TaxTMI 
TaxTMI 
TaxTMI 
Continuity and Change in Income Tax Appellate Procedures : Clause 359 of the Income Tax Bill, 2025 Vs. Section 250 of the Income-tax Act, 1961
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....tice are observed in appellate proceedings, and that both the taxpayer and the tax authorities have a fair opportunity to present their cases. The transition from Section 250 to Clause 359 is emblematic of the broader legislative intent to modernize and streamline tax administration, while maintaining procedural fairness and efficiency. This commentary provides a comprehensive analysis of Clause 359, its objectives, detailed provisions, and practical implications. It then undertakes a comparative analysis with Section 250, highlighting the similarities, differences, and the likely impact of the proposed changes. Objective and Purpose The core objective of Clause 359, as with Section 250, is to codify the procedure to be followed in appel....
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.... of Section 250(1), ensuring continuity of procedural fairness. It also implicitly allows for the use of technological means (e.g., e-notices), as per evolving administrative practices. 2. Right to be Heard (Sub-clause 2) Sub-clause (2) explicitly provides the right of hearing to both the appellant (in person or through an authorised representative) and the Assessing Officer (in person or through a representative). This provision is crucial for upholding the principles of natural justice and adversarial adjudication. Interpretation: The express mention of authorized representatives reflects recognition of the technical nature of tax disputes and the need for professional assistance. 3. Powers of the Appellate Authority (Sub-clause 3) C....
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....s the perennial issue of delays in appellate proceedings. Interpretation: The use of the phrase "where it is possible" makes the timeline directory rather than mandatory, balancing administrative feasibility with the need for prompt disposal. 6. Communication of Order (Sub-clause 6) Upon disposal of the appeal, the appellate authority must communicate the order to both the assessee and the relevant higher tax authorities (Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner). Interpretation: This ensures that all stakeholders are informed and can take necessary follow-up action, such as compliance or further appeal. Comparative Analysis with Section 250 of the Income-tax Act, 1961 1. Structure and ....
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....the decision, and the reasons. The wording is nearly identical, underscoring the importance of reasoned orders. 6. Timelines for Disposal Section 250(6A) and Clause 359(5) both provide for a timeline of one year from the end of the financial year in which the appeal is filed or transferred. However, Section 250(6A) is more detailed, specifying the various circumstances in which the timeline applies (e.g., under which section the appeal is filed or transferred), whereas Clause 359(5) refers generally to section 356 for transfer. Section 250(6A) uses the phrase "where it is possible," making the timeline directory, which is mirrored in Clause 359(5). 7. Schemes for Disposal of Appeals (Faceless Appeals) A significant point of divergence ....
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.... is possible" in prescribing a one-year timeline leaves room for administrative discretion. There is no consequence for non-compliance, which may dilute the effectiveness of the provision. * Admission of Additional Grounds: The subjective test of "wilful or unreasonable" omission could result in inconsistent application and may be a source of litigation. * Absence of Digital Process Provisions: Without explicit authority for digital or scheme-based appeals, the system may revert to traditional, in-person procedures, potentially negating recent gains in efficiency and transparency. * Consolidation of Powers: While streamlining is beneficial, the consolidation of powers in Clause 359 may obscure the distinct procedural steps, potentiall....
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....ould constrain innovation in appellate management. * For the Legal System: * The requirement for reasoned, written orders supports appellate review and judicial scrutiny, reinforcing the rule of law. * The scope for raising additional grounds, subject to discretion, aligns with the broader judicial policy of substantive justice over technicalities. * The legislative silence on digital or faceless appeals in Clause 359 may necessitate future amendments or reliance on subordinate legislation to keep pace with global best practices. Conclusion Clause 359 of the Income Tax Bill, 2025, largely preserves the procedural safeguards and structure of Section 250 of the Income-tax Act, 1961, while offering a more streamlined and modern draft....