The first appeal is the stage at which most income tax disputes are actually decided. Very few travel further. The record built here — the grounds, the evidence, the explanation of the facts — is the record every later forum reads.
It is also the stage handled with the least care, because an appeal feels like a formality after an assessment that already went badly. It is not. A first appeal filed late, or without the tax that section 249(4) requires, or on grounds that identify nothing, is a disadvantage that the Tribunal cannot always repair.
What can be appealed
Section 246A lists the orders against which an appeal lies to the Commissioner (Appeals). The list is long, and it includes the orders most taxpayers encounter:
- an assessment order under section 143(3), or a best judgment assessment under section 144;
- a reassessment order under section 147;
- an order under section 154 or 155 amending any of the above;
- an intimation under section 143(1) where the assessee objects to an adjustment;
- an order imposing penalty;
- an order under section 201 treating a person as an assessee-in-default for failure to deduct or pay tax;
- an order under section 237 relating to refunds.
Two points follow. First, if an order is not in the list, an appeal does not lie against it — the remedy may be revision under section 264, rectification under section 154, or a writ. Second, where several orders arise from the same assessment — the assessment order and a separate penalty order, for example — each requires its own appeal. A single appeal does not carry both.
Following the Finance Act, 2023, specified categories of smaller cases are heard by the Joint Commissioner (Appeals) rather than the Commissioner (Appeals). The procedure described here applies substantially to both.
The thirty-day clock
An appeal must be presented within thirty days of:
- the date of service of the notice of demand, where the appeal relates to an assessment or penalty; or
- the date on which the intimation or order was served, in other cases.
The clock runs from service, not from the date the order bears. For orders and notices delivered through the e-filing portal, the date they become available is the operative date — which means an appeal period can run and expire while nobody in the business has opened the account. Our note on what to do on receiving an income tax notice deals with the wider monitoring discipline.
Section 249(3) allows the Commissioner (Appeals) to admit an appeal after the thirty-day period where satisfied that the appellant had sufficient cause for not presenting it in time. Unlike the GST provisions, there is no fixed outer limit on that discretion — but it is a discretion, and it has to be invoked by an application explaining the delay specifically, supported by evidence, rather than by a line in the covering letter.
The pre-condition most appeals fail on
Section 249(4) is the provision that stops appeals at the door, and it is routinely missed.
No appeal shall be admitted unless, at the time of filing:
- where the assessee has filed a return, the tax due on the income returned has been paid; or
- where no return has been filed, the assessee has paid an amount equal to the amount of advance tax which was payable.
The proviso allows the Commissioner (Appeals), on an application and for good and sufficient reason, to exempt an appellant from the second requirement. There is no corresponding exemption from the first.
The practical consequence is important and frequently misunderstood: the tax on the returned income must be paid before the appeal is admitted. The tax on the addition made by the Assessing Officer need not be — that is the subject matter of the appeal, and it is dealt with separately under the stay provisions discussed below.
An appeal filed without satisfying section 249(4) is liable to be treated as not admitted, and the thirty days continue to run while the defect is being cured.
Filing Form 35
The appeal is filed electronically in Form 35 through the e-filing portal, under digital signature where the return is required to be so verified, and otherwise through electronic verification code.
The form carries the statement of facts, the grounds of appeal, and details of the order appealed against. Attachments ordinarily include the order, the notice of demand, and the challan evidencing payment under section 249(4).
The fee depends on the total income assessed:
| Total Income Assessed | Fee |
| ₹1,00,000 or less | ₹250 |
| More than ₹1,00,000 but not more than ₹2,00,000 | ₹500 |
| More than ₹2,00,000 | ₹1,000 |
| Where the subject matter is not covered by the above | ₹250 |
Appeals are heard under the faceless appeal framework, which means the interaction is written and through the portal rather than in person, with a video hearing available on request in accordance with the scheme. That shifts the weight decisively onto the quality of the written submissions — a point worth internalising before drafting.
Grounds and the statement of facts
These are two different documents doing two different jobs, and merging them is the most common drafting fault.
The statement of facts sets out what happened, in sequence and without argument: the return filed, the notices issued, what was furnished in response, what the Assessing Officer held and on what material. It should be capable of being read by someone who has never seen the file.
The grounds identify the errors in the order. One error per ground, numbered, each capable of standing on its own.
A ground that says “the order is bad in law and against the facts” pleads nothing. A ground that works names the provision, the finding, the material on record and why the finding does not follow from it. The difference matters because the appellate authority decides what has been pleaded, and because the grounds are what the Tribunal reads if the matter travels further.
Section 250(5) permits the Commissioner (Appeals) to allow an appellant to go into any ground not specified in the grounds of appeal, where satisfied that the omission was not wilful or unreasonable. As with condonation, this is a discretion to be applied for rather than an entitlement, and it is better not to need it.
Jurisdictional grounds — want of jurisdiction, limitation, the validity of the notice that founded the proceeding — belong at the top of the list. They are capable of disposing of the appeal without reaching the merits, and they are among the strongest grounds available where, for example, the validity of a section 148A notice is in issue.
Additional evidence under Rule 46A
The general position is that an appellant may not produce before the Commissioner (Appeals) evidence that was not produced before the Assessing Officer.
Rule 46A creates four exceptions. Additional evidence may be admitted where:
- the Assessing Officer refused to admit evidence which ought to have been admitted;
- the appellant was prevented by sufficient cause from producing the evidence which the Assessing Officer called for;
- the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence relevant to any ground of appeal; or
- the Assessing Officer made the order without giving sufficient opportunity to the appellant to adduce evidence.
Two procedural requirements attach, and appeals are lost on both. The Commissioner (Appeals) must record reasons for admitting the evidence. And the Assessing Officer must be allowed a reasonable opportunity to examine the evidence and to produce evidence in rebuttal — in practice, through a remand report.
The application under Rule 46A should therefore be made expressly, identifying which of the four limbs is relied on and why, rather than attaching documents to the submissions and hoping they are considered.
The power to enhance
Section 251 sets out what the Commissioner (Appeals) may do. In an appeal against an order of assessment, the authority may confirm, reduce, enhance or annul the assessment. In an appeal against a penalty, it may confirm, cancel, or vary the penalty so as either to enhance or reduce it.
Enhancement requires a reasonable opportunity of showing cause against it. But the power exists, and it is exercised.
This has a direct bearing on how an appeal is framed. A ground that opens an issue the assessment did not deal with, or that invites the authority to look again at a computation that happened to favour the appellant, carries a risk that is asymmetric. Where a ground is taken on a point with enhancement exposure, the appellant should be ready to meet it rather than be surprised by it. Our note on income tax appeals deals with the wider strategic questions.
What CIT(A) cannot do
One limitation deserves particular emphasis, because it changes how the first appeal must be run.
The power to set aside the assessment and refer the case back to the Assessing Officer was removed from section 251 with effect from June 2001. The Commissioner (Appeals) can confirm, reduce, enhance or annul. There is no remand.
The consequence is the same as under the corresponding GST provision: whatever the appellant wants examined must be placed before the Commissioner (Appeals) and evidenced there. There is no second attempt before the same authority and no route back to the Assessing Officer to develop the factual case.
What the authority can do is make further inquiry itself under section 250(4), or direct the Assessing Officer to make inquiry and report. That is not a remand, and it is not a substitute for a complete record filed with the appeal.
Demand while the appeal is pending
Filing an appeal does not, by itself, stay recovery of the demand. That is a separate application.
An application under section 220(6) is made to the Assessing Officer, who may treat the assessee as not being in default in respect of the disputed amount, subject to conditions. Administrative instructions have historically contemplated a deposit of a percentage of the disputed demand as a condition of stay, with discretion to vary it on the facts.
Two practical points. The stay application should be made promptly after the appeal is filed, not after recovery begins. And the conditions attached to a stay — including the percentage — are capable of being contested where the facts warrant it, which is a separate exercise from the appeal itself and part of the broader tax litigation strategy.
The interaction between the appeal and the demand is one of the more consequential aspects of ongoing income tax compliance for a business carrying a disputed assessment.
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