Chapter XVIII - Appeals, Revisions and Alternate Dispute Resolutions
Section 363
Section 363: orders passed by the Appellate Tribunal
Section 363 governs the orders the Appellate Tribunal passes on appeal - including its power to rectify a mistake apparent from the record, a four-year target for deciding appeals, and detailed conditions for granting a stay of demand, including a 20% deposit/security condition and an overall cap on the stay period.
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Need advice on Section 363?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) The Appellate Tribunal may, after giving both the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate Tribunal may amend any order passed by it under sub-section (1) for the rectification of any mistake apparent from record, within six months from the end of the month in which the order was passed, if the mistake is brought to its notice by the assessee or the Assessing Officer.
(3) An amendment, as referred to in sub-section (2), which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made, unless the assessee has been allowed a reasonable opportunity of being heard.
(4) Any application filed by the assessee under sub-section (2) shall be accompanied by a fee of ₹50.
(5) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within four years from the end of the financial year in which such appeal is filed under section 362(1) or (2).
(6) The Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under section 362(1), for a period not exceeding one hundred and eighty days from the date of such order, subject to the condition that the assessee— (a) deposits not less than 20% of the amount of tax, interest, fee, penalty or any other sum payable under this Act; or (b) furnishes security of equal amount as referred to in clause (a), and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order.
(7) No extension of stay, as referred to in sub-section (6), shall be granted by the Appellate Tribunal, where such appeal is not so disposed of within the said period of stay as specified in the order of stay passed under the said sub-section, unless— (a) the assessee makes an application and has complied with the condition referred to in sub-section (6); and (b) the Appellate Tribunal is satisfied that the delay in disposing of the appeal is not attributable to the assessee, so, however, that the aggregate of the period of stay originally allowed and the period of stay so extended shall not exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed.
(8) The order of stay shall stand vacated if the appeal is not disposed of within the period allowed under sub-section (6) or (7), even if the delay in disposing of the appeal is not attributable to the assessee.
(9) The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal.
(10) The Appellate Tribunal shall— (a) send a copy of any order passed under this section to the assessee; and (b) a copy of such order shall also be sent to the jurisdictional Principal Commissioner or Commissioner, electronically on the designated portal designed by the Director General or Principal Director General and the provisions relating to time limits under this Act for any appeal, reference, revision, or otherwise, shall apply accordingly.
(11) Save as provided in section 365, orders passed by the Appellate Tribunal on appeal shall be final.
Introduction
After hearing both parties, the Appellate Tribunal may pass an order on the appeal. Section 363 also covers rectification of an apparent mistake, stay of demand, communication of orders and finality.
A stay application has conditions and time limits. The section distinguishes an initial stay from an extension and provides when a stay stands vacated.
Key takeaways
Hearing before order
Both parties to the appeal must be given an opportunity of being heard.
Rectification window
An apparent mistake may be corrected within six months from the end of the month in which the order was passed, under the section’s conditions.
Stay has conditions
A stay order may require a deposit or equivalent security and is subject to specified duration and extension rules.
Order communication
The Tribunal must send copies as required by the 2026-amended subsection (10).
Passing and rectifying orders
The Appellate Tribunal may, after giving both parties an opportunity of being heard, pass such orders on the appeal as it thinks fit.
It may amend its own order to rectify a mistake apparent from the record, within six months from the end of the month in which the order was passed, if the mistake is brought to its notice by the assessee or the Assessing Officer.
An amendment that enhances an assessment, reduces a refund, or otherwise increases the assessee's liability cannot be made unless the assessee has been given a reasonable opportunity of being heard.
An application by the assessee for such rectification must be accompanied by a fee of ₹50.
Timeline for deciding appeals
Where possible, the Appellate Tribunal should hear and decide an appeal within four years from the end of the financial year in which the appeal was filed under section 362(1) or (2).
Stay of demand
The Appellate Tribunal may, after considering the merits of the assessee's application, grant a stay in proceedings relating to an appeal filed under section 362(1), for a period not exceeding one hundred and eighty days from the date of the stay order, on condition that the assessee deposits not less than 20% of the tax, interest, fee, penalty or other sum payable, or furnishes security of an equal amount.
The Tribunal must dispose of the appeal within that stay period.
An extension of stay is not granted unless the assessee applies, has complied with the 20% deposit/security condition, and the Tribunal is satisfied that the delay in disposing of the appeal is not attributable to the assessee - and even then, the total of the original stay and all extensions cannot exceed three hundred and sixty-five days.
The stay order stands vacated if the appeal is not disposed of within the allowed period, even if the delay is not the assessee's fault.
