Explainer - Income Tax Appellate Tribunal (ITAT)

• Chief Justice of India B.R. Gavai said the disputes pertaining to a whopping Rs 6.85 lakh crore are still pending considerations before the Income Tax Appellate Tribunal (ITAT).

• The CJI was speaking at a symposium titled ‘Income Tax Appellate Tribunal (ITAT) - Role, Challenges and Way Forward’ and a felicitation ceremony held in New Delhi on October 8.

• The CJI, however, praised ITAT for bringing down the pendency of cases from 85,000 to 24,000 in the last five years.

Income Tax Appellate Tribunal

• The Income Tax Appellate Tribunal (ITAT) was established on January 25, 1941.

• Section 252 of the Income-Tax Act, 1961 provides that the central government shall constitute an Appellate Tribunal consisting of as many judicial members and accountant members as it thinks fit, to exercise the powers and discharge the functions conferred on the Appellate Tribunal by the said Act.

• ITAT is a quasi-judicial institution and specialises in dealing with appeals under the Direct Taxes Acts. 

• ITAT is referred to as “mother tribunal” being the oldest tribunal in the country.

• At present, ITAT has 63 Benches at 30 different stations covering almost all cities having a seat of the High Court.

Constitution of ITAT

• The present sanctioned strength of members is 126 including one president and 10 zonal vice-presidents. 

• To be qualified for appointment as president of the ITAT, a person must be either a sitting or retired High Court judge who has completed at least seven years of service as a judge in a High Court.

A person shall not be qualified for appointment as judicial member unless:

i) he/she has, for a combined period of 10 years, been a District Judge and Additional District Judge; or

ii) He/she has been a member of the Indian Legal Service with 10 years of experience in litigation and has held the post of Additional Secretary or any equivalent or higher post for two years; or

iii) He has been an advocate for 10 years with substantial experience in litigation under income tax laws in ITAT, High Court, or Supreme Court.

A person shall not be qualified for appointment as accountant member, unless:

i) He/she has for 25 years been in the practice of accountancy

a) As a chartered accountant under the Chartered Accountants Act, 1949; or

b) As a registered accountant under any law formerly in force; or partly as such registered accountant and partly as a chartered accountant; or

(ii) He/she has been a member of the Indian Revenue Service (Income Tax Service Group ‘A’) and has held the post of Principal Commissioner of Income Tax or any equivalent or higher post and has performed judicial, quasi-judicial or adjudicating functions for three years.

Functioning of ITAT

• The powers and functions of the ITAT are exercised and discharged by the Benches constituted by the president of the tribunal from amongst the members thereof. 

• Generally, a Bench consists of one judicial member and one accountant member. 

• However, in appropriate cases, at the discretion of the president, a Bench may consist of more than two members. 

• The ITAT functions as the final fact-finding authority not only in matters concerning income tax but also in all matters of taxation such as wealth tax, gift tax, etc.

• The matters that the ITAT disposes, are of vital importance involving revenue to the tune of several crores. 

• The ITAT is entrusted with the responsible task of deciding intricate questions of law and fact. 

• The presence of both judicial and accountant members ensures that questions of law and facts, which arise for consideration are properly enquired into and that the accountancy point, as well as the legal angle, are weighed properly.

• Income Tax appeals against the orders passed by ITAT can be filed by either of the parties before the respective High Courts of judicature. 

• However, generally, an appeal before a High Court is admitted only if it involves a substantial question of law. 

• The Supreme Court, which lays down the final interpretation of law on an issue, can be approached by either of the parties against the order of a High Court, albeit again, only on a question of law.