ITAT Appeal: Procedure, Fees, Stay Application & Form 36 Guide
Quick Answer
The Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income Tax Act, 1961 — and in practice, the most important one. Appeals to the ITAT are filed under Section 253 in Form 36 within 60 days of the CIT(A) order. The ITAT is a fact-finding tribunal whose orders on questions of fact are final — only substantial questions of law can be carried further to the High Court. At Virtual Auditor, we handle ITAT appeals across all benches in India, from grounds of appeal drafting through paper book preparation, stay applications under Section 254(2A), hearing representation, and miscellaneous applications for rectification. CA V. Viswanathan (IBBI/RV/03/2019/12333) personally supervises the legal strategy for every ITAT matter we handle.
Definition — Section 253 (Appeals to the Appellate Tribunal): Section 253 governs the right of appeal to the ITAT. Under Section 253(1), an assessee aggrieved by an order of CIT(A) under Section 250, or by certain specified orders of the Principal Commissioner/Commissioner, may appeal to the ITAT. Under Section 253(2), the Principal Commissioner or Commissioner may appeal to the ITAT against an order of CIT(A) that is prejudicial to the Revenue. The appeal must be filed within 60 days (assessee) or 60 days (Revenue) from the date the order is communicated.
Definition — Section 254 (Orders of Appellate Tribunal): Section 254(1) empowers the ITAT to pass orders on appeals after giving both parties an opportunity of being heard. The ITAT may confirm, reduce, enhance, or annul the assessment, or remand the matter to the AO/CIT(A). Section 254(2) provides for rectification of mistakes apparent from the record within 6 months from the end of the month in which the order was passed. Section 254(2A) empowers the ITAT to grant stay of demand pending disposal of the appeal.
Definition — Form 36 (Memorandum of Appeal to ITAT): The prescribed form under Rule 47 of the Income Tax Rules, 1962, for filing an appeal before the ITAT. Contains: (i) name and address of the appellant; (ii) details of the order appealed against; (iii) grounds of appeal (each ground numbered separately); (iv) statement of facts; (v) details of tax paid; and (vi) verification by the appellant or authorised representative.
Definition — ITAT Rules (Appellate Tribunal Rules, 1963): The procedural rules governing the functioning of the ITAT, including rules for filing appeals, adjournments, hearing procedures, paper book requirements, stay applications, and pronouncement of orders. These rules supplement the provisions of Sections 253 and 254.
ITAT: Structure and Jurisdiction
The ITAT was established in 1941 and is the oldest Tribunal in India. It functions under the Ministry of Law and Justice (not the Ministry of Finance), which ensures its independence from the Income Tax Department. The ITAT has benches across India — including Chennai, Bangalore, Mumbai, Delhi, Kolkata, Hyderabad, Ahmedabad, Pune, Lucknow, Jaipur, Chandigarh, and several other cities.
Bench Composition
Each ITAT bench consists of a Judicial Member (typically a former District Judge or High Court advocate with at least 10 years’ experience) and an Accountant Member (typically a member of the ICAI with at least 10 years’ experience in practice or service). Both members sit together as a Division Bench. In certain cases involving substantial questions of law or where there is a difference of opinion between the two members, the matter is referred to a Special Bench or a Third Member.
Jurisdictional Bench
The appeal must be filed before the ITAT bench having jurisdiction over the area where the Assessing Officer who passed the assessment order is located. For instance, if the AO is based in Chennai, the appeal is filed before the Chennai Bench of the ITAT. If the AO is in Coimbatore (which falls under the Chennai Bench’s jurisdiction), the appeal is still filed before the Chennai Bench. The ITAT’s jurisdiction is determined by the location of the AO, not the address of the assessee.
Appealable Orders Under Section 253
Orders Appealable by the Assessee — Section 253(1)
An assessee may appeal to the ITAT against the following orders:
- Order of CIT(A) under Section 250: This is the most common category. Any order passed by the Commissioner of Income Tax (Appeals) on an appeal filed by the assessee under Section 246A.
- Order of Principal Commissioner/Commissioner under Section 263: Revision order passed by the PCIT/CIT on the ground that the assessment order is erroneous and prejudicial to the interests of the Revenue.