Costs, communication of the order, and finality
The cost of an appeal to the Appellate Tribunal is at the Tribunal's discretion.
The Appellate Tribunal must send a copy of any order under this section to the assessee, and a copy is also sent electronically to the jurisdictional Principal Commissioner or Commissioner on the designated portal, with the Act's time limits for any appeal, reference or revision applying accordingly.
Save as provided in section 365, orders passed by the Appellate Tribunal on appeal are final.
Step-by-step flow for orders of the Appellate Tribunal under Section 363
- 1
Hearing and order
Under Section 363(1), the Tribunal passes such orders as it thinks fit after giving both parties an opportunity of being heard. Costs are at its discretion (Section 363(9)). Where possible, it may decide the appeal within four years from the end of the financial year in which the appeal was filed (Section 363(5)).
- 2
Is a stay of demand sought while the appeal is pending?
Under Section 363(6), the Tribunal may grant a stay in an appeal under section 362(1) for up to 180 days, if the assessee deposits not less than 20% of the tax, interest, fee, penalty or other sum payable, or furnishes security of an equal amount. The appeal is to be disposed of within the stay period.
- No: Skip to the rectification check (step 5).
- Yes: Go to the next step.
- 3
Is the appeal still pending when the stay period ends?
An extension needs an application by the assessee, compliance with the deposit or security condition, and the Tribunal's satisfaction that the delay is not attributable to the assessee. The total stay, original plus extended, cannot exceed 365 days (Section 363(7)).
- 4
Has the total permitted stay period run out without disposal?
- Yes: The stay stands vacated, even if the delay is not attributable to the assessee (Section 363(8)). Go to the next step.
- No: The stay continues for the period allowed. Go to the next step.
- 5
Is there a mistake apparent from the record in the Tribunal's order?
Under Section 363(2), the Tribunal may amend its order within six months from the end of the month in which it was passed, if the assessee or the Assessing Officer brings the mistake to its notice. An assessee's application carries a fee of ₹50 (Section 363(4)). An amendment that increases the assessee's liability needs a reasonable opportunity of being heard first (Section 363(3)). Save as provided in section 365, the order is final (Section 363(11)).
Practical checklist
Do
- Record the date of the Tribunal order and the date its copy is received.
- For rectification, identify the alleged mistake apparent from the record and the statutory time window.
- For a stay, track its expiry date, deposit or security condition and any extension application.
Avoid
- Do not assume a stay continues automatically while an appeal remains pending.
Illustrative example
Worked example: stay of demand pending a Tribunal appeal
Hypothetical facts (illustration only, not a real taxpayer): A company has an appeal pending before the Tribunal under section 362(1). The sum payable under the Act that is in dispute is ₹12,50,000. It applies for a stay of demand. All figures are assumed.
Deposit condition
The minimum deposit under Section 363(6)(a) is 20% × ₹12,50,000 = ₹2,50,000. Alternatively, it may furnish security of ₹2,50,000.
Stay period
If granted, the stay is for a period not exceeding 180 days from the date of the order.
Extension
If the appeal is not disposed of in time and the delay is not attributable to the company, it may apply for extension. The total cannot exceed 365 days, so the extension can be at most 365 − 180 = 185 days.
Vacation
If the appeal is still not disposed of when the total period ends, the stay is vacated under Section 363(8), even though the company did not cause the delay.
Outcome
- The company must deposit at least ₹2,50,000, or furnish equal security, to get a stay.
- The stay cannot run beyond 365 days in total.
Glossary
- Stay of demand
- A temporary suspension of recovery of the disputed demand under the Tribunal’s order, subject to statutory conditions.
- Rectification
- Correction by the Tribunal of a mistake apparent from the record in its order.
Frequently asked questions
Can the Appellate Tribunal correct a mistake in its own order?
Section 363(2) permits rectification of a mistake apparent from the record within six months from the end of the order month, when brought to the Tribunal’s notice by the assessee or Assessing Officer. The ₹50 fee under subsection (4) applies to an application filed by the assessee. An amendment increasing the assessee’s liability requires a reasonable hearing opportunity.
How much do I have to deposit to get a stay of demand from the Appellate Tribunal?
Not less than 20% of the tax, interest, fee, penalty or other sum payable, or security of an equal amount, as set out in Section 363(6).
What is the maximum total period a stay from the Appellate Tribunal can last?
The initial stay is for up to 180 days; if extended, the aggregate of the original stay and any extensions cannot exceed 365 days, per Section 363(7).
Is an order of the Appellate Tribunal final?
Yes, save as provided in section 365 (appeal to the High Court), per Section 363(11).
Need help applying this provision to your situation?
Get help with your Appellate Tribunal appealLast updated 10 October 2026