Itat and appeals

This query is : Resolved

A.Barli (Querist)
Follow

31 August 2011 What is a special bench of ITAT.

Is it possible to pay the demand u/s 156 before filing appeals to CIT(A)
and then claiming refund if the case is won..
practically what are the disadvantages in doing this other than immediate outflow of funds??

Thank You.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

31 August 2011 If demand is discharged with out notice from department, it is an indirect admission of the assessed income.

Message likes : 1 times

A.Barli

A.Barli (Querist)
Follow

31 August 2011 Thank You Sir.

i meant in response to ITAT's notice of demand u/s 156.
And disadvantages other than outflow of funds

Also, what is a special bench of ITAT

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

02 August 2024 ### Special Bench of ITAT

A **Special Bench** of the Income Tax Appellate Tribunal (ITAT) is a special panel set up to handle cases involving significant or complex issues of law or fact. These benches are constituted to expedite the resolution of such cases and are typically composed of a larger number of members than the usual benches. Here are some key points:

- **Purpose:** The Special Bench is formed to deal with cases that involve substantial issues of law or significant matters of general importance. These cases might have broader implications beyond the individual case.
- **Composition:** It usually consists of three or more members, including the senior-most members of ITAT. The members are selected based on their expertise and experience.
- **Scope:** The Special Bench is authorized to handle cases that involve large amounts of tax, significant legal issues, or complex factual disputes.

### Paying Demand U/s 156 Before Filing Appeals to CIT(A)

**Section 156** of the Income Tax Act deals with the notice of demand for payment of tax. Here’s how the process typically works and the considerations involved:

#### Can You Pay the Demand Before Filing Appeals?

Yes, you can pay the demand u/s 156 before filing an appeal to the Commissioner of Income Tax (Appeals) (CIT(A)). After paying the demand, you can file an appeal and claim a refund if the appeal is successful.

#### Disadvantages Other Than Immediate Outflow of Funds:

1. **Interest on Refund:**
- If you pay the demand upfront and later win the appeal, you are entitled to a refund. However, interest on the refund is usually payable only from the date of filing the appeal or the date of payment of the tax, whichever is later. Thus, you may lose interest income on the amount paid if the appeal is delayed.

2. **Liquidity Impact:**
- Paying the demand upfront could impact your liquidity or financial position. If the funds are not readily available, this might affect other financial commitments or investments.

3. **Opportunity Cost:**
- The money paid towards the demand could have been invested elsewhere. By paying upfront, you lose out on potential returns or opportunities.

4. **No Immediate Benefit:**
- While you are entitled to a refund if you win the appeal, there is no immediate financial benefit or relief from the demand payment until the appeal is resolved.

5. **Administrative Effort:**
- Paying the demand and later claiming a refund involves additional administrative effort, including maintaining documentation and correspondence with tax authorities.

6. **Appeal Success Uncertain:**
- There’s always a risk that the appeal might not be successful. If the appeal is lost, the amount paid is not recoverable (except in specific circumstances or if there was an error in the initial assessment).

### Summary

Paying the demand under Section 156 before filing an appeal is a legal option and might be beneficial if it helps in resolving the case faster. However, it involves immediate outflow of funds, potential loss of interest, and possible liquidity issues. It’s essential to weigh these factors and consult with a tax advisor to make an informed decision based on your specific circumstances.

If you need more specific advice or detailed guidance, it’s always best to consult with a qualified tax consultant or legal expert familiar with the intricacies of tax laws and appeals.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now