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Table of Contents
2. Right to Appeal not Inherent or Implied
3. Right to Appeal to be Liberally Construed
4. Appellate Process vis-à-vis Writ
Check out Taxmann’s Your Appeal Before Commissioner (Appeals) which provides a comprehensive and annotated guide to the appellate process before the Commissioner (Appeals) in a thoroughly researched & logically sequenced format. It includes discussions on the relevant legal provisions duly supplemented by the judicial view on the various topics/issues.
1. Meaning of Appeal
The right to “appeal” finds a place in almost all statutes whether Civil, Criminal or Economic (tax-adjudication related) and is an integral part of the judicial process. The Merriam – Webster Dictionary defines “appeal” as
“a legal proceeding by which a case is brought before a higher Court for review of the decision of the lower Court”.
The Wharton’s Law Lexicon defines it as
“the removal of a cause from an inferior to a superior Court for the purpose of testing the soundness of the decision of the inferior Court”.
An appeal is a complaint or grievance to a superior court for reconsideration or review of a decision, verdict or sentence of a lower court. It can also be defined as a complaint made to a higher court with the intent that the order levying a sentence passed by the lower court is illegal or erroneous.The act of “appealing” is reflective of approaching a higher authority/Court of Law for corrective action against an act or decision which is perceived to be unjust, unfair, faulty or even illegal or to seek correction of an error.
While the right to appeal is neither inherent or implied but has to be specifically conferred by statute, or by the rules enforced thereunder almost all legislations whether civil, criminal, economic etc. incorporate a well-defined, comprehensive and hierarchical appellate process. In the context of the Income-tax Act, 1961, the right to “appeal” provides a formal opportunity for an aggrieved assessee to travel up the judicial hierarchy to agitate and dispute the decision of a lower authority, in case he feels aggrieved by the same.
2. Right to Appeal not Inherent or Implied
The right of appeal is available only to the extent specified by the relevant statute. It is a creation of and derived from the underlying statute which also determines the nature, extent, scope and the limitations, if any, imposed thereon by the Legislature enacting the statute or the rules promulgated by the Executive to operationalize the law in exercise of the power delegated to it by the statute. The right to appeal can be exercised in respect of an item/issue which is otherwise appealable, irrespective of whether it is the subject matter of an independent order or forms part of a consolidated order. The absence of a necessary redressal mechanism by way of appeal may, in appropriate circumstances, be a reason to hold a piece of legislation as being oppressive, however, right of appeal cannot be read into a legislation.
Right to appeal is neither inherent nor automatic but derived from a specific enactment under the underlying statute and cannot be implied. Except where “right to appeal” is specifically granted, appeal cannot be filed. [Mahant Harihar Gir v. CIT  9 ITR 246 (Patna)].
The absence of a provision for appeal in taxing statute may be a vitiating factor leading to a constitutional challenge to the validity of the Act itself. [Kunnathat Thathunni Moopil Nair v State of Kerala (AIR 1961 SC 552)]
The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. The Legislature while granting the right to appeal can impose conditions for the exercise of such right. An appeal is not inherent for any person but can only be filed and is maintainable under an authority of law and under the conditions imposed under that law. [Gujarat Agro Industries Co Ltd. v Municipal Corporation of City of Ahmedabad (1999) 45 CC 468 (SC)]
The appeal is a creation of statute and in case a person want to avail of the right to appeal he has to accept the conditions imposed by the Statute. The Legislature while granting the right to appeal can impose conditions for the exercise of such right. Neither there is a constitutional nor legal impediment for the imposition of such conditions. [State of Haryana v Maruti Udyog Ltd. (2001) 124 STC 285(SC)];
The right of appeal is not an inherent right or common law right, but it is a statutory right. If the law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged [National Insurance Co. Ltd. v. Nicolletta Rohtagi (2002) 7 SCC 456]
Section 246 of the Act specifically enumerates in detail the orders which are appealable to the first appellate authority. The said authority, therefore, cannot have jurisdiction to entertain appeals which fall outside the specific grounds and orders mentioned in the Section. The right to appeal cannot come under the category of fundamental rights. [CIT v. Ram Lal Mansukh Rai  77 ITR 964 (Punj. & Har.)]
3. Right to Appeal to be Liberally Construed
The Income-tax Act lays down specific restrictions and limitations on the scope and manner of exercise of the right of filing appeal. However, considering the importance of the right to appeal in the entire tax adjudication process and for an Assessee, since it bestows upon him an opportunity of getting a wrong corrected and to mitigate the possibility of financial loss, the right to appeal should be viewed from a broad-based liberal perspective and not by applying a strict, constricted and myopic view. The decision whether the right to appeal is available in a particular circumstance should be guided by the form and not substance of the order appealed against.