- Order of Principal Commissioner/Commissioner under Section 270A: Penalty order for under-reporting or misreporting of income (where penalty is imposed by the Commissioner).
- Order under Section 272A: Penalty for failure to answer questions, sign statements, furnish information, or allow inspections.
- Order imposing penalty under Section 271J: Penalty on a professional (CA, advocate, registered valuer) for furnishing incorrect information in a report or certificate.
Orders Appealable by the Revenue — Section 253(2)
The Principal Commissioner or Commissioner may appeal to the ITAT against any order of CIT(A) under Section 250 that is prejudicial to the interests of the Revenue. The Revenue’s appeal must also be filed within 60 days of the CIT(A) order.
Form 36: Filing the Appeal
Contents of Form 36
Part A — Appellant Details: Name, PAN, address, status (individual/HUF/firm/company), and details of the authorised representative (name, enrolment number if advocate, membership number if CA).
Part B — Order Details: Details of the order appealed against — order date, order number, section under which passed, the authority who passed it (CIT(A) name and jurisdiction), assessment year, and the date on which the order was communicated to the appellant.
Part C — Grounds of Appeal: Each ground of appeal must be stated separately and numbered. Grounds should be specific — not vague or omnibus. A ground like “The CIT(A) erred in confirming the addition of Rs 5,00,000 under Section 68” is specific. A ground like “The CIT(A) erred in law and in facts” is vague and may be rejected or struck off. The ITAT may permit amendment of grounds during hearing if justified.
Part D — Statement of Facts: A concise statement setting out the facts of the case, the issues in dispute, and how they arose. This is not a legal argument — it is a factual narrative that enables the Bench to understand the case before hearing. Keep it focused and chronological: return filed, assessment proceedings, additions made, CIT(A) findings, and the specific orders/findings challenged.
Part E — Tax and Fee Details: Details of tax demanded, tax paid, and the appeal fee paid. The appeal fee receipt must be attached.
Verification: The appellant (or authorised representative) must verify that the contents of the appeal are true to the best of their knowledge and belief.
Filing Requirements
The appeal in Form 36 must be filed in duplicate (one for the ITAT and one for the respondent). The following must be attached:
- Copy of the order appealed against (CIT(A) order)
- Copy of the assessment order/penalty order (the order that was appealed before CIT(A))
- Copy of the notice of demand (if any)
- Challan of appeal fee payment
- Power of attorney or vakalatnama (if filed through an authorised representative)
From 2020, the ITAT has enabled e-filing of appeals through its portal. Most ITAT benches now accept e-filed appeals, though physical filing is still accepted at the Registry of the respective bench.
Appeal Fee Structure Under Section 253(6)
The fee payable for filing an appeal before the ITAT is prescribed under Section 253(6):
| Total Income Assessed by AO | Appeal Fee |
|---|---|
| Up to Rs 1,00,000 | Rs 500 |
| Rs 1,00,001 to Rs 2,00,000 | Rs 1,500 |
| Above Rs 2,00,000 | 1% of assessed income, maximum Rs 10,000 |
For appeals against penalty orders, the fee is based on the total income as determined in the related assessment order. For appeals against orders under Section 263 (revision), the fee is based on the total income as would be determined if the PCIT’s direction were given effect to. The fee is payable by demand draft or through the ITAT e-filing portal.
Time Limit and Condonation of Delay
60-Day Filing Window
Under Section 253(3), the appeal must be filed within 60 days from the date on which the CIT(A) order is communicated to the assessee. The date of communication is typically the date of service of the order — which may be different from the date of the order itself. If the order is uploaded on the e-filing portal, the date of upload is generally treated as the date of communication. If served by post, the date of receipt (as evidenced by the postal acknowledgement) is the date of communication.
Section 253(5): Condonation of Delay
If the appeal is filed beyond 60 days, the ITAT may admit it if the appellant demonstrates that there was sufficient cause for the delay. The application for condonation of delay must be filed along with the appeal, setting out the reasons for the delay with supporting evidence. The ITAT follows the principles laid down by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC) — that a liberal approach should be adopted in condoning delays if the cause shown is sufficient and the delay is not deliberate or due to negligence.
