Chapter XVIII - Appeals, Revisions and Alternate Dispute Resolutions
Section 365
Section 365: appeal to the High Court
Section 365 provides the route from the Appellate Tribunal to the High Court - available only where the High Court is satisfied that a substantial question of law is involved. It sets the 120-day filing window, requires the memorandum of appeal to precisely state the substantial question of law, and describes how the High Court formulates, hears and decides that question.
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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) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law.
(2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be— (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (b) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.
(3) The High Court may admit an appeal after the expiry of the period of one hundred and twenty days referred to in sub-section (2)(a), if it is satisfied that there was a sufficient cause for not filing the same within the said period.
(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(5) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question.
(6) The provisions of sub-section (5) shall not take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.
(7) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.
(8) The High Court may determine any issue which the Appellate Tribunal,–– (a) has not determined; or (b) has wrongly determined, by reason of a decision on such question of law as is referred to in sub-section (1).
(9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.
(10) Where the High Court delivers a judgment in an appeal filed before it under this section, effect shall be given to such order by the Assessing Officer, on the basis of a certified copy of the judgment.
Introduction
A High Court appeal from an Appellate Tribunal order under section 365 depends on a substantial question of law. The aggrieved assessee or specified tax authority files a memorandum identifying that question.
The general period is 120 days from receipt of the Tribunal order. The High Court may admit a late appeal on sufficient cause and formulates the substantial question on which the appeal is heard.
Key takeaways
Legal question required
The High Court must be satisfied that the case involves a substantial question of law.
Receipt-based filing period
The 120-day clock starts when the order appealed against is received by the relevant party or authority.
Memorandum identifies question
The appeal memorandum must precisely state the substantial question of law.
Late admission possible
The High Court may admit an appeal after 120 days if sufficient cause is shown.
When an appeal lies to the High Court
An appeal lies to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law.
The Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, Commissioner, or an aggrieved assessee may file such an appeal, which must be filed within one hundred and twenty days from the date the Tribunal's order is received by the assessee or the relevant income-tax authority, and must be in the form of a memorandum of appeal precisely stating the substantial question of law involved.
The High Court may admit a late appeal if satisfied there was sufficient cause for the delay.
Formulating and deciding the question of law
Where the High Court is satisfied a substantial question of law is involved, it formulates that question, and the appeal is heard only on the question so formulated - the respondent may argue at the hearing that the case does not actually involve that question.
This does not take away the Court's power to hear, for recorded reasons, the appeal on any other substantial question of law not originally formulated, if it is satisfied the case involves such a question.
The High Court decides the formulated question of law and delivers a judgment stating the grounds for its decision, and may award costs as it deems fit.
The High Court may determine any issue the Appellate Tribunal has not determined, or has wrongly determined because of its decision on the question of law.
Procedure and giving effect to the judgment
Except as otherwise provided in the Act, the Code of Civil Procedure, 1908 provisions relating to appeals to the High Court apply, so far as possible, to appeals under this section.
Where the High Court delivers a judgment on an appeal under this section, the Assessing Officer must give effect to it based on a certified copy of the judgment.
Step-by-step flow for an appeal to the High Court under Section 365
- 1
Is the order one passed in appeal by the Appellate Tribunal?
Section 365(1) allows an appeal from every order passed in appeal by the Tribunal. The assessee, or the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, may appeal (Section 365(2)).
- 2
Does the case involve a substantial question of law?
The appeal lies only if the High Court is satisfied that it does (Section 365(1)).
- No: No appeal lies under Section 365.
- Yes: Go to the next step.
- 3
File the memorandum within 120 days
The memorandum of appeal must precisely state the substantial question of law and be filed within one hundred and twenty days from the date the order is received (Section 365(2)). A late appeal may be admitted for sufficient cause (Section 365(3)).
- 4
Formulation and hearing
The High Court formulates the question (Section 365(4)) and hears the appeal on it. The respondents may argue the case does not involve that question (Section 365(5)). For reasons recorded, the Court may also hear the appeal on another substantial question of law not formulated (Section 365(6)).
- 5
Judgment and effect
The High Court decides the question, gives its grounds and may award costs (Section 365(7)). It may decide any issue the Tribunal did not decide or wrongly decided because of a decision on such a question of law (Section 365(8)). The Assessing Officer gives effect to the judgment on the basis of a certified copy (Section 365(10)). The Code of Civil Procedure, 1908 applies as far as may be (Section 365(9)).
Practical checklist
Do
- Retain the Tribunal order and proof of its receipt date.
- Identify and draft the substantial question of law in the memorandum.
- If filing after 120 days, gather the facts supporting sufficient cause.
Avoid
- Do not frame the High Court appeal as a routine rehearing of every factual dispute.
Illustrative example
Worked example: framing a substantial question of law
Hypothetical facts (illustration only, not a real taxpayer): The Appellate Tribunal decides against a company on whether a receipt is a capital receipt. The company receives the Tribunal's order on 1 March 2027. The company believes the Tribunal misread a provision of the Act. All facts and dates are assumed.
Right of appeal
The order was passed by the Tribunal in appeal, and the company is aggrieved, so it may appeal under Section 365(2).
Question of law
The company frames the issue as a precise question on the interpretation of the provision, because a dispute on facts alone would not satisfy Section 365(1).
Time
The memorandum must be filed within one hundred and twenty days from 1 March 2027, the date the order was received.
Admission and hearing
If the High Court is satisfied, it formulates the question and hears the appeal on it. The Department may argue the case does not involve that question.
Effect
If the company succeeds, the Assessing Officer gives effect to the judgment on the basis of a certified copy.
Outcome
- The appeal stands or falls on a substantial question of law.
- The question in the memorandum should be stated precisely, as Section 365(2)(b) requires.
Glossary
- Substantial question of law
- The legal question on which a High Court appeal under this section is admitted and ordinarily heard.
- Giving effect
- Implementing the High Court judgment in the tax proceedings through the specified consequential process.
Frequently asked questions
Can I appeal to the High Court against any Appellate Tribunal order?
Only if the High Court is satisfied that the case involves a substantial question of law - a routine factual dispute without such a question does not qualify for appeal under Section 365.
What is the time limