The income tax appellate structure in India has traditionally been centered around the Commissioner of Income Tax (Appeals) as the first authority for resolving disputes between taxpayers and the department. Over the years, this role has become increasingly burdened with a heavy volume of pending appeals. As assessments and compliance have expanded, so too has the load on the Commissioner (Appeals), resulting in longer resolution timelines.
Recognizing the need for systemic change, the Finance Bill, 2023 proposed an additional appellate tier in the form of the Joint Commissioner of Income Tax (Appeals) or Additional Commissioner of Income Tax (Appeals). This reform aims to introduce a more efficient, targeted resolution system for cases involving smaller disputed demands.
Historical Context – The Role of the Deputy Commissioner (Appeals)
The concept of a mid-level appellate authority is not entirely new. Before the year 2000, the Deputy Commissioner (Appeals) existed under Section 246 of the Income-tax Act to handle specific categories of appeals. This position acted as a relief valve for the Commissioner (Appeals) by managing less complex matters.
However, in 2000, the post was discontinued as part of structural changes. Over the next two decades, appeals of all sizes and complexities flowed directly to the Commissioner (Appeals), contributing to a gradual buildup of backlog. The introduction of the JCIT (Appeals) essentially revives and modernizes that earlier approach, now adapted to the digital environment.
Legislative Framework – Finance Bill 2023 Provisions
The Finance Bill, 2023 proposed a formal substitution of Section 246 to accommodate the new authority. Under this new arrangement, the JCIT (Appeals) is vested with powers and responsibilities equivalent to the Commissioner (Appeals) for disposing of appeals within its scope.
This ensures that appeal disposal procedures, legal safeguards, and accountability mechanisms remain consistent across both levels. The legislative design targets a specific class of cases, mainly smaller disputed amounts, so that larger and more complex matters continue to be handled by the Commissioner (Appeals).
Section 246 – Categories of Appealable Orders
The heart of the change lies in the revised Section 246, which specifies the types of orders against which an appeal can be filed before the JCIT (Appeals). These provisions apply where the orders are passed by an Assessing Officer below the rank of Joint Commissioner. They include:
- Orders under Section 143(1), Section 143(3), or Section 144 where the taxpayer disputes the income assessed, the tax determined, the computation of loss, or the status under which they have been assessed.
- Orders under Section 147 relating to assessment, reassessment, or recomputation in cases of income escaping assessment.
- Orders under Section 200A dealing with the processing of TDS statements.
- Orders under Section 201 regarding failure to deduct or pay TDS.
- Orders under Section 206C(6A) relating to failure to collect or deposit TCS.
- Orders under Section 206CB for the processing of TCS statements.
- Penalty orders under Chapter XXI.
- Amendments to the above orders under Sections 154 and 155.
These categories are designed to capture procedural and substantive matters that are significant enough to merit an appeal but not so complex as to require exclusive attention from the Commissioner (Appeals).
The Proviso – Jurisdictional Restrictions
The revised Section 246 includes an important proviso: no appeal will lie with the JCIT (Appeals) if the order in question was passed by, or made with the prior approval of, an authority above the rank of Deputy Commissioner. This limitation preserves the authority of higher-ranking officers and ensures that cases involving higher departmental scrutiny are not assigned to the JCIT (Appeals).
Transfer of Appeals – Section 246(2) to 246(4)
The law contemplates flexibility in managing appeal workloads. Under Section 246(2), the Central Board of Direct Taxes (CBDT) or an authorised authority may transfer appeals pending before the Commissioner (Appeals) to the JCIT (Appeals). Similarly, Section 246(3) allows for the reverse transfer of pending appeals from the JCIT (Appeals) to the Commissioner (Appeals).
Both transfer directions require that the appellant be given a reasonable opportunity to be reheard, as stipulated under Section 246(4). This ensures procedural fairness even when administrative efficiency is the driving factor behind the transfer.
