Procedure and Limitation for Tax Appeals : Clause 358 of the Income Tax Bill, 2025 Vs. Section 249 of the Income-tax Act, 1961

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....ssioner (Appeals). This commentary undertakes a detailed analysis of Clause 358, elucidates its objectives, practical implications, and interprets its provisions. A comparative analysis with Section 249 is undertaken to highlight continuities, departures, and the legislative intent underpinning the proposed changes. Objective and Purpose The primary objective of both Clause 358 and Section 249 is to prescribe the procedural framework for filing appeals before the first appellate authorities under the Income Tax regime. This includes specifying: * The form and verification requirements for appeals. * The quantum and structure of appeal fees. * The limitation period for presenting appeals and conditions for condonation of delay. * P....

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....raged. The fee is not a revenue source but a procedural filter. 3. Limitation Period for Filing Appeal (Sub-section 3) Clause 358(3) stipulates that an appeal must be presented within thirty days: * From the date of service of the notice of demand (for assessment or penalty-related appeals); or * From the date of service of intimation of the order sought to be appealed against (in any other case). This standardizes the limitation period and aligns with the existing position u/s 249(2). The thirty-day period is considered reasonable for taxpayers to assess the order, consult advisors, and prepare the appeal. 4. Exclusion of Time in Certain Cases (Sub-section 4) Clause 358(4) introduces an exclusion from the limitation period for the....

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....tion from Pre-condition (Sub-section 7) Clause 358(7) allows the appellate authority to exempt the appellant from the requirement of paying advance tax (under sub-section 6(b)), upon application and for reasons to be recorded in writing. This is a relief provision, enabling the authority to consider genuine hardship or inability to pay, thereby balancing revenue interests with taxpayer equity. Comparative Analysis with Section 249 of the Income-tax Act, 1961 1. Form and Verification Both Clause 358(1) and Section 249(1) require appeals to be in the prescribed form and verified in the prescribed manner. There is no material difference, and the continuity ensures administrative ease and familiarity for practitioners. 2. Appeal Fee Struct....

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....rinciples that such discretion must be exercised liberally to advance substantial justice. 6. Pre-condition of Payment of Tax Clause 358(6) and Section 249(4) are virtually identical in requiring payment of tax due on returned income, or advance tax if no return is filed, as a pre-condition for admission of appeal. This is a well-established principle in tax law, designed to prevent abuse of appellate remedies. Both provisions allow for exemption from this requirement (Clause 358(7) and the proviso to Section 249(4)), upon application and for recorded reasons. The language in the 1961 Act refers to "good and sufficient reason," whereas the Bill requires "reasons to be recorded in writing." The practical effect is similar, though the Bill....

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....f time for applications u/s 440(1), but does not specify the nature of such applications. For clarity, cross-referencing the type of application (e.g., immunity, rectification) would aid interpretation and avoid disputes. * Omission of Appeals u/s 248: Section 249(2)(a) specifically covers appeals u/s 248 (relating to tax deduction u/s 195), which is not expressly mentioned in Clause 358. If the new Bill has restructured or relocated these provisions, appropriate cross-references should be provided to avoid confusion. * Fee Structure: The appeal fees have remained static for decades. While this ensures affordability, there may be a case for periodic review to reflect inflation and administrative costs, without compromising access. * D....