Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Section 253 of the Act lays down the provisions for filing an appeal with the Income Tax Appellate Tribunal (ITAT) against an order passed by the Joint Commissioner of Income-tax (Appeals), Commissioner of Income-tax (Appeals) [CIT(Appeals)], the Principal Chief Commissioner of Income-tax, the Chief Commissioner of Income-tax, the Principal Commissioner of Income-tax, or the Commissioner of Income-tax. The ITAT is the second appellate authority in the income-tax appellate hierarchy.

2. The sub-section (1) of the said section details the types of orders passed under various sections of the Act against which an aggrieved assessee may appeal to the Appellate Tribunal. Clause (a) of the said sub-section provides that any assessee aggrieved by any order passed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998 or, as the case may be, a Commissioner (Appeals) under section 154, section 250, section 270A, section 271, section 271A, section 271AAB, section 271AAC, section 271AAD, section 271J or section 272A may appeal to the Appellate Tribunal.

2.1 Section 158BFA of the Act is an interest and penalty provision under Chapter XIV-B of the Act for imposition of penalty on undisclosed income for the block period in a case where search has been initiated under section 132 of the Act. However, as the reference to the same has not been inserted in sub-section (1) of section 253 of the Act, an aggrieved assessee cannot appeal against such penalty orders passed by Commissioner (Appeals). Accordingly, it is proposed to amend clause (a) of subsection (1) of section 253 to include the reference of section 158BFA therein

3. As per the provisions of sub-section (3) of the said section, appeals to the ITAT are to be filed ‘within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the PCIT/CIT, as the case may be’. Appeals to the ITAT are generated mainly by orders passed by the CIT (Appeals), which is now through ITBA. In the new Faceless Appeal dispensation, the CIT (Appeals) upload the orders on a day-to-day basis rather than the erstwhile practice of sending a monthly/fortnightly ‘bunch’ of orders to the jurisdictional PCIT. Such an upload amounts to electronic communication to the PCIT. This, in turn, means that the limitation for filing appeal to the ITAT would fall on a daily basis making it difficult for the PCIT and the Assessing Officer to track the same.

4. In view of the foregoing, it is proposed to amend sub-section (3) of section 253 to provide that the appeal before the ITAT may be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.

5. This amendment will take effect from the 1st day of October, 2024.

[Clause 78]

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Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Time-limit for appeals to ITAT changed to a two-month period measured from month-end after electronic communication of orders. The proposal adds penalty orders on undisclosed income arising from search assessments to the list of orders appealable to the Income Tax Appellate Tribunal, correcting an omission; and it changes limitation computation so appeals may be filed within two months from the end of the month in which the order is communicated to the assessee or to the Principal Commissioner/Commissioner to accommodate electronic faceless appeal communications.