Common grounds for condonation: illness of the assessee or key person, postal delays, change of counsel, non-receipt of the CIT(A) order (especially where the address on record was outdated), and administrative delays in large organisations. Mere ignorance of the law or negligence of the authorised representative is generally not sufficient cause, though the ITAT exercises discretion on a case-by-case basis.
Cross-Objections Under Section 253(4)
Cross-objections are a powerful but underutilised procedural tool. When the Revenue files an appeal before the ITAT against a CIT(A) order that was partly in the assessee’s favour, the assessee (as respondent) can file cross-objections challenging the portions of the CIT(A) order that went against them — without filing a separate appeal and without paying any additional fee.
Filing Requirements
Cross-objections must be filed within 30 days from the date of receipt of notice of the Revenue’s appeal. The format is similar to Form 36 but filed as a memorandum of cross-objections. The cross-objections are heard together with the Revenue’s appeal.
Strategic Use of Cross-Objections
Cross-objections serve two purposes. First, they bring the assessee’s grievances before the ITAT even if the assessee did not file an independent appeal (perhaps because the CIT(A) gave partial relief and the remaining amount was not worth an independent appeal fee). Second, they ensure that the ITAT considers the complete picture — both the Revenue’s challenge and the assessee’s counter-challenge — in a single hearing.
At Virtual Auditor, we always review the CIT(A) order for cross-objection opportunities when the Revenue files an appeal. Even if the CIT(A) has given substantial relief, there may be smaller issues decided against the assessee that can be raised through cross-objections at no additional cost.
Stay of Demand Under Section 254(2A)
One of the most critical aspects of an ITAT appeal is the stay of demand. When an assessment results in a tax demand and the CIT(A) upholds the demand (wholly or partly), the demand remains enforceable. The Tax Recovery Officer (TRO) can initiate recovery proceedings — attachment of bank accounts, garnishee orders on debtors, and seizure of assets. A stay of demand from the ITAT halts this recovery pending the appeal.
The Three-Factor Test
The ITAT considers three factors when deciding a stay application:
1. Prima Facie Merits: The appellant must demonstrate that the appeal has a reasonable prospect of success — not certainty, but a strong prima facie case. If the issue is covered by a favourable decision of the jurisdictional High Court or the Supreme Court, this factor is strongly in the assessee’s favour. If the issue is debatable with conflicting Tribunal decisions, this still supports stay.
2. Balance of Convenience: Whether the balance of convenience lies in favour of granting stay. If recovery will cause the assessee to close business, lose assets disproportionate to the demand, or suffer consequences that cannot be reversed even if the appeal succeeds, this favours stay.
3. Irreparable Hardship: Whether the assessee will suffer irreparable injury if stay is not granted. Financial hardship alone may not be sufficient — the hardship must be of a nature that cannot be compensated or reversed. For example, if the demand exceeds the assessee’s total net worth, recovery would effectively destroy the assessee’s economic existence.
Duration and Extension of Stay
Under Section 254(2A), the ITAT may grant stay for a period not exceeding 180 days from the date of the stay order. The stay may be extended by a further period not exceeding 180 days if the delay in disposal of the appeal is not attributable to the assessee. The total stay period cannot exceed 365 days.
If the appeal is not disposed of within the stay period and the stay is not extended, the stay automatically vacates. This makes it critical to ensure that the appeal is heard within the stay period — which requires active case management, timely filing of paper books, and avoidance of unnecessary adjournments.
Conditions Attached to Stay
The ITAT typically attaches conditions to stay orders — most commonly, payment of a portion of the outstanding demand (usually 20% to 50%) as a precondition for stay. The percentage depends on the prima facie merits and the assessee’s financial capacity. In some cases, the ITAT may also require the assessee to furnish a bank guarantee or surety.
Drafting the Stay Application
A strong stay application includes: (a) a summary of the grounds of appeal with supporting case law demonstrating prima facie merits; (b) financial statements showing the assessee’s net worth and liquidity position relative to the demand; (c) details of hardship — ongoing business operations that would be disrupted, employees who would be affected, contracts that would be breached; and (d) a statement of willingness to comply with reasonable conditions. File the stay application simultaneously with the appeal to prevent recovery action in the interim.
