Appeals under tax laws need fair judgement

Akhter Zamil in the first of a two-part write-up on disposal of tax disputes The right to appeal by an aggrieved person has been given in the Income Tax Ordinance 1984 under Chapter XIX against Appellate Commissioner and Commissioner (Appeal) under section 153 to 156 and sections 158 to 159 related to Appellate Tribunal and Reference Application to Honourable High Court under section 160-162. Besides, Revisional Application may also be filed under section 121A to Commissioner of Taxes for revision of the case. Under this Chapter, we find that the Ordinance provides two tiers of appeals. According to section 153(1), any assessee (individual AOP, HUDF etc) not being a company, if aggrieved by the order of the deputy commissioner of taxes (DCT), may appeal to the Commissioner (Appeal) and Appellate Joint Commissioner of Taxes. On the other hand, a company if aggrieved by the order of the DCT or any assessee aggrieved by any order of an Inspecting Joint Commissioner (IJCT) may prefer an appeal to the Commissioner (Appeal) against such order. Disputes may arise due to arbitrary assessment of DCT regarding computation of the amount of loss under section 37, assessment of income and arbitrary determination of tax liabilities under section 83(2), imposition of interest under section 73, imposition of penalty under section 124, 125, 126, 127, 128 or 137, refusal to allow claim of refund and arbitrary determination of the amount of refund under chapter XVIII. Appeal against these types of disputes may be sorted out by filing of appeal by an individual assessee to the Appellate Joint Commissioner of Taxes and also to Commissioner of Taxes (C.T-Appeal) against the order of Inspecting Joint Commissioner of Taxes. The company and individual assessee may also file appeal to C. T. (Appeal). AUTHORITY TO DISPOSE APPEALS UNDER DIFFERENT SECTIONS: Under 153 (1a) sub-section, any assessee being a company aggrieved by any order of DCT or any assessee aggrieved by any order of IJCT in respect of the following may prefer an appeal to the Commissioner (Appeal) against such order. However, under section 10, the Board may on application or its own motion, transfer an appeal from AJCT to CT (appeal) and vice versa. These are (a) any matter specified in clauses (1) of section 153(6), imposition of penalty under Chapter XV or section 137 and (c) assessment under section 10 or 120. Under 153 (1b) sub-section, it is provided that all pending appeal files prior to amendment of Finance Act 1990 will be dealt with by the Appellate Joint Commissioner of Taxes and from first day of July, all appeals should be filed to the Commissioner of Appeal for disposal. The Appellate Joint Commissioner will resolve the appeals up to June 30, as if this section were not amended by Finance Act, 1990. (2) Any partner of a partnership firm may appeal to the Appellate Joint Commissioner against the order of DCT who determined the total income or loss of the firm or apportionment thereof between several partners. (3) No appeal shall lie against any order of assessment under this section unless the admitted tax as per return is paid under section 74 before filing appeal. Section 154 is related to forms of appeal and limitation in accepting appeal for hearing. An assessee is required to follow certain procedures for filing appeal with C.T. (Appeal) or Appellate Joint Commissioner of Taxes in case of individual and company which are as under: (a) Every appeal shall be filed in prescribed form and verified in a manner as required by I. T. Rule. (b) Such appeal shall accompany a fee of Tk. 200/- (two hundred) for each appeal for an individual year. (c) Appeal shall be filed within the prescribed time limit of 45 days from the date of receipt of the notice or orders relating to assessment or penalty as the case may be. (d) In any other case from the date on which the intimation of the order to be appealed is served. (e) The Appellate Joint Commissioner or the Commissioner (Appeals) may also admit an appeal after expiration of the time limit of 45 days if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal with that period under section 158(4) of I.T. Ordinance, 1984. (f) In case of late submission of appeal beyond the time limit of 45 days, an assessee may also file an application with condonation of delay under section 5 of the limitation Act 1908 stating the reasons for delay. The point of late submission of appeal is highly cumbersome for the assessee. The causes may be found in the following paragraphs. Section 155 deals with the procedure to dispose off the appeals only by the Appellate Joint Commissioner (AJCT) or Commissioner of Appeals. It includes adjournment of hearing of appeal from time to time, acceptance