To file an appeal under the Income Tax Act, submit Form 35 electronically on the Income Tax Department’s e-filing portal within 30 days of receiving the notice of demand or intimation, pay the tax due on the income you yourself reported in your return, pay the applicable filing fee, and attach a Statement of Facts and numbered Grounds of Appeal along with the disputed order. The first appeal goes to the Commissioner (Appeals) or Joint Commissioner (Appeals) and is decided under the Faceless Appeal Scheme. If that appeal fails, you can move up to the Income Tax Appellate Tribunal, the High Court, and ultimately the Supreme Court, with each level narrowing what it will reconsider.
Which Orders You Can Appeal
Section 246A lists the orders you can challenge before the Commissioner (Appeals). The common ones are regular assessment orders where you dispute the income computed or the tax determined, reassessment orders passed after the Assessing Officer reopens a completed assessment, and rectification orders that raise your assessed income or cut a refund you were expecting. Penalty orders are appealable, whether the penalty is for a payment default, non-filing of a return, or a TDS lapse.
Refund decisions are equally open to challenge. If your refund claim was rejected or the amount reduced, you can contest it. Orders treating you as the agent of a non-resident, orders relating to firm registration, and orders demanding tax from a person who failed to deduct TDS also fall within the section. The general principle is that any administrative order that worsens your tax position or denies a benefit you claimed has a route of challenge.
The 30-Day Deadline and the Pay-First Rule
You have 30 days to file the first appeal. The clock starts on the date you receive the notice of demand for assessment and penalty orders, and on the date of intimation for other orders. Miss it and the appeal is not automatically dead, but you will have to satisfy the appellate authority that there was “sufficient cause” for the delay. Courts read that phrase strictly. Being busy or unaware of the deadline rarely works. Serious illness, a death in the family, or misleading advice from a professional has a better track record.
There is a second condition that catches taxpayers off guard. Your appeal will not be admitted unless you have paid the tax due on the income you yourself reported in your return. This is not the full disputed amount the Assessing Officer computed. It is the tax on the income you acknowledged. Clear that before you file, or the appeal will not be entertained.
Filing Fees
The fee depends on the total income the Assessing Officer computed in the disputed order:
- ₹250 where the assessed total income is ₹1,00,000 or less
- ₹500 where it is more than ₹1,00,000 but not more than ₹2,00,000
- ₹1,000 where it exceeds ₹2,00,000
- ₹250 where the appeal does not relate to assessed income, such as certain TDS or penalty disputes
These figures are set by Section 249(1) and have not moved in years. The government fee is nominal; the real cost in most appeals is professional representation.
Preparing Form 35
Form 35 is the prescribed form for the first appeal. Beyond your personal details, it needs three substantive components: a Memorandum of Appeal, a Statement of Facts, and your Grounds of Appeal. You attach the assessment order you are challenging and the notice of demand.
The Statement of Facts is a short narrative of what happened during the assessment: the income you reported, what the Assessing Officer changed, and why the change is wrong. The portal allows up to 10,000 characters, which is enough for most disputes but demands disciplined writing when several issues are in play.
Grounds of Appeal should be numbered and specific. Each ground should isolate a single error: a misread provision, ignored evidence, a wrong rate, a computation slip. Vague or bundled grounds weaken the appeal because the authority has to address each point on its own. The appellate authority can allow you to add grounds later if the omission was not deliberate, but it is far safer to be complete at filing.
Filing on the E-Filing Portal
All first appeals are filed electronically on the Income Tax Department’s e-filing portal. The steps run in this order:
- Log in using your PAN, or TAN for deductor appeals, and password.
- Navigate to Form 35 through Pending Actions, then E-Proceedings, then File Appeal; or through e-File, then Income Tax Forms.
- Select the assessment year of the disputed order.
- Choose the order type. If the order carries a Document Identification Number, select “File appeal for an order with DIN” and pick the DIN from the dropdown. If it does not, enter the section, order number, and date manually.
- Complete the tabs: basic information, order details, pending appeal status, appeal details, taxes paid, and the statement of facts and grounds of appeal.
- Verify and submit using a Digital Signature Certificate, Electronic Verification Code, or another available method.
Much of the basic information auto-populates. Once submitted, the portal generates an acknowledgment; keep the reference number for every future communication about the appeal.
How the Faceless Appeal Scheme Works
Since 2021 the first appeal is decided under the Faceless Appeal Scheme. There is no in-person interaction with the Commissioner (Appeals). Allocation, communication, and the final order all move through the National Faceless Appeal Centre, and the officer deciding your appeal may be sitting in a different city. You cannot influence the allocation.