It is true that there is no inherent right of appeal to any assessee and that it has to be spelt from the words of the statute, if any, providing for an appeal. But it is an equally well settled proposition of law that, if there is a provision conferring a right of appeal, it should be read in a “reasonable, practical and liberal manner.” Right of appeal includes right to challenge the very jurisdiction of the authority passing the order appealed against. Assessee can even challenge the jurisdiction of the Assessing Officer to make the order. Such a right cannot be denied on the ground that appeal lies only against order of the Assessing Officer and if Assessing Officer did not have jurisdiction to make the order, appeal too would not lie. [CIT v. Ashoka Engineering Co.  63 Taxman 510/194 ITR 645 (SC)]
Even if the Income-tax Officer committed an error in passing the order imposing penalty because the conditions necessary for invoking that jurisdiction were absent, an appeal against his order on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner is under the Act constituted an appellate authority against certain orders of the Income-tax Officer, and exercise of that jurisdiction is not made conditional upon the competence of the Income-tax Officer to pass the orders made appealable. The Appellate Assistant Commissioner had as a court of appeal jurisdiction to determine the soundness of the conclusions of the Income-tax Officer both on questions of fact and law and even as to his jurisdiction to pass the order appealed from. If an order is appealable, an appeal would lie even though the Assessing Officer making the order had no jurisdiction to make the order [CIT v. Bhikaji Dadabhai & Co.  42 ITR 123 (SC)].
The items specified as appealable have to be liberally construed and in case of ambiguity, benefit of doubt has to go to the assessee. [R.B. Jodha Mal Kuthiala v. CIT  66 ITR 319 (Delhi)].
The right of appeal is a valuable right and unless expressly taken away or abandoned, it could not be held that the assessee had abandoned or lost such right by implication [Indian Aluminium Co Ltd v. CIT  27 Taxman 578/162 ITR 788 (Cal.)].
The right to appeal is not merely a matter of procedure. It is a substantive right. The statutes pertaining to right of appeal have to be given a liberal construction since they are remedial in nature. A right of appeal will not be restricted or denied unless such a construction is unavoidable [CIT v. Bengal Cardboard Industries & Printers (P.) Ltd  49 Taxman 60/ 176 ITR 193 (Cal.)].
Courts recognise the rule that an appeal of a cause is a valuable right to a litigant and, in the absence of unmistakable indications to the contrary, statutes regulating appeals are given liberal construction. It is also recognised that an appeal is a remedy that is favoured in law and an important right, which should never be denied, unless its forfeiture or abandonment is conclusively shown, and in case of doubt, an appeal should always be allowed rather than denied [Gopi Lal v. CIT  65 ITR 477 (Punj. & Har.)]
The right must be determined according to the effect the order has on the aggrieved taxpayer and not merely upon the form or language in which it has been concluded by the Officer concerned [Jaikishan Gopikishan & Sons v. CIT  84 ITR 645 (MP)].
4. Appellate Process vis-à-vis Writ
A “Writ” is a legal order given by a Court of law directing the behaviour of a lower court, agency, specific official or another branch of the Government to do or not to do something. A writ petition, in its essence is a petition to a higher court seeking the exercise of its extraordinary jurisdiction to intervene in a review of lower court/authority/agency’s order/proposed action. The Constitution of India grants powers to the Supreme Court and the jurisdictional High Court to issue “prerogative writs” reflecting their discretionary, prerogative and extraordinary powers.
Under Article 32 of the Constitution of India, an aggrieved person can move the Supreme Court for a legal remedy in case of an alleged infringement of the Fundamental Right(s) for an appropriate writ, direction or order. Similarly Article 226 empowers High Courts to issue to any person or authority, including the Government (in appropriate cases) directions, orders or writs in the nature of habeas corpus, mandamus, prohibition, quo warranto, certiorari or any of them. The power of High Courts to issue writs under Article 226 of the constitution is much broader and can be issued for the enforcement of fundamental rights as well as for any other purpose. A writ is issued only in exercise of the supervisory jurisdiction of the High Courts under Article 226 and not under their appellate jurisdiction.
The specific availability of a right to appeal against a particular grievance normally precludes the possibility of approaching the High Court directly by seeking recourse to an alternate remedy of filing a writ petition under Article 226 of the Constitution. Simply put, an appeal is reflective of challenging the decision of a lower authority before the higher authorities by following the process as laid down in the governing statute. On the other hand, the resort to judicial review exercised by filing a Writ would involve a challenge to the decision making process.
Normally the question of constitutional validity or vires of a provision of any of the Direct Tax Acts, or of a rule made or of a notification or circular issued thereunder which cannot be entertained and decided by an authority appointed under the Acts, and for which no specific appellate procedure is laid down in the Act can be raised by way of a writ petition to the High Court.