of additional grounds from assessee, further enquiry by DCT as per order of the AJCT or Commissioner (Appeal). Section 156 is related to decision by the Appellate Joint Commissioner or Commissioner (Appeal) against the appeal. Disposal of appeal by Joint Commissioner or Commissioner Appeals are sufficiently described. The time limit for communicating of the order to the Appellant is 30 days of the passing of such order, and the power is vested under sub-section 5 of section 156. If the order is not passed by the Appellate Joint Commissioner or Commissioner Appeals within 150 days from the end of the month on which the appeals was filed, it shall be deemed to have been allowed. APPEAL TO THE APPELLATE TRIBUNAL: The second tier of appeal is related to appeal to the Tribunal under section 158 of the Income Tax Ordinance 1984. The limitations, procedures, disposal of Appeal by the Appellate Tribunal are more or less the same except in some cases which are as under: An individual assessee and company may appeal to the Tribunal if he is aggrieved by an order of Appellate Joint Commissioner, Inspecting Joint Commissioner under section 120 to the Commissioner of Appeals as the case may be under section 128 (penalty) 156 (5) 6), (failure to communicate the order and non-delivery of order will be deemed to have been allowed if not delivered within 150 days). Here also appeal shall not lie for hearing if the assessee fails to pay 10 per cent of the demanded tax after adjustment of tax paid under section 74 or on total demanded tax under section 74 (4) of the Income tax Ordinance 1984. Every appeal under section 158(1) or sub-section (2A) shall be filed within 60 days of the receipt of the order from the Commissioner of Appeal, Appellate Joint Commissioner/Inspecting Joint Commissioner of Taxes against section 120. In some cases, the Tribunal may admit an Appeal submitted beyond the period of 60 days provided there is sufficient cause for not presenting the appeal within that period accompanied by an application for condonation of delay under section 5 of the limitation Act 1908 with a fee of one thousand taka. Under sub-section 4 of section 159, the Appellate Tribunal, after giving an opportunity of being heard to the assessee, pass order to the assessee and relevant Commissioner within 30 days from the date of such order. The orders passed by the Appellate Tribunal on appeal shall be final. Under sub-section 6 of section 159, if the Appellate Tribunal fails to make the order within a period of six months from the end of month in which the appeal is filed, it shall be deemed to have been allowed by the Appellate Tribunal. This is precisely the same procedure followed by the above two tires under which the action of the AJCT, Commissioner (Appeal) and Tribunal authorities are regulated. We may now discuss as to how the appeal applications are admitted by the Commissioner (Appeal) and Appellate Tribunal for hearing. The question of disputes are found common both at the stages of Commissioner (Appeal) and Appellate Tribunal. Admission of appeal application by the Appellate authorities for hearing of the case takes into consideration the following: (a) The date of Receipt of the Assessment Order and filing of appeal which in case of filing appeal beyond the time limit of 45 days and 60 days before the Commissioner (Appeal) and Appellate Tribunal respectively are the fixed time for submission of appeal. (b) The next issue is whether the assessee has paid the admitted tax under section 74. In any case, if the amount of tax falls short, the appeal authorities do not accept the application for hearing, and the right of appeal is denied against the assessee. There should be a provision to pay shortfall amount prior to the hearing by Commissioner (Appeal) and Appellate Tribunal for the cause of natural justice. (c) No tax is payable before filing of Appeal before C. T. (Appeal) but 10 per cent payment should be made before filling of appeal to Appellate Tribunal. This appears to be a bit harsh. Sometime the assessee finds it difficult to pay the requisite tax against huge arbitrary demand of tax created by the DCT. This is questionable whether demand of tax is rightly claimed or not by the DCT for payment of tax before appeal. (d) There is no scope to seek waiver against demand from higher tax authority and ultimately the assessee is denied the right to appeal. This is not fair and rational. Appellate Authority may be given the power to consider appeal with less payment of tax over demanded tax for the cause of justice. In case of Reference Application, such provision is there and it may also be considered in case of appeal to Commissioner (Appeal). The writer, an FCA, is proprietor of Akhter Zamil & Co. [email protected]