time has not expired or is pending before the JCIT(A) or CIT(A). If the appeal deadline has lapsed, application to the DRC is not permitted.

o Orders passed after 31.08.2024: Application must be filed within 1 month of receipt of the order.

• Powers of DRC - The DRC may:

o Reduce or waive penalty imposable under the Income Tax Act;

o Grant immunity from prosecution for any offence punishable under the Income Tax Act.

• Conditions for Granting Relief - DRC shall grant relief if the assessee has paid tax on the returned income in full and co-operated during DRC proceedings. However, no immunity is available where prosecution was initiated before receipt of the application. Immunity stands withdrawn if conditions are violated.

• Time Limit for Resolution Order—The DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted. If DRC members differ in opinion, the decision shall be made by the majority.

• Modification of Order by AO - Upon receipt of DRC's order:

o The AO shall pass the assessment, reassessment, or recomputation order where the specified order is a draft under Section 144C(1); or

o In any other case, modify the assessment, reassessment, or recomputation order, as directed.

o AO to act within 1 month from the end of the month of receipt of the DRC order.

• Finality of the DRC Order - No appeal or revision is permitted against the AO’s order passed in conformity with the DRC’s resolution. If the matter originally related to a draft order under Section 144C(1), no reference to DRP is allowed after DRC resolution.

e-Dispute Resolution Scheme, 2022

The e-Dispute Resolution Scheme, 2022, notified via Notification No. 27/2022 dated 05.04.2022, provides a faceless framework for the resolution of specified disputes by the Dispute Resolution Committee (DRC). The DRC offers taxpayers an alternative remedy to avoid prolonged litigation by resolving eligible disputes arising from assessment and TDS/TCS-related orders.

• Preliminary Screening by DRC

o The DRC verifies whether the application meets the eligibility criteria and whether the order in question qualifies under the scheme.

o If the DRC intends to reject the application, it issues a show-cause notice, giving the assessee a chance to respond.

o Based on the response:

➢ DRC may reject the application, or

➢ Admit the application for further processing.

o If rejected, the assessee may appeal before JCIT(A) or CIT(A), and the time taken by the DRC will be excluded from the limitation period for such appeal.

• Post-Admission Process - Once an application is admitted:

o The DRC may call for relevant records from the Income Tax Authority.

o It may also seek a report from the Assessing Officer (AO).

o Requests for further queries or information are sent via registered e-mail, and the assessee must respond electronically.

o The assessee must also submit proof of withdrawal of any parallel appeal filed before JCIT(A), CIT(A), or the Dispute Resolution Panel (DRP), within 30 days of admission. Otherwise, the application is liable to be rejected.

• Types of Decision by DRC - After reviewing all material, DRC can pass any of the following three types of resolution orders:

o Modification with Relief –

➢ Makes changes to the assessment order in favour of the assessee.

➢ Waives penalties and grants immunity from prosecution.

➢ For waiver of penalty or immunity from prosecution or both, the following conditions should be satisfied:

o Full tax on returned income is paid.

o Assessee has cooperated during the proceedings.

No immunity if prosecution was already initiated before the DRC application

o Immunity Without Modification -

➢ Does not alter the assessment order.

➢ Still waives penalty and grants immunity from prosecution if the assessee meets the above conditions.

o No Modification –

➢ Does not modify or grant any immunity.

➢ Merely disposes of the application, which is still not prejudicial to the assessee.

• Timeline and Implementation - DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted.

AO to issue modified order to give effect to the DRC’s decision and serve a demand notice on the assessee. The assessee shall submit proof of payment to the DRC and AO. Upon proof of payment, DRC grants immunity and/or penalty waiver.

• Termination of Proceedings - DRC may terminate proceedings at any stage, after recording the reasons in writing and giving the assessee a chance to be heard, if:

o The assessee fails to cooperate or respond.

o The assessee conceals material facts or provides false evidence.

o The assessee doesn’t pay the demand as per the DRC’s order.