The principles of law which emerge are:
(i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well;
(ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where –
(a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution;
(b) there has been a violation of the principles of natural justice;
(c) the order or proceedings are wholly without jurisdiction; or
(d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law;
(v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and
(vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with. Radha Krishna Industries v. State of Himachal Pradesh [(2021) SSC Online SC 334],
The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for “any other purpose”.
Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of constitutional law as they still hold the field. Whirlpool Corporation v. Registrar of Trademarks, Mumbai [(1998) 8 SCC 1]
So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1]. The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107]
Assessee challenged impugned assessment order on ground that impugned order proceeded on basis that there was a violation of ‘Foreign Exchange Management Act, 1999’ without even issuing notice to counter party, since arguments of assessee that norms of FEMA had not been set out with specificity or required approval details had not been set out with specificity in impugned order were all clearly arguments in nature of an appeal qua impugned order i.e., not arguments compelling interference in writ jurisdiction, assessee was to be relegated to file statutory appeal under section 246A. [Greenstar Fertilizers Ltd. v. Additional/Joint/Deputy/Assistant Commissioner of Income Tax/ Income Tax Officer, National Faceless Assessment Centre, Delhi (2022) 134 taxmann.com 115 (Madras)]
Where assessee, a vegetable vendor, collected cash from wholesale market and deposited same in bank account and Assessing Officer passed assessment order treating said deposit as unexplained money of assessee, since alternate statutory remedy by way of appeal under section 246A was available to assessee, writ petition filed against assessment order was not maintainable. [Arunachalam Nadar Muthuraj v. Income-tax Officer (2022) 135 taxmann.com 162 (Madras)]
Where assessee filed writ petition against order of assessment passed under section 144 read with section 144B contending that opportunity of hearing was inadequate which affected his right to make a proper response, certainly same could be gone into by Commissioner (Appeals) and consequently assessee was to be relegated to forum of appeal before Commissioner (Appeals) under section 246A. [Sri Chandra Sekar Reddy Bokkalapall v. National Faceless Assessment Centre (2022) 142 taxmann.com 109 (Telangana)]
Where assessee filed writ petition against reopening notice issued upon it on ground that no sanction under section 151 was accorded by competent authority and further on making enquries online it became evident that computer generated document identification number (DIN) mentioned in sanction letter was also not correct, since assessee had an efficacious alternate statutory remedy available, it should avail it and, thus, writ petition was to be dismissed [Southern Ispat and Energy Ltd. v. Union of India (2022) 143 taxmann.com 270 (Chhattisgarh)]
Where assessee-firm, engaged in business of quarrying and marketing granite, filed a writ petition against impugned assessment order wherein Assessing Officer had made addition of difference between selling price and raising rate of granite to be paid for production of minerals with taxes, since statutory remedy was available under section 246A, said writ petition was to be dismissed. [Tvl. Sree Karumariamman Granites v. Assistant Commissioner of Income-tax (2022) 144 Taxmann.com 118 (Madras)]
Writ petitions cannot be entertained when alternative remedy of filing appeal before Commissioner (Appeals) is available. However, where the statutory authority has not acted in accordance with the provisions of the enactment in question or in defiance of the fundamental principles of natural justice or has resorted to invoke the provisions which are repealed or when an order has been passed in total violation of the principles of natural justice, a writ may be allowed. [CIT v. Chhabil Dass Agarwal  36 taxmann.com 36 (SC)]
Where only show-cause notices under section 153C were issued for reassessment, assessee should have filed appropriate reply to said notices, instead of filing writ petition, followed by a special leave petition [CIT Gujarat v. Vijaybhai N. Chandrani  35 taxmann.com 580]
Where assessee filed a writ petition against order of Assessing Officer rejecting its prayer for refund of excess amount paid as tax, in view of fact that an alternative remedy of filing revision application under section 264 was available, instant petition was to be dismissed being non-maintainable. [Aditya Marine Ltd. v. Dy. CIT (International Taxation)  112 taxmann.com 216 (Bom.)]
Writ against section 264 order need not be entertained in view of alternative remedy of filing appeal. [S. Thilakam v. CIT  35 taxmann.com 468 (Mad.)]
When an aggrieved person has a statutory remedy available to get rid of order, then said remedy must be availed of at first instance, before filing a writ under Articles 226 and 227 of the Constitution. Writ petition filed against order of Commissioner (Appeals) under section 251 is not entertainable as aggrieved has an alternative remedy of appeal under section 253 – [Omprakash Bagdia (HUF) v. CIT  139 Taxman 275 (MP)]
Writ cannot be filed in the High Court if remedy is available under the Income-tax Act where assessee had statutory alternative remedies available in form of filing an appeal before the Commissioner and further appeal to Tribunal, if required, invoking jurisdiction of High Court under article 226, was to be disallowed. [Jagran Prakashan Ltd. v. Dy. CIT  47 taxmann.com 82/225 Taxman 39 (Mag.) (All)]
Assessment order was passed against assessee bank on account of non-deduction of TDS under section 194A on interest paid to depositors. Assessee filed writ against it. It was held that since Act specifically provides an appeal remedy under section 246A, same had to be exhausted first by petitioner before approaching Court under Article 226 of Constitution of India. [Coimbatore District Central Co-Operative Bank Ltd. v. ITO  46 taxmann.com 233 (Mad.)]
