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Section 250 of Income Tax Act- All That You Need to Know

Updated: Jan 11


Section 250 of Income Tax Act - Regulations, Deductions and Powers

Section 250 of the Income Tax Act provides guidelines to taxpayers to file an appeal with the Commissioner (Appeals) when they are aggrieved by an order passed by the Assessing Officer. The Commissioner (Appeals) is an appellate authority with the power to hear and address appeals filed by taxpayers. The section gives the procedure for filing an appeal and defines the powers of the Commissioner (Appeals) in handling such appeals. In this article, we will share all that you need to know about the importance, regulations, provisions, and deductions related to Section 250.

 

Table of Content

 

What is Section 250 of the Income Tax Act?

Section 250 is a key element of the Income Tax Act, specifically focusing on the appeal process available to taxpayers. An individual denied tax deduction in diverse cases can make an appeal to the tax authorities. Additionally, Section 250 offers legal resources to taxpayers who do not agree to orders passed by an Assessing Officer. 

The regulation defines the powers of the Commissioner of Income Tax (CT) Appeals when they address a case, such as the way to conduct litigation or pass an order. The Commissioner can rectify a mistake apparent from the existing record. These include arithmetical or clerical errors, mistakes related to the record, or incorrect application of facts.


Who Can File an Appeal Under Section 250?

Anyone aggrieved by an order of the Assessing Officer can file an appeal under section 250 of the Income Tax Act. It includes:

  • Individuals

  • Hindu Undivided Families (HUFs)

  • Firms

  • Companies

  • Any other entity liable to pay income tax

They can file an appeal  in respect of any disputed issue, including assessment of income, the quantum of income liability, and disallowance of expenses.


Regulations of Section 250 of the Income Tax Act 

Section 250 of the Income Tax Act gives the following regulations and provisions that apply in different circumstances:


Section 250 (1): The Commissioner schedules a day and fixes a venue to hear the appeal. He also notifies the appellant and Assessing Officer about these details.


Section 250 (2): The following individuals can rightfully speak during the hearing:

  • Appellant (in-person or by a lawful representative)

  • Assessing officer (in-person or by a lawful representative)

Section 250 (3): The Commissioner can adjourn any hearing of appeal at any point in time.


Section 250 (4): Before dismissing an appeal, the Commissioner may find a reason to conduct further inquiries himself or order an Assessing Officer to inquire and give a report to him. 


Section 250 (5): During appeal proceedings, the Commissioner (Appeals) permits the appellant to provide new grounds for appeal that were not initially included. However, the inclusion should be both reasonable and unintentional. 


Section 250 (6): The Commissioner (Appeals) must provide a written decision in the event of dismissal of an appeal. The decision should give the reasons for dismissal along with the underlying rationale and conclusion. 


Section 250 (6A): Whenever feasible, the Commissioner (Appeals) should strive to hear and decide on appeals within a year following the end of the financial year when the appeal was filed under Section 246A sub-section (1). 


Section 250 (6B): The Central Government has established a scheme to streamline the appeal process with greater efficiency, clarity, and accountability. The scheme, published in the Official Gazette, states: 

  • Limit direct interactions between the appellant and the Commissioner to a feasible minimum

  • Optimise resource utilisation through specialisation and economies of scale

  • Introduce an appellate system with shared jurisdiction with one or more Commissioners jointly dismissing an appeal

Section 250 (6C): The scheme outlined in subsection 6(B) is implemented by the Central Government through notifications in the Official Gazette. It specifies whether provisions regarding jurisdiction and the dismissal process are applicable or not. Notifications may include modifications, adaptations, or deviations as needed.


Section 250 (6D): All notifications under subsections 6(B) and 6(C) should be presented before both Houses of Parliament. 


Section 250 (7): On the dismissal of an appeal, the Commissioner (Appeals) has the responsibility to communicate the issued order to the appellant and Principal Commissioner, Principal Chief Commissioner, or Commissioner Chief Commissioner.


