Overview of Tax Litigation
Tax can be defined as a mandatory fee or financial charge levied by the government on an individual or entity. The Indian Tax Laws are governed under the Income Tax Act 1961.
Tax Litigation refers to the initiation of legal proceedings regarding disputes arising due to the non-compliance of tax laws. Tax litigation can be a time-consuming process due to the complexities of the taxation procedure and the delays in the appellate process. There has been a rise in the number of tax litigation cases due to the increasing aggression amongst the tax authorities.
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Issues that Lead to Tax Litigation
The major issues that lead to tax litigation are given below
- Individual and Partnership matters
- Charitable and non-profit making institutions
- Cross-border transactions on permanent establishment and ascription
- Transfer Pricing Matters such as marketing intangibles, management expenses across the border, compensation for captive service, royalty payments, transfer pricing methods and comparable.
- Matters concerning the withholding of taxes
- Corporate Restructuring
- Tax Liability related to Royalty Income
- Valuation issues under the Customs Act,1962
Categories of Tax Litigation
The following information is provided to the Registrar while filing the annual return of the Company:
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Time Limit of Filing Appeals and Appeal Hierarchy
- Appeal before the Commissioner of Income Tax (Appeal) can be filed within a period of 30 days
- Appeal to Income Tax Appellate Tribunal within a period of 60 days.
- Appeal to High Court within 60 days.
- Appeal before Supreme Court within 90 days.
Tax Litigation FAQ's
The hierarchy of Tax litigation in India is- Assessment will be done by an Income – Tax officer; if the taxpayer is not satisfied by the assessment order, an appeal can be filed before the Commissioner of Income – Tax, any order passed by CIT (A) will be challenged before Income – Tax Appellate Tribunal; however an order of ITAT will only be challenged before High Court and Supreme Court on the substantial question of law whereas if an appeal is to be filed before Supreme Court, a certificate has to issue by the high court.
- Appeal before Commissioner of Income – Tax (Appeal) within 30 days from the date of the order of the AO.
- Appeal before Income – Tax Appellate Tribunal within a period of 60 days from the date of the order of the CIT (A)
- Appeal before the High Court can be filed within 60 days from the date of the order of the ITAT.
- Appeal before the Supreme Court within 90 days from the date of the order of the High Court.
A Chartered Accountant or practising Advocate can represent the Taxpayers before ITAT. However, the practising Advocate is empowered to represent his client even before Supreme Court and High Court.
Use of Artificial intelligence for scrutiny of cases Abolition of territorial Jurisdiction, automated random allocation of cases, document identification number, No human interface and many more features are there.