Because the case is decided primarily on written material, the quality of your Statement of Facts and Grounds of Appeal matters more than it did under the older system where you could explain nuances face to face. You do retain a right to a personal hearing by video conferencing, and the Commissioner (Appeals) is required to grant it and schedule a date through the National Faceless Appeal Centre. If you lack the technology, the Board must provide facilities at designated locations. In complex cases, ask for the video hearing.
What the Commissioner (Appeals) Can Do
Under Section 251, the appellate authority can confirm, reduce, enhance, or annul the assessment. In a penalty appeal, the authority can also raise the penalty. Filing an appeal, in other words, carries a genuine if uncommon risk of making things worse.
The safeguard is procedural. Before increasing your assessment or penalty, the Commissioner (Appeals) must give you a reasonable opportunity to show cause against the proposed enhancement. There is also a substantive limit: the enhancement power extends only to issues the Assessing Officer actually considered in the original assessment. New items of income cannot be introduced for the first time on appeal. The authority can, however, take up matters that arise from the proceedings even if you did not list them as grounds, which occasionally works in your favor and occasionally against it.
Joint Commissioner (Appeals)
The Finance Act, 2023 created a parallel first appellate forum, the Joint Commissioner (Appeals), mainly to clear backlogs. The Joint Commissioner (Appeals) and Commissioner (Appeals) share most powers, including confirming, reducing, enhancing, or annulling assessments and modifying penalties. The narrow difference is that only the Commissioner (Appeals) can set aside an ex parte assessment under Section 144 and remand it to the Assessing Officer for a fresh assessment. You do not choose which authority hears your case.
Stopping Recovery While Your Appeal Is Pending
Filing an appeal does not freeze collection. If you do nothing, the department can pursue the full disputed demand while the appeal is being decided. You have to apply separately for a stay of demand.
Under CBDT guidelines, the standard expectation is that you pay 20% of the disputed demand as a precondition for stay. That figure is the administrative benchmark, not an absolute rule. The Assessing Officer or Principal Commissioner can raise or lower it based on the case, but any departure has to be supported by recorded reasons. Where the demand appears to have no legal basis, some High Courts have held that even the 20% requirement can be waived. Plan for paying roughly one-fifth of the disputed amount if you want to prevent recovery action. Ignoring the demand during the appeal is a common mistake and can lead to bank attachments or property liens even while the merits are still being argued.
Second Appeal: The Income Tax Appellate Tribunal
If the first appeal does not go your way, the next stop is the Income Tax Appellate Tribunal. The ITAT is the final authority on questions of fact. Once it makes a factual finding, neither the High Court nor the Supreme Court will disturb it except in extraordinary circumstances. That makes the ITAT stage the last real chance to argue about what actually happened in your affairs.
The appeal is filed on Form 36 within 60 days of receiving the order of the Commissioner (Appeals) or Joint Commissioner (Appeals). Delays can be condoned on sufficient cause, but the standard is demanding. The fees are higher than at the first level:
- ₹500 where the assessed total income is ₹1,00,000 or less, or where the appeal is not linked to assessed income
- ₹1,500 where the assessed total income is more than ₹1,00,000 but not more than ₹2,00,000
- 1% of assessed income, capped at ₹10,000, where the assessed total income exceeds ₹2,00,000
If the assessed income is a loss, the fee is computed as though that loss were positive income. A stay application at the ITAT stage costs an additional ₹500. The other side, whether it is you or the department, can file cross-objections within 30 days of receiving notice of the appeal even without filing an appeal of its own.
High Court and Supreme Court
After the ITAT, review narrows sharply. An appeal to the High Court under Section 260A is available only if the case involves a substantial question of law. The High Court will not re-examine bank statements, invoices, or other evidence. It will look only at whether the ITAT applied the law correctly. You have 120 days from receiving the ITAT order, and the memorandum must state the substantial question of law with precision.
The Supreme Court sits at the top and takes up tax matters only where a legal question of national importance is involved or where different High Courts have reached conflicting conclusions on the same provision. Reaching the Supreme Court in a tax dispute is rare and typically follows years of litigation.
How Long the Process Takes
Section 250 sets the ideal for the Commissioner (Appeals) at one year from the end of the financial year in which the appeal was filed. In practice, that target is frequently missed. The Faceless Appeal Scheme was intended partly to clear the accumulated backlog, but complex cases and heavy volumes mean many appeals still run longer than the statutory ideal.
ITAT timelines vary by bench and city. Metropolitan benches in Mumbai, Delhi, and Bangalore tend to be slower than smaller ones. High Court and Supreme Court proceedings can run over several years. If the amount in dispute is large, budget for professional representation across what may be a multi-year process before deciding how far to push the appeal.