Sections 253 and 254 of Income Tax Act, 1961: Appeals to ITAT and Orders of Appellate Tribunal

Section 253 specifies the orders against which an assessee or the Income Tax Department may approach the Income Tax Appellate Tribunal, together with limitation, cross-objections, prescribed forms and fees. Section 254 governs the Tribunal's power to hear and decide appeals, rectify mistakes, grant stay and communicate its orders.

Section 253 - Appeals to the Appellate Tribunal

The Appellate Tribunal means the Income Tax Appellate Tribunal constituted under Section 252. Section 253 identifies appealable orders and provides the procedure for bringing an appeal before the Tribunal.

Important classes of appealable orders

As applicable before 1 July 2024, an assessee could appeal to the Tribunal against the categories specified in Section 253(1), including relevant orders of the Commissioner (Appeals) and, from 1 April 2023, specified orders of the Joint Commissioner (Appeals). The provision also covers specified orders of higher income-tax authorities, orders connected with the Dispute Resolution Panel and other orders expressly listed in the section.

• Specified orders of Commissioner (Appeals) under Sections 154, 250, 270A, 271, 271A, 271AAB, 271AAC, 271AAD, 271J and 272A.
• Specified orders of Joint Commissioner (Appeals) under Sections 154, 250, 270A, 271, 271A, 271AAC, 271AAD and 271J.
• Specified orders of Principal Commissioner, Commissioner and other designated authorities, including orders under provisions such as Sections 12AB, 80G, 263, 270A, 271 and 272A where covered by Section 253.
• Specified assessment or rectification orders passed in pursuance of directions of the Dispute Resolution Panel, and specified orders involving Section 144BA.
• Other special orders expressly made appealable by Section 253, including specified orders concerning Section 10(23C).

The exact clause applicable should always be checked against the particular order and the statutory text in force on the relevant date.

Limitation for ITAT appeal and memorandum of cross-objections

Immediately before 1 July 2024, Section 253(3) generally required an appeal under Section 253(1) or 253(2) to be filed within 60 days from the date on which the order sought to be appealed against was communicated to the assessee or to the Principal Commissioner or Commissioner, as applicable.

Under Section 253(4), after receiving notice that the other party has preferred an appeal, the Assessing Officer or the assessee, as applicable, may file a memorandum of cross-objections within 30 days from receipt of the notice. Following the 2023 rationalisation, the cross-objection mechanism extends to the classes of cases covered by the amended provision and is not confined merely to an appeal against an order of the Commissioner (Appeals).

Section 253(5) empowers the Tribunal to admit a delayed appeal or permit delayed cross-objections if it is satisfied that there was sufficient cause for not presenting them within the prescribed period.

Form and fees for appeal to ITAT

An appeal must be filed in the prescribed form and verified in the prescribed manner. Rule 47 of the Income Tax Rules prescribes Form No. 36 for an appeal and Form No. 36A for a memorandum of cross-objections.

No fee is payable for a departmental appeal under Section 253(2) or for a memorandum of cross-objections under Section 253(4), subject to the statutory provision.

Section 254 - Orders of the Appellate Tribunal

Section 254(1) authorises the Appellate Tribunal, after giving both parties an opportunity of being heard, to pass such orders on the appeal as it thinks fit. The provision embodies the hearing requirement before the Tribunal determines the appeal.

Rectification of mistake apparent from the record

Under Section 254(2), the Tribunal may amend an order passed under Section 254(1) to rectify a mistake apparent from the record. For the period covered by this article, the rectification power could be exercised within six months from the end of the month in which the order was passed. If such a mistake is brought to its notice by the assessee or Assessing Officer, the Tribunal is required to make the appropriate amendment within the statutory framework.

An amendment that enhances an assessment, reduces a refund or otherwise increases the assessee's liability cannot be made without notice of the proposed action and a reasonable opportunity of hearing. An assessee's rectification application under this provision carries the prescribed statutory fee of Rs. 50 where applicable.

Stay of demand during ITAT appeal

Section 254(2A) contains the statutory framework concerning disposal of appeals and stay. The Tribunal may, on considering the merits of an assessee's application, grant stay subject to the conditions stated in the provision, including the statutory requirement concerning deposit of not less than 20 percent of the relevant tax, interest, fee, penalty or other sum payable, or furnishing security of equal amount. The initial stay may not exceed 180 days, and the statutory framework regulates extension and the aggregate period of stay.

The section also states that the Tribunal should, where possible, hear and decide an appeal within four years from the end of the financial year in which it is filed. Costs of an appeal are at the Tribunal's discretion under Section 254(2B).

Communication and finality of ITAT orders

Under Section 254(3), a copy of the Tribunal's order is to be sent to the assessee and to the Principal Commissioner or Commissioner. Section 254(4) provides for finality of appellate orders of the Tribunal, subject to the statutory appellate framework, including an appeal to the High Court under Section 260A where its requirements are satisfied.

Official references

For the authoritative text and applicable amendment history, refer to the Income Tax Department - Section 253, Income Tax Department - Section 254, the Income Tax e-Filing Portal and the Income Tax Appellate Tribunal.