Income Tax Litigation

In India, the Income Tax Act (The Act) prescribes the procedures to be followed by a taxpayer and the methods for tax collection and recovery for the Income Tax Department.

The taxpayer is required to assess the tax on his income himself and file the Income Tax Return (ITR). The ITR is processed at the Central Processing Centre (CPC) and the taxpayers are given an opportunity to correct any mistakes.

The jurisdictional Assessing Officers (AO) may accept/ reject the response by passing an adverse “assessment order’, thus initiating litigation. If the taxpayer is dissatisfied with the assessment order, he can prefer an appeal before the Commissioner of Income Tax (Appeals) (“CIT (A)”), who can, enhance, modify or reject the AO’s order, after giving the assessee a reasonable opportunity of being heard.

An appeal against the order of CIT (A) lies before the Income Tax Appellate Tribunal (ITAT), which is the final fact finding body. After the ITAT, the aggrieved taxpayer or the Income Tax Authority (ITA) have the option of filing an appeal before the High Court or the Supreme Court but only in matters involving a ‘substantial question of law’.