Scheme-Making Powers and Exclusions
Section 246(5) empowers the government to frame a scheme to streamline the disposal of appeals. The scheme must aim for speed, transparency, and minimal direct interaction between the appellant and the appellate authority.
This provision lays the groundwork for the E-Appeals Scheme, which replaces in-person hearings with digital processes. Furthermore, Section 246(6) gives the CBDT the authority to exclude certain cases or classes of cases from the jurisdiction of the JCIT (Appeals), providing flexibility to respond to evolving administrative needs.
The Role of the JCIT (Appeals) in the Appellate Process
The JCIT (Appeals) functions as a quasi-judicial authority, adjudicating disputes between the taxpayer and the department. Although the scope of their jurisdiction is narrower compared to the Commissioner (Appeals), the procedural requirements are equivalent.
They are required to issue notices, invite responses, allow the submission of evidence, and pass reasoned, written orders. This maintains uniformity in appellate standards while expanding capacity.
Anticipated Impact on Pending Appeals
The introduction of JCIT (Appeals) is expected to significantly reduce the backlog faced by the Commissioner (Appeals). By diverting smaller, more straightforward matters to the JCIT (Appeals), the system allows senior appellate authorities to focus on complex and high-stakes disputes. This tiered approach mirrors judicial systems where lower courts handle routine matters, allowing higher courts to concentrate on precedent-setting and intricate cases.
Comparative Analysis – Commissioner (Appeals) vs Joint Commissioner (Appeals)
While the Commissioner (Appeals) remains the primary appellate authority, the JCIT (Appeals) serves as a complementary forum. The main differences lie in jurisdictional scope and the category of cases handled.
Appeals involving large disputed amounts, complex factual issues, or orders passed by higher authorities will continue to be heard by the Commissioner (Appeals). By contrast, cases allocated to the JCIT (Appeals) are those that can be resolved more efficiently without compromising the quality of adjudication. This structural difference allows for better resource allocation within the appellate hierarchy.
Alignment with Digital Reforms in Adjudication
The revival of a mid-level appellate authority coincides with the broader push toward digitalisation in tax administration. The E-Appeals Scheme integrates this new authority into an entirely electronic process.
This means that the JCIT (Appeals) will operate within a system that reduces physical paperwork, enables real-time communication, and promotes transparency. In practice, the scheme removes geographical constraints, allowing appeals to be allocated across jurisdictions through automated systems.
Challenges in Implementation
While the benefits of introducing the JCIT (Appeals) are clear, there are operational challenges. Adequate staffing, training, and technological infrastructure will be essential to ensure that the new authority meets its objectives.
Additionally, careful case allocation will be needed to prevent overlap or jurisdictional disputes between the Commissioner (Appeals) and the JCIT (Appeals). As this reform unfolds, monitoring its impact on appeal disposal rates and taxpayer satisfaction will be critical.
The Need for a Digital Appeal Framework
The E-Appeals Scheme, 2023 represents a shift from traditional in-person hearings to a fully electronic system for handling certain categories of income tax appeals. Designed to complement the introduction of the Joint Commissioner of Income Tax (Appeals), the scheme reflects the government’s ongoing commitment to efficiency, transparency, and reduced compliance costs.
The objective is to make the appeal process faster while ensuring procedural fairness and safeguarding taxpayer rights. In this system, every step, from the filing of an appeal to the passing of the final order, is integrated within the income tax portal, supported by automation and real-time communication tools.
Scope and Applicability of the Scheme
The scheme applies to cases covered under the revised Section 246 of the Income-tax Act, except for those specifically excluded under Section 246(6) and subsequent CBDT orders. These exclusions ensure that complex cases, high-value disputes, and matters requiring specialised jurisdiction remain outside the JCIT (Appeals) domain.
Appeals under the scheme include those filed directly before the JCIT (Appeals) as well as appeals transferred from or to the Commissioner (Appeals). The scope covers both assessment-related and penalty-related orders, but only within the boundaries defined by law.