Code of Criminal Procedure of Section 250

The Code of Criminal Procedure of Section 250 (CrPC) deals with the compensation for an accusation without a valid cause. The section lays down the following provisions and guidelines:

  • If a person is accused of a crime based on the complaint or information provided to the police or a magistrate and they find an unreasonable basis for an accusation, the Magistrate can order the complainant to explain why they will not give compensation to the accused.

  • The Magistrate has to document and assess the argument presented by the informant or complainant. They can issue an order for the informant or complainant to pay compensation if they are convinced that the accusation lacks merit. They will have to provide a documented justification at this point.

  • The compensation value should not exceed the fine amount that the Magistrate is authorised to impose as deemed appropriate.

Powers of the Commissioner (Appeals)

According to Section 250 of the Income Tax Act, the Commissioner (Appeals) has the power to assess and examine any order passed by the Assessing Officer. He can also check any other evidence provided by the appellant. Further, he may modify, cancel, or confirm the order passed by the Assessing Officer. He may enhance the assessment if satisfied that the appellant’s income has been under-assessed. 


Section 250 Deduction & Notice

Deductions under Section 250 can be claimed for Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII). Form 8993 is used for the eligible deduction amount for both GILTI and FDII. The form should be attached to the tax return and filled out by the due return date. The Appellate Assistant Commissioner can issue a lega notice to the appellant and the officer under Section 250 of the IT Act. The notice includes the date and venue for the hearing of the appeal. 


Appeals to the Appellate Tribunal and High Court

While Section 250 of the Income Tax Act is a legal recourse for taxpayers aggrieved by an order, appealing to the Commissioner (Appeals) may not be enough in some cases. If the appellant is still not satisfied with the Commissioner’s (Appeals) decision, he may bring up another appeal with the Appellate Tribunal. This has to be done within 60 days from the date of receiving the order.

The Tribunal is a higher appellate authority with the power to hear and dispose of appeals against orders passed by the Commissioner (Appeals). The appellant may again not be satisfied with the order of the Appellate Tribunal. He has the option to file another appeal with the High Court. The timeline for this appeal is within 120 days from the date of receiving the order. If the case involves a substantial question of law, the High Court may admit the appeal. The High Court’s decision is final and binding on the appellant and the Income Tax Department.


Conclusion

Section 250 is a key element of the Indian Income Tax Act as it enables the taxpayers to challenge the tax authorities with an appeal. The process ensures fairness and transparency in tax assessments. As a taxpayer seeking redressal to an unjust order, you must understand the provisions and regulations of Section 250. It is about being aware of your rights in terms of a fair tax payment system. You can consult a seasoned tax specialist to clear your doubts and concerns regarding Section 50 and its regulations. 


FAQ

Q1. What is Section 250 of the Income Tax Act?

Section 250 is a section of the Income Tax Act vesting the Commissioner (Appeals) with the power to rectify a mistake apparent from the record. It also sets guidelines for a taxpayer to file an appeal against an order they do not agree with. 


Q2. Who can apply for rectification under Section 250?

A taxpayer aggrieved by an order issued by the Assessing officer can file an application for rectification under Section 250. It may be an individual, HUF, firm, or company. 


Q3. What kind of mistakes can be rectified under Section 250?

Under Section 250, any mistake apparent from the record can be rectified. These include clerical or arithmetical errors, errors apparent on the face of the record, and incorrect application of law or facts. 


Q4. Is there any time limit for filing an application under Section 250?

Yes, a taxpayer looking to file an application under Section 25O should do it four years from the end of the financial year when the order sought to be rectified was passed. 


Q5. Can the Commissioner (Appeals) review his own order?

No, the Commissioner (Appeals) cannot review his own order or substitute a different view under Section 250. 


Q6. Can rectification be made for an order already subject to an appeal?

No, Section 250 does not allow the rectification of an order already subject to an appeal.


Q7. Is rectification under Section 250 an alternative to filing an appeal?

No, rectification under Section 250 is not an alternative to filing an appeal. If a taxpayer does not agree with the rectification order, he can still file an appeal against the order.









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