In such cases, the DRC will notify the income-tax authority for appropriate further action under the Income-tax Act.

• Powers of the Dispute Resolution Committee - Any proceedings before the DRC are treated like court proceedings under certain sections of the Indian Penal Code. Income-tax authorities are considered Civil Courts for limited purposes. If there's any difficulty in implementing the DRC’s order, the DRC can fix it on its own or on request, as long as it is not inconsistent with the Income-tax Act.

• No Further Appeal or Reference

o No appeal or revision can be filed against the AO’s order that gives effect to the DRC’s resolution.

o In case of a Section 144C(1) order, the assessee cannot approach the DRP after DRC resolution.

• Privacy and Confidentiality

o Proceedings are not open to the public.

o Only the assessee, authorised representatives, and concerned officers are allowed to attend (even virtually).

• Personal Hearing and Communication Protocol

o Personal Appearance - Not required in faceless proceedings. However, the appellant may request a personal hearing, which shall be:

➢ Allowed by DRC;

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

➢ Assessee’s authorised representative must file the authorisation electronically in advance.

o Mode of Communication—All internal communications between DRC and any income-tax authority shall be exchanged exclusively by electronic mode, and communication between the DRC and the assessee or the authorised representative shall be exchanged electronically to the extent technologically feasible. Electronic records are authenticated by the DRC and the PCIT/CIT through digital signature. The assessee or any other person shall authenticate an electronic record by affixing a digital signature or logging in via a registered account.

All communication is delivered through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The assessee’s response is deemed authenticated once acknowledged via the registered account.

• Language of the DRC

o Language of proceedings: Hindi or English, as per assessee’s choice.

o If documents are in any other language, an English translation is mandatory

• Power to specify format, mode, procedure, and processes - The PDGIT/DGIT, in consultation with the jurisdictional PCCIT/PDGIT, in charge of DRC, with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of NFAC and the Appeal Unit in an automated environment, including:

o Service of orders, or other communications;

o Receipt of information or documents in response;

o Issue of official email-id to the DRC;

o Issuance of acknowledgements for responses received;

o Provision of e-proceedings facilities (login, status tracking, display, downloads);

o Access, verification, and authentication of submissions during the dispute resolution proceedings;

o Centralised receipt, storage, and retrieval of documents; and

o General administration and grievance redressal mechanism in the respective DRC.

Avoiding Repetitive Appeals by the Assessee

To reduce litigation and avoid repetitive appeals on the same question of law, the Income-tax Act provides a mechanism wherein an assessee can voluntarily submit a declaration, confirming that the issue pending in a later year is identical to one already contested in a previous year.

Upon acceptance of this declaration, the Assessing Officer (AO) or Appellate Authority can dispose of the later case without awaiting the final judicial outcome of the earlier one. The assessee forfeits the right to raise the same issue in any further appeal for the later year.

• When Can a Declaration be Filed? - A declaration can be submitted when:

o A question of law is already pending before the High Court or Supreme Court in relation to an earlier assessment year, and

o The same question of law arises in a subsequent assessment year before the Assessing Officer or the Appellate Authority.

• Purpose and Effect of Filing Declaration - By filing Form 8, the assessee agrees:

o That the final decision on the question of law in the earlier case shall also apply to the later case; and

o That no further appeal will be filed on the same question of law in a later year, if the AO or Appellate Authority accepts the claim.

• Procedure for Filing Declaration

o The declaration must be submitted electronically in Form 8;

o It must be verified by a person authorised to verify the return of income under Section 140.

• Report from Assessing Officer

o If the declaration is submitted before an Appellate Authority, it shall call for a report from the Assessing Officer to verify the correctness of the assessee’s claim.

o If the AO requests, an opportunity of hearing may be provided to him before the authority admits or rejects the claim.

• Order Accepting or Rejecting the Declaration - The Assessing Officer or Appellate Authority, as the case may be, shall pass a written order to either:

o Admit the claim, if satisfied that the question of law in the later year is identical to that in the earlier year; or

o Reject the claim if not satisfied.