Key Definitions under the Scheme
The framework includes several terms with specific meanings in the context of electronic proceedings:
- Appeal refers to an appeal filed under Section 246 or Section 246A.
- Appellant means the person who files the appeal.
- Automated Allocation refers to the random case assignment process using artificial intelligence or machine learning systems to ensure impartiality and remove human bias.
- E-Appeal denotes an appellate proceeding conducted entirely in electronic form through the designated portal.
- Real-Time Alert covers notifications sent to the parties via SMS, email, or mobile application to keep them informed about developments in the appeal.
These definitions provide clarity to taxpayers and departmental officers, ensuring a common understanding of the terms used in the process.
Allocation of Appeals
One of the defining features of the E-Appeals Scheme is the automated allocation of appeals. The Principal Director General of Income Tax (Systems) is responsible for this allocation, acting with the approval of the CBDT.
Appeals are assigned to JCIT (Appeals) officers without human intervention, which is expected to improve transparency and reduce perceptions of bias. This system also allows the allocation of cases across different jurisdictions, ensuring an even distribution of workload and quicker disposal timelines.
Initiating the Appeal Process
The process begins with the appellant filing Form No. 35 electronically through the income tax portal. The form must be completed with all required details, including the grounds of appeal, statement of facts, and supporting documents.
If the appeal is filed after the expiry of the prescribed period, the JCIT (Appeals) has the discretion to condone the delay provided there are sufficient and recorded reasons. Once filed, the appeal is acknowledged electronically, and the appellant receives a confirmation along with an appeal reference number.
Issuance of Notices and Timelines
After an appeal is admitted, the JCIT (Appeals) issues a notice to the appellant, directing them to present their case within a specific timeframe. A copy of the notice is also sent to the Assessing Officer concerned.
The notice will detail the issues to be addressed, documents required, and the deadline for submissions. Timely compliance with these directions is essential, as non-compliance may lead to adverse inferences or even dismissal of the appeal.
Submission of Additional Grounds
The appellant has the right to raise additional grounds of appeal after the initial filing. These may arise from subsequent developments, discovery of new facts, or a reassessment of the legal position. If the omission of the grounds in the original appeal was not willful or negligent, the JCIT (Appeals) may admit them.
In certain cases, such as appeals arising from orders passed by the Centralised Processing Centre, additional grounds can be admitted automatically without seeking comments from the Assessing Officer. In other situations, the JCIT (Appeals) will forward the request to the Assessing Officer for remarks before deciding on admission.
Additional Evidence and Rule 46A
The production of additional evidence is generally restricted to ensure fairness to both parties and to maintain the integrity of the assessment process. However, Rule 46A permits additional evidence in exceptional situations such as when the Assessing Officer refused to admit evidence which ought to have been admitted, or when the appellant could not produce it earlier for sufficient cause.
For orders passed by the Centralised Processing Centre, such evidence is accepted directly. For other cases, the JCIT (Appeals) will call for a report from the Assessing Officer before deciding on admissibility.
Requests for Reports and Comments
The JCIT (Appeals) may seek reports or comments from the Assessing Officer to better understand the issues under dispute.
These reports may relate to factual clarifications, interpretation of records, or the verification of additional evidence submitted by the appellant. The Assessing Officer is required to respond within the specified period, and the response is shared with the appellant to ensure transparency and allow for rebuttal.
Enhancement or Reduction in Assessment
While adjudicating an appeal, the JCIT (Appeals) is not limited to confirming or annulling the assessment order. They may enhance the assessment, increase the penalty, or reduce a refund.
However, before taking such a step, they must issue a show-cause notice to the appellant, providing an opportunity to respond. This notice sets out the proposed enhancement or reduction and the reasons behind it. The principle of natural justice requires that no order prejudicial to the appellant be passed without giving them a chance to be heard.
Drafting and Issuing the Final Order
The final order must be a speaking order under Section 251, stating clearly the points for determination, the decision on each point, and the reasons for those decisions.