Paper Book Preparation
The paper book is the compilation of documents that the parties rely upon during the ITAT hearing. Under Rule 18 of the ITAT Rules, either party may file a paper book containing copies of documents, statements, accounts, or other evidence relied upon. The paper book is filed in advance of the hearing to enable the Bench to review the material.
Contents and Organisation
A well-organised paper book is one of the most effective tools in an ITAT appeal. The paper book should contain:
- Index: Detailed index with page numbers and description of each document.
- Assessment Order: Complete copy of the assessment/reassessment order.
- CIT(A) Order: Complete copy of the appellate order.
- Return and Computation: Copy of the ITR filed and computation of income.
- Submissions Made: Copies of written submissions made before the AO and CIT(A) during proceedings.
- Supporting Documents: Relevant documents — bank statements, agreements, valuation reports, audit reports, ledger extracts — specifically referenced in the grounds of appeal.
- Case Law: Copies of cited judicial decisions (with relevant portions highlighted).
The paper book must be paginated continuously and each page must bear the signature or stamp of the authorised representative. File the paper book in the prescribed number of copies (typically 3 — one for each Member and one for the Departmental Representative). At Virtual Auditor, we prepare indexed paper books with cross-referenced tabs for each ground of appeal, ensuring the Bench can locate any document within seconds during hearing.
Hearing Procedure Before the ITAT
Listing and Adjournments
After the appeal is filed, the ITAT Registry assigns a case number and lists the appeal for hearing. The cause list is published on the ITAT website in advance. Both parties are served notice of hearing. If either party requires an adjournment, a written application must be filed before the hearing date. The ITAT discourages frequent adjournments — particularly where stay of demand has been granted — and may vacate stay if the assessee seeks repeated adjournments.
Order of Arguments
In an appeal by the assessee, the assessee’s representative argues first, followed by the Departmental Representative (DR). The assessee then gets a right of reply. In a Revenue appeal, the DR argues first. If both the assessee and Revenue have filed appeals for the same AY, they are typically heard together.
Written Submissions
In addition to oral arguments, parties may file written submissions (also called a synopsis or written brief). Written submissions are strongly recommended — they ensure that every legal argument and factual point is recorded, regardless of hearing time constraints. The written submission should mirror the grounds of appeal, with each ground addressed separately with legal analysis and case law citations.
Virtual Hearings
Since 2020, the ITAT has adopted virtual hearings (video conferencing) as a regular mode of hearing. Most benches offer the option of physical or virtual hearings. Virtual hearings are particularly convenient for out-of-station appeals — an assessee based in Coimbatore with an appeal before the Chennai Bench can appear via video conference without travelling.
ITAT Orders: Types and Implications
Disposal on Merits — Section 254(1)
The standard order where the ITAT decides the appeal on merits after hearing both parties. The ITAT may:
- Allow the appeal: Delete the additions/disallowances, cancel the penalty, or set aside the CIT(A) order in favour of the assessee.
- Dismiss the appeal: Confirm the CIT(A) order against the assessee.
- Partly allow: Allow some grounds and dismiss others.
- Set aside and remand: Set aside the CIT(A) order and remand the matter to the CIT(A) or the AO for fresh consideration with specific directions. Remand typically happens when there is a need for further factual inquiry or when the CIT(A)/AO failed to consider material evidence.
Rectification Under Section 254(2)
If there is a mistake apparent from the record in the ITAT order, either party may file a miscellaneous application (MA) for rectification under Section 254(2). The application must be filed within 6 months from the end of the month in which the order was passed. A ‘mistake apparent from the record’ means an obvious error — not a ground for rehearing or re-arguing the case. Common examples: arithmetical errors, failure to consider a ground of appeal, incorrect citation of facts already on record.
Further Appeal to High Court — Section 260A
An appeal against the ITAT order lies to the High Court under Section 260A, but only on a substantial question of law. Questions of fact — which the ITAT has decided — are not appealable. The High Court appeal must be filed within 120 days of the ITAT order. If the High Court admits the appeal (i.e., frames a substantial question of law), it proceeds to hear and decide the appeal on merits.