Assessee filed writ petition against assessment order passed by Assessing Officer. Since assessee had an efficacious alternative remedy of filing appeal before Commissioner (Appeals) under section 246 against order of Assessing Officer, he was not entitled to invoke writ jurisdiction of High Court under article 226. [Dr. K. Nedunchezhian v. Dy. CIT  148 Taxman 617 (Mad.)]
Assessee had filed writ petition praying that satisfaction note recorded by Assistant Commissioner might be quashed with all consequential proceedings taken in pursuance thereof under section 153C, read with section 153A. Subsequently, it was noted that before writ petition was filed, an assessment order had been passed against assessee and that it had filed an appeal before Commissioner (Appeals) challenging said order wherein one of ground was same as the prayer made in writ petition. Since prayer-in-question was not argued, instant petition was to be rejected with liberty to assessee to press all contentions in connection with aforesaid prayer before Commissioner (Appeals). [Saraya Industries Ltd. v. Union of India  176 Taxman 47 (Delhi)]
Assessee can cross examine concerned party in appeal, separate writ directing appellate authority to provide such opportunity is not required. [Naresh Prasad Agarwal v. CIT  57 taxmann.com 41 (Mad.)]
Where Assessee-company filed a writ-petition against re-opening notice issued against it on ground that Assessee had failed to deduct TDS on certain payment and further reassessment order was passed making disallowance under section 40(a)(IA), since Assessee had not deducted TDS as detailed in Form 3CD and said fact was not taken into consideration by Assessing Officer while passing original assessment order under section 143(3), consideration of same could not to be considered as change of opinion and, thus, there was tangible material to believe that there was an escapement of income an alternative statutory remedy was available, impugned writ petition could not be entertained. [Bayer Vapi (P.) Ltd. v. Asstt. CIT  131 taxmann.com 59 (Guj.)]
Where petitioner filed appeal against assessment order before Appellate authority and thereafter filed writ petition challenging said assessment order and demand notice issued under section 156, writ petition challenging same order which was pending consideration before Appellate Authority was not maintainable and was liable to be dismissed. [Agrawal Global Infratech (P) Ltd v Union of India (2021) 133 taxmann.com 137 (Chhattisgarh)]
Where Commissioner (Appeals) repeatedly granted adjournments on all applications moved by assessee and thereafter, when assessee remained unrepresented passed impugned order on basis of material available on record, in such case assessee could not level baseless allegations against Commissioner (Appeals) alleging abuse of power in grounds of appeal before Tribunal. [Abdul Wahab v Income-tax Officer, Ward -1(5) Ghaziabad [(2022) 134 taxmnn.com 152 (Delhi – Trib)]
Where an appeal filed by assessee against an assessment order was pending before Appellate Commissioner, impugned writ petition filed against said assessment order could not be adjudicated. [Coastal Engergy (P) Ltd v Deputy Commissioner of Income-tax (2022) 137 taxmann.com 344 (Madras)]
Where appeal filed by assessee-cooperative society against an assessment order denying it deduction under section 80P was already pending before appellate authority, simultaneous writ petition filed by assessee against same assessment order could not be adjudicated. [Income-tax Officer v K 97 Kinathukadavu Primary Agriculture Cooperative Credit Society Ltd (2022) 139 taxmann.com 234 (Madras)]
The conclusion arising out of the above discussion is that the appellate route is available only in respect of orders specially listed under the applicable provisions. However, while judging whether a particular order is covered under the relevant head, the substance rather that the form of the order is relevant e.g. an order wrongly stated to be passed under a particular section (which is not appealable) but which should have been legally passed in another section would be appealable since the subject matter of the order passed would be the determining factor for rendering whether it is appealable or not. The language of a provision conferring the right of appeal should be construed liberally and in case of an ambiguity, the relevant provisions must be construed in favour of the existence of the right.
Similarly where a specific remedy by way of pursuing a matter in appeal is available, filing a writ under Article 226 of the Constitution would not be the proper and acceptable course of action. However, the remedy of filing a writ petition can be directly pursued when the issue involved relates to the violation of fundamental rights or where the principles of natural justice have been grossly violated or where the challenge is to the vires of an enactment or a rule framed or a circular or a notification issued.
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