It is to be digitally signed and uploaded on the income tax portal, with copies sent electronically to the appellant, the Assessing Officer, and the relevant Commissioner. If the order includes a recommendation for initiating penalty proceedings, a separate notice is issued to the appellant.
Penalty Proceedings during Appeals
The JCIT (Appeals) has the power to initiate penalty proceedings for non-compliance with notices or directions issued during the appeal process.
These proceedings are separate from the original dispute and are aimed at ensuring procedural discipline. Penalty notices are issued electronically, and the appellant has the opportunity to respond before any penalty is imposed.
Rectification of Mistakes
Mistakes apparent from the record can be rectified either on the JCIT (Appeals)’s own motion or on an application by the appellant or the Assessing Officer.
The scope of rectification is limited to errors that are obvious and do not require long-drawn arguments to establish. Applications for rectification must be filed electronically within the prescribed time limit, and orders on such applications are also communicated digitally.
Right to Further Appeal
An order passed by the JCIT (Appeals) can be challenged before the Income Tax Appellate Tribunal. This ensures that the appellant retains access to an independent, higher forum for review. The timelines and procedural rules for filing an appeal to the Tribunal are governed by the Income-tax Act and the Tribunal’s procedural regulations.
Modes of Communication under the Scheme
All communication under the E-Appeals Scheme is carried out electronically. Authentication is achieved either through a digital signature or an electronic verification code.
Delivery of communications is done via the income tax portal, and the appellant is simultaneously informed through email and mobile application notifications. This multi-channel approach ensures that parties are promptly informed of every development in the appeal.
Hearings via Video Conferencing
Physical appearances are generally not part of the E-Appeals process. However, where the appellant requests an opportunity for oral submissions, the JCIT (Appeals) may permit a hearing through video conferencing.
The CBDT is tasked with ensuring that adequate facilities for such hearings are available, both for appellants and their representatives as well as for departmental officers. This provision ensures that the right to be heard is preserved in a digital-first framework.
Administrative Control and Oversight
The CBDT retains administrative control over the functioning of the JCIT (Appeals) and the implementation of the E-Appeals Scheme. Regular monitoring, case disposal targets, and technological upgrades form part of the oversight mechanism. This ensures that the objectives of efficiency, transparency, and reduced human interface are consistently met.
Balancing Inclusion and Exclusion
The E-Appeals Scheme, 2023 is designed with a carefully defined jurisdiction to ensure that cases suited to a digital and streamlined process are included, while those requiring deeper investigation, in-person examination, or specialised handling remain with other appellate authorities.
This balance between inclusion and exclusion helps maintain efficiency without compromising the quality of adjudication. The scope limitations also ensure that the newly created Joint Commissioner of Income Tax (Appeals) focuses on categories of disputes where the potential for quick resolution is highest.
Cases Included within the Scheme
The scheme covers all appeals under Section 246 of the Income-tax Act, which outlines the specific categories of orders appealable before the JCIT (Appeals). This includes cases where the dispute arises from assessment orders, reassessment proceedings, processing of TDS and TCS statements, and certain penalty orders.
Additionally, the scheme extends to selected appeals under Section 246A, covering specific orders such as those under Section 143(1) for intimation, Section 147 for reassessment, Section 200A for processing of TDS statements, Section 201 for defaults in TDS compliance, Section 206C(6A) for TCS defaults, and penalty-related orders under Chapter XXI.
By including these categories, the framework ensures that a large portion of routine disputes, particularly those arising from automated or standardised processes, are handled in an efficient electronic environment.
Exclusions Based on Date and Amount
One of the key exclusions relates to the date of assessment and the amount of disputed demand. Appeals against assessments made before 13 August 2020 are excluded if the amount of disputed demand exceeds ten lakh rupees.
This restriction helps ensure that only relatively recent disputes of moderate monetary value fall within the ambit of the JCIT (Appeals) under the E-Appeals Scheme. Older cases or those involving high demands are generally more complex and may require more extensive hearings or evidentiary work, making them unsuitable for the digital-first approach.