Who Can Represent Before the ITAT
Under Section 288 of the Income Tax Act, the following persons can represent an assessee before the ITAT:
- Chartered Accountants: Members of the Institute of Chartered Accountants of India (ICAI) holding a valid Certificate of Practice. CAs are the most common representatives before the ITAT, given their combined expertise in tax law and accountancy.
- Advocates: Advocates enrolled with any Bar Council under the Advocates Act, 1961.
- The assessee in person: The assessee can argue their own case before the ITAT, though this is rarely advisable given the procedural and legal complexities involved.
Notably, tax practitioners registered under Section 288(2) — who can represent assessees before the AO and CIT(A) — cannot represent before the ITAT. Only CAs and advocates have the right of appearance before the ITAT.
Common Grounds of Appeal Before the ITAT
Quantum Appeals
Additions under Section 68 (unexplained cash credits): The assessee challenges the CIT(A)’s confirmation of additions for share capital/premium, loans, or other credits received. The defence focuses on demonstrating identity, creditworthiness, and genuineness of the transaction — the three conditions laid down by the Supreme Court in CIT v. Lovely Exports (2008) 216 CTR 195 (SC).
Additions under Section 69/69A/69B (unexplained investments/money/expenditure): Where the AO has treated investments, money, or expenditure as unexplained. The defence requires proving the source of funds and the legitimacy of the transaction.
Disallowance under Section 14A (expenditure against exempt income): One of the most litigated issues. The AO applies Rule 8D to disallow expenditure allegedly incurred for earning exempt income. The defence challenges the applicability of Section 14A (no exempt income, no expenditure for exempt income) or the computation under Rule 8D.
Transfer pricing adjustments (Chapter X): Where the Transfer Pricing Officer has made an adjustment to the arm’s length price of international transactions. These are typically high-value matters heard by Special Benches.
Penalty Appeals
Penalty appeals under Section 271(1)(c) or Section 270A follow the quantum appeal. The penalty grounds include: defective notice, bona fide explanation, debatable issue, and deletion of quantum addition in appeal.
Jurisdictional Appeals
Reassessment validity: Where the CIT(A) has upheld the validity of a Section 148 reassessment notice and the assessee challenges its validity on jurisdictional grounds — time bar, lack of reason to believe, change of opinion, Section 148A non-compliance.
Section 263 revision: Where the PCIT/CIT has revised the assessment order under Section 263 on the ground that it is erroneous and prejudicial to Revenue. The assessee challenges whether the conditions for Section 263 revision are satisfied — whether the order is truly erroneous and whether it is truly prejudicial to Revenue (both conditions must be met).
Virtual Auditor’s ITAT Appeal Services: Pricing
We offer end-to-end ITAT appeal services with transparent pricing. Every engagement is supervised by CA V. Viswanathan.
ITAT Appeal Filing and Representation (From Rs 50,000): Includes: analysis of CIT(A) order, drafting grounds of appeal in Form 36, statement of facts, paper book preparation, written submissions, and hearing representation (up to 3 hearings). Additional hearings: Rs 10,000 per hearing.
Stay of Demand Application (From Rs 25,000): Includes: stay application drafting with prima facie merits analysis, financial hardship documentation, hearing representation, and follow-up on conditions.
Cross-Objections (From Rs 20,000): Includes: review of Revenue’s appeal grounds, identification of cross-objection opportunities, drafting and filing cross-objections, and hearing representation.
Miscellaneous Application — Section 254(2) (From Rs 15,000): Includes: identification of rectifiable mistakes, drafting MA, filing, and hearing.
High Court Appeal — Section 260A (From Rs 1,50,000): Includes: framing substantial questions of law, drafting appeal memorandum, filing before the jurisdictional High Court, and representation through senior counsel. This is in collaboration with advocates practising before the respective High Courts.
For a detailed fee estimate based on your specific case, visit our pricing page or book a free consultation. Call us at +91 99622 60333.