Such order is final and cannot be challenged by way of appeal, revision, or reference.

• Consequences of Admission of Claim - Where the declaration is admitted:

o The AO or Appellate Authority shall dispose of the later case without waiting for the final decision in the earlier case;

o The assessee is barred from raising the same question of law in any subsequent appeal for that year.

• Application of Final Decision in Earlier Case - Once the decision in the earlier case becomes final:

o The AO or Appellate Authority shall apply that decision to the later case;

o If necessary, the earlier order passed in the later case shall be amended accordingly.

Avoidance of Repetitive Appeals by Revenue

To streamline litigation and avoid filing repetitive appeals on the same question of law, Section 158AB empowers the Revenue to defer the filing of an appeal in a subsequent case where an identical question of law is already pending in another case.

• Scope and Application - The provision applies where the Collegium identifies that:

o The question of law arising in a later case from the order of JCIT(A), CIT(A), or ITAT is identical to one already pending in an earlier case;

o The earlier case, which is in favour of the assessee, is pending either:

➢ Before the Jurisdictional High Court under Section 260A;

➢ Before the Supreme Court under Section 261; or

➢ As a Special Leave Petition (SLP) under Article 136 of the Constitution.

The earlier case may pertain to the same assessee or any other assessee.

• Role and Composition of the Collegium - The Collegium is constituted by the Principal CCIT, CCIT, or DGIT and comprises:

o The jurisdictional PCIT or CIT; and

o 2 other officers of the rank of PCIT/CIT nominated by the authority.

o The senior-most member of the Collegium acts as the Chairperson [Order F. No. 370133/13/2022-TPL, dated 28-09-2022].

o Upon finding the questions to be identical, the Collegium informs the PCIT/CIT not to file an appeal before ITAT or the jurisdictional High Court on the issue in the later case.

• Procedure for Deferral

o On receiving communication from the Collegium, the PCIT/CIT may instruct the Assessing Officer (AO) to file an application in Form No. 8A before the ITAT or High Court.

o This application must be filed within 120 days of the receipt of the order from JCIT(A)/CIT(A)/Tribunal.

o The application states that the appeal on the question of law in the later case will be filed after the earlier case is decided.

• Acceptance by the Assessee is Mandatory - The deferral process is initiated only if the assessee accepts that the question of law in the later case is identical to that in the earlier case. If the assessee does not accept, the Department proceeds to file a regular appeal under the normal provisions.

• Appeal in Case of Contradictory Orders - If the order of the JCIT(A) or CIT(A) or ITAT, as the case may be, in the later case, conflicts with the final decision in the earlier case:

o PCIT/CIT may instruct the AO to file an appeal before the ITAT/Jurisdictional High Court against such conflicting order of the JCIT(A) or CIT(A) or ITAT.

o Time limit:

➢ 60 days for filing an appeal to the ITAT;

➢ 120 days for filing an appeal to the High Court;

from the date of receipt of the order of the jurisdictional High Court/Supreme Court

o The jurisdictional PCIT/CIT must follow the procedure specified by the CBDT.

• CBDT Guidelines on Monetary Thresholds - The usual monetary limits prescribed by CBDT for appeal filing also apply to deferral under Section 158AB [Circular No. 8/2023, dated 31-05-2023].

o When an appeal involves multiple issues, if the total tax effect (aggregated across issues) exceeds the monetary limit, appeals on identical questions can be deferred; appeals on non-identical questions can proceed.

o If the tax effect does not exceed the threshold, the appeal cannot be filed or deferred.

o An appeal deferred under Section 158AB can be contested on its merits irrespective of the tax effect until an identical case, where judicial finality is awaited, is resolved and favours Revenue.

If that case doesn’t favour the Revenue and isn't accepted by the Department, it may be taken to a higher court. Meanwhile, the deferred appeal remains deferred until that identical case is resolved.