Jurisdictional and Procedural Exclusions
The scheme specifically excludes cases handled by central charges, which typically involve complex or sensitive assessments such as those arising from search, requisition, or survey operations. These assessments often require examination of seized or impounded materials and may involve multiple related entities, making them more suited for traditional appellate handling.
Similarly, cases falling under international taxation jurisdiction are excluded. These matters often involve cross-border transactions, interpretation of tax treaties, transfer pricing disputes, and other specialised issues that require dedicated expertise and may not lend themselves easily to an entirely electronic adjudication.
Exclusion of Cases Involving Seized or Impounded Material
Another important exclusion relates to appeals where the assessment involves seized or impounded material. In such cases, the evidence is often physical, voluminous, and may need to be examined in person. The digital framework of the E-Appeals Scheme is not designed to handle the logistical requirements of such cases, and therefore, these matters remain outside its scope.
Appeals from Faceless Assessment and Penalty Schemes
The scheme also excludes certain appeals arising from faceless assessment and penalty schemes after specified dates. This exclusion ensures there is no duplication of effort and maintains the integrity of the separate faceless appeal process already established for those cases. The criteria for such exclusions are periodically updated by the CBDT to keep the jurisdictional boundaries clear.
Relevant Rule Changes Supporting the Scheme
The operationalisation of the E-Appeals Scheme required changes to several procedural rules under the Income-tax Rules, 1962. Rule 45, which governs the filing of appeals, has been updated to include the JCIT (Appeals) alongside the Commissioner (Appeals) as an appellate authority for electronic filing. This ensures that appellants can choose the correct forum at the filing stage based on the nature of their dispute.
Rule 46A, which governs the admission of additional evidence, has also been amended by replacing references to the Deputy Commissioner with the Joint Commissioner. This change aligns the provisions with the new appellate structure and ensures that the same principles apply when additional evidence is sought to be introduced before the JCIT (Appeals).
Form No. 35, which is the standard form for filing appeals, has been modified to reflect the inclusion of the JCIT (Appeals) as a designated authority. This change allows appellants to clearly indicate whether their appeal is to be heard by the JCIT (Appeals) or the Commissioner (Appeals), avoiding jurisdictional confusion.
Appointment and Empowerment of JCIT (Appeals)
The CBDT has the authority to appoint officers as JCIT (Appeals) under Section 2(28CA) read with Section 120 of the Income-tax Act. These appointments are made to ensure that there is adequate capacity to handle the expected volume of appeals under the scheme. The appointed officers are vested with the same powers and responsibilities as the Commissioner (Appeals) for the categories of cases assigned to them.
The CBDT is also responsible for ensuring that the JCIT (Appeals) is supported by adequate staff and resources. This includes access to the necessary technological infrastructure, case management tools, and administrative support to enable them to perform their duties effectively within the digital framework.
Transfer of Appeals Between Authorities
Section 246 includes provisions for the transfer of appeals between the Commissioner (Appeals) and the JCIT (Appeals). Appeals pending before the Commissioner (Appeals) can be transferred to the JCIT (Appeals) by the CBDT or an authorised authority.
Similarly, appeals pending before the JCIT (Appeals) can be transferred back to the Commissioner (Appeals). These transfers are subject to the condition that the appellant is given an opportunity to be reheard, ensuring that procedural fairness is maintained. The transfer provisions are important for balancing workloads and ensuring that cases are handled by the most appropriate authority based on their nature and complexity.
Framing of Schemes by the Government
Section 246(5) empowers the government to frame schemes for the disposal of appeals to achieve the objectives of expediency, transparency, and minimal face-to-face interaction. The E-Appeals Scheme, 2023 is one such scheme, designed with these objectives in mind. This provision allows for flexibility in adapting the appeal process to evolving technological capabilities and policy priorities.
The government also has the power under Section 246(6) to exclude certain cases or classes of cases from the jurisdiction of the JCIT (Appeals). This power is exercised to fine-tune the scope of the scheme in response to practical considerations and feedback from stakeholders.
