Section 363 Income Tax Act 2025: What Orders Can the ITAT Pass and When Can It Grant Stay?
Section 363 regulates orders of the Income Tax Appellate Tribunal (ITAT), correction of mistakes apparent from the record, stay of proceedings and demand, appeal costs, communication of orders and their finality. The provision includes important six-month, 180-day and 365-day time limits.
What powers does the Appellate Tribunal have under Section 363?
Section 363(1): Orders after hearing both parties
The Tribunal may pass such orders on an appeal as it thinks fit, but must first give both parties an opportunity of being heard. The power concerns an appeal before the Tribunal and is exercised subject to applicable statutory procedure.
Can the ITAT correct a mistake in its order?
Section 363(2): Six-month rectification window
The Tribunal may amend an order passed under sub-section (1) to rectify a mistake apparent from the record. The mistake must be brought to its notice by the assessee or the Assessing Officer. The amendment must be made within six months from the end of the month in which the original order was passed. Rectification is distinct from a full rehearing of an appeal on its merits.
Section 363(3): Hearing before adverse rectification
Where an amendment would enhance an assessment, reduce a refund or otherwise increase the assessee's liability, it cannot be made unless the assessee has been allowed a reasonable opportunity of being heard.
Section 363(4): Rectification application fee
An application for rectification filed by the assessee under sub-section (2) must be accompanied by a fee of Rs. 50.
When can the ITAT grant a stay under Section 363?
Section 363(6): Initial stay for up to 180 days
After considering the merits of an assessee's application, the Tribunal may grant a stay in proceedings relating to an appeal filed under Section 362(1). The initial stay cannot exceed 180 days from the date of the order. The assessee must satisfy one of the following statutory conditions:
- Deposit not less than 20% of the tax, interest, fee, penalty or any other sum payable under the Act; or
- Furnish security of an equal amount.
The Tribunal is directed to dispose of the appeal within the stay period specified in the order. A stay is discretionary; the provision does not create an automatic right to suspension of recovery merely upon filing an appeal.
Section 363(7): Extension of stay
Where the appeal is not disposed of during the original stay period, the Tribunal may extend the stay only if the assessee applies, has complied with the deposit or security condition in sub-section (6), and the Tribunal is satisfied that the delay is not attributable to the assessee. The total of the original and extended stay periods cannot exceed 365 days.
Section 363(8): Automatic vacation of stay
If the appeal is not disposed of within the period allowed under sub-section (6) or (7), the stay stands vacated, even where the delay in disposal is not attributable to the assessee. This is the express statutory rule; the effect of any applicable binding judicial decision should be assessed separately in a particular case.
Key time limits and amounts
| Provision | Requirement | Period or amount |
|---|---|---|
| 363(2) | Rectification of mistake apparent from record | Within six months from end of month of ITAT order |
| 363(4) | Assessee's rectification application fee | Rs. 50 |
| 363(5) | Target for disposal of appeal, where possible | Within four years from end of financial year of filing under Section 362(1) or (2) |
| 363(6) | Initial stay | Up to 180 days; deposit of at least 20% or equal security |
| 363(7) | Combined original and extended stay | Not more than 365 days |
| 363(8) | Expiry of stay without appeal disposal | Stay stands vacated |
Section 363(5): Four-year disposal target
Where possible, the Tribunal may hear and decide an appeal within four years from the end of the financial year in which it was filed under Section 362(1) or (2). The words where it is possible qualify this provision; it should not be described as an absolute deadline that automatically invalidates an order.
Who bears appeal costs and who receives the order?
Section 363(9): Costs
The cost of any appeal to the Appellate Tribunal is at the Tribunal's discretion.
Section 363(10): Communication of the order
The Tribunal must send a copy of its order to the assessee and a copy to the jurisdictional Principal Commissioner or Commissioner electronically on the designated portal designed by the Director General or Principal Director General. Applicable time limits for an appeal, reference, revision or other proceeding operate accordingly. This subsection reflects the Finance Act, 2026 amended text.
Section 363(11): Finality, subject to Section 365
Except as provided in Section 365, orders passed by the Tribunal on appeal are final. The statutory exception is important when considering a further appeal to the High Court.
Relevant statutory definitions and expressions
Practical illustrations
Illustration 1: Security in place of deposit
An assessee seeks a stay concerning an outstanding demand of Rs. 10 lakh in an appeal under Section 362(1). The condition under Section 363(6) would require a deposit of at least Rs. 2 lakh or security of an equal amount, in addition to a favourable decision on the merits of the stay application. The Tribunal may grant an initial stay for up to 180 days.
Illustration 2: Extension of stay
An appeal remains pending after the first 180 days. The assessee applies for an extension, has complied with the deposit or security condition and establishes that the delay is not attributable to the assessee. The Tribunal may extend the stay, but the aggregate stay period under Section 363(7) cannot exceed 365 days.
Illustration 3: Rectification deadline
If the Tribunal passes an order on 10 June 2026, the six-month period under Section 363(2) is measured from the end of June 2026. On the face of the statutory calculation, the rectification period ends on 31 December 2026, subject to any legally applicable rules affecting computation of time.
Frequently asked questions
Can the ITAT grant a stay without hearing the appeal finally?
Yes. Section 363(6) permits an interim stay after consideration of the merits of the assessee's application, subject to statutory conditions.
Is a 20% deposit compulsory in every stay case?
Section 363(6) provides alternatives: deposit of not less than 20% of the covered amount, or furnishing security of an equal amount. Other legal issues and binding judicial decisions may also affect a particular case.
How long can an ITAT stay continue under Section 363?
The initial period is up to 180 days. Extensions are conditional, and the aggregate statutory period is capped at 365 days.
Can an ITAT order be rectified after six months?
Section 363(2) specifies a six-month period measured from the end of the month in which the order was passed. The availability of any separate remedy must be considered independently.
Is every ITAT order final?
Section 363(11) makes appellate orders final save as provided in Section 365, which concerns appeals to the High Court.
Official source and related sections
Read the official Income-tax Act, 2025, as amended by the Finance Act, 2026. Related reading: Section 361: Appellate Tribunal, Section 362: Appeals to ITAT, and Section 364: Procedure of Appellate Tribunal.
Updated: 12 November 2026. This article is for general legal information and does not replace case-specific professional advice.