TaxTMI 
TaxTMI 
TaxTMI 
Legal Framework and Practical Impact of Appellate Powers in Indian Taxation: : Clause 360 of the Income Tax Bill, 2025 Vs. Section 251 of the Income-tax Act, 1961
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....s to adjudicate appeals against orders passed by assessing officers and to ensure that the principles of natural justice and fair play are observed in the appellate process. The appellate mechanism is a crucial safeguard for taxpayers, providing a structured process for challenging adverse orders and ensuring that the tax administration acts within the bounds of law. Both Clause 360 and Section 251 underscore the importance of appellate oversight, but the 2025 Bill seeks to modernize, clarify, and in some respects, expand upon the existing legal framework. This commentary provides a detailed, clause-by-clause analysis of Clause 360, followed by a comparative analysis with the corresponding provisions in Section 251 of the Income-tax Act, 1....
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....road power allows the authority to modify the assessment in any manner, including increasing the assessed tax, reducing it, or setting aside the assessment entirely if found irregular or illegal. * Appeal against Assessment u/s 271: The Commissioner (Appeals) may set aside the assessment and refer the case back to the Assessing Officer for a fresh assessment. This power is restricted to certain cases and is not available to the Joint Commissioner (Appeals) under Clause 360, indicating a more limited appellate remit for the latter. * Appeal against Assessment where Settlement Commission Proceedings Abate (Section 245HA): The Commissioner (Appeals) may, after considering all material and evidence produced before the Settlement Commission,....
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....passed, even if such matter was not raised before the authority by the appellant. This ensures that the appellate authority can address all relevant issues, including those not specifically pleaded, thereby promoting comprehensive justice and preventing multiplicity of proceedings. Comparative Analysis with Section 251 of the Income-tax Act, 1961 Structural and Substantive Parity Section 251 of the Income-tax Act, 1961, is the existing statutory provision governing the powers of the Commissioner (Appeals) and, post recent amendments, the Joint Commissioner (Appeals). The structure and substance of Section 251 closely mirror those of Clause 360, reflecting legislative continuity and a deliberate effort to maintain the core appellate power....
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.... being heard before any enhancement of assessment or penalty or reduction of refund, upholding the principles of natural justice. * Consideration of All Matters Arising from Proceedings: * Both Clause 360(3) and the Explanation to Section 251 empower the appellate authority to consider and decide any matter arising from the proceedings, even if not specifically raised by the appellant. This is intended to ensure that the appellate process is holistic and not limited to the grounds of appeal. * Distinction Between Commissioner (Appeals) and Joint Commissioner (Appeals): * Section 251, after recent amendments, explicitly delineates the powers of the Joint Commissioner (Appeals) in sub-section (1A), closely paralleling those of the Com....
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....the appellate authority has access to the full factual matrix. * Procedural Uniformity: Both statutes maintain procedural uniformity in requiring a reasonable opportunity of being heard, reflecting a continued commitment to natural justice. Policy Considerations and Historical Background Historically, the appellate structure under the Income-tax Act has evolved to respond to growing complexity and volume in tax disputes. The introduction of the Joint Commissioner (Appeals) is a recent development aimed at expediting dispute resolution and reducing pendency. The 2025 Bill, through Clause 360, seeks to further streamline and modernize the appellate process, ensuring that the powers of appellate authorities remain robust and fit for contem....
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....s": While the power to consider all matters arising from the proceedings is intended to promote comprehensive justice, it may raise questions about the scope of appellate review and the potential for the appellate authority to adjudicate issues not specifically raised or pleaded. Judicial clarification may be required to delineate the boundaries of this power. * Drafting Clarity: As noted, the reference to "assessment made u/s 271" in Clause 360(1)(b) may require correction or clarification to align with the intended legislative purpose. * Division of Powers between Commissioner (Appeals) and Joint Commissioner (Appeals): The rationale for restricting certain powers (e.g., setting aside assessments) to the Commissioner (Appeals) may nee....