Practitioner Insight — CA V. Viswanathan
The ITAT is where tax litigation is won or lost. CIT(A) proceedings are important, but practically, the CIT(A) is part of the Revenue hierarchy — the real independent adjudication begins at the ITAT. In my experience, three things determine the outcome of an ITAT appeal: (1) the quality of the paper book — a well-indexed, cross-referenced paper book with all supporting documents allows the Bench to verify every factual assertion during arguments; (2) written submissions that anticipate and address the Department’s counter-arguments — the DR will raise specific objections, and your written brief should pre-empt them; and (3) the stay application, if applicable — securing stay early prevents the coercive recovery that often forces assessees into unfavourable settlements. At Virtual Auditor, we treat the ITAT appeal as the decisive stage. We invest disproportionate effort in paper book preparation and written submissions because, in the ITAT, the record speaks as loudly as oral arguments. One practical tip: always file the paper book at least 7 days before the hearing. Benches that receive the paper book on the day of hearing are less likely to have reviewed it — and your strongest factual evidence may not get the attention it deserves.
Key Takeaways
- Regulations: Section 253 (appeal to ITAT), Section 254 (ITAT orders and stay), ITAT Rules 1963, Form 36 (Rule 47 of IT Rules)
- Time Limit: 60 days from communication of CIT(A) order; condonation of delay under Section 253(5) on showing sufficient cause
- Fee: Rs 500 (income up to Rs 1 lakh), Rs 1,500 (Rs 1-2 lakhs), 1% of assessed income max Rs 10,000 (above Rs 2 lakhs)
- Stay of Demand: Under Section 254(2A), up to 180 days (extendable to 365 days), based on prima facie merits, balance of convenience, and irreparable hardship
- Cross-Objections: Section 253(4), within 30 days of Revenue’s appeal notice, no additional fee
- Representation: Only CAs and advocates can appear before ITAT (Section 288)
- Valuer: CA V. Viswanathan, IBBI/RV/03/2019/12333
Frequently Asked Questions
What is the time limit for filing an appeal before ITAT?
Under Section 253(3), an appeal to the ITAT must be filed within 60 days from the date on which the order of CIT(A) or the order sought to be appealed is communicated to the assessee. The ITAT has power to condone delay under Section 253(5) if the appellant demonstrates sufficient cause for the delay.
What is the fee for filing an appeal before ITAT?
Under Section 253(6), the appeal fee is: Rs 500 where the total income as computed by the AO does not exceed Rs 1 lakh; Rs 1,500 where the total income exceeds Rs 1 lakh but does not exceed Rs 2 lakhs; and 1% of the assessed income subject to a maximum of Rs 10,000 where the total income exceeds Rs 2 lakhs. For penalty appeals, the fee is based on the total income determined in the assessment.
What is Form 36 for ITAT appeal?
Form 36 is the prescribed form for filing an appeal before the ITAT under Section 253. It contains: details of the appellant, the order appealed against, the grounds of appeal, a statement of facts, and a verification. Form 36 must be filed with the Registrar of the Bench of the ITAT having jurisdiction over the case.
Can the ITAT grant stay of demand?
Yes. Under Section 254(2A), the ITAT has the power to grant stay of demand pending disposal of the appeal, subject to conditions. The stay is initially granted for a period of 180 days and can be extended for a further period of 180 days. The ITAT considers: the prima facie merits of the case, the balance of convenience, and irreparable hardship to the assessee if stay is not granted.
Who can represent an assessee before the ITAT?
Under Section 288 of the Income Tax Act, an assessee can be represented before the ITAT by: a Chartered Accountant (CA) holding a certificate of practice issued by ICAI, an advocate enrolled with the Bar Council, or the assessee in person. Tax practitioners registered under Section 288(2) can represent before CIT(A) but not before the ITAT.
What are cross-objections before the ITAT?
Under Section 253(4), if the Revenue files an appeal before the ITAT, the assessee (respondent) can file cross-objections within 30 days of receiving notice of the Revenue’s appeal. Cross-objections allow the assessee to challenge portions of the CIT(A) order that were against them, without filing a separate appeal. No separate fee is payable for cross-objections.
How much does ITAT appeal representation cost?
ITAT appeal filing and representation: from Rs 50,000. Stay of demand application: from Rs 25,000. Cross-objections filing: from Rs 20,000. Miscellaneous application (rectification): from Rs 15,000. Contact Virtual Auditor at +91 99622 60333 for a case-specific quote.
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