Communication and Authentication Standards
All communications under the scheme are electronic, ensuring that every step of the process is digitally recorded and traceable. Authentication of documents and orders is achieved through digital signatures or electronic verification codes. These methods provide security and authenticity to the proceedings, ensuring that documents cannot be tampered with and that communications are verifiable.
Delivery of communications is done through the income tax portal, with simultaneous alerts via email and mobile applications. This system minimises the chances of missed notices or delays in receiving important updates.
Video Conferencing as an Alternative to Physical Hearings
The scheme recognises the importance of oral hearings in certain cases. While the default mode is paperless adjudication, appellants may request a hearing through video conferencing.
This provision preserves the right to be heard without compromising the benefits of the electronic system. The CBDT ensures that facilities for such hearings are available to both taxpayers and departmental representatives, including those in remote locations.
Integration with Other Digital Initiatives
The E-Appeals Scheme is part of a broader push towards digitisation in tax administration. It integrates with the income tax portal’s existing functionalities, such as e-filing, document verification, and real-time status tracking. This integration ensures a seamless user experience for appellants, who can manage their compliance and dispute resolution activities from a single platform.
Automated allocation of cases through AI and machine learning tools also aligns with the government’s emphasis on using technology to reduce human discretion and improve transparency. The system can learn from historical case data to optimise workload distribution and reduce processing times.
Administrative Oversight and Monitoring
The CBDT maintains administrative oversight over the functioning of the JCIT (Appeals) and the implementation of the E-Appeals Scheme. This includes monitoring case disposal rates, reviewing the quality of orders, and ensuring adherence to timelines. Feedback from appellants, tax professionals, and departmental officers is used to identify areas for improvement.
Regular training and capacity building for JCIT (Appeals) and their staff are also part of the oversight mechanism. This ensures that officers remain up-to-date with legal developments, procedural rules, and technological tools required for efficient functioning.
Importance of Procedural Discipline
Procedural discipline is critical to the success of the E-Appeals Scheme. Both appellants and departmental officers are expected to adhere to timelines and respond promptly to notices and requests for information.
The JCIT (Appeals) has the authority to initiate penalty proceedings for non-compliance, ensuring that delays and procedural lapses are minimised. Clear procedural rules, combined with strict enforcement, create a predictable and orderly appellate environment that benefits both taxpayers and the administration.
Conclusion
The E-Appeals Scheme, 2023, and the introduction of the Joint Commissioner of Income Tax (Appeals) mark a decisive step toward a more efficient, technology-driven, and transparent appellate framework. By creating a new authority dedicated to handling specific categories of disputes, the government has sought to reduce the heavy backlog faced by the Commissioner (Appeals) and ensure quicker resolution of routine matters.
The scheme’s design reflects a careful balance between inclusion and exclusion, ensuring that straightforward, lower-value, and standardised cases can be resolved digitally while leaving complex and sensitive disputes to more traditional processes. The reliance on automated allocation, strict procedural timelines, electronic communication, and video conferencing facilities demonstrates a strong commitment to modernising the appellate system without compromising fairness or due process.
Rule changes, updated forms, and explicit jurisdictional provisions provide the legal and procedural backbone for the scheme, while the transfer provisions between appellate authorities offer flexibility in workload management. Administrative oversight by the CBDT, coupled with capacity building for officers, ensures that the new system remains responsive and effective over time.
By reducing the need for face-to-face interaction and leveraging AI-driven case allocation, the E-Appeals Scheme is not only streamlining dispute resolution but also reinforcing trust in the impartiality of the process. If implemented consistently and supported with adequate resources, it has the potential to set a benchmark for digital transformation in quasi-judicial functions.
Ultimately, the creation of the JCIT (Appeals) and the operationalisation of the E-Appeals Scheme represent more than just procedural reform; they signal a broader shift toward a future where technology and governance work hand in hand to deliver faster, fairer, and more accessible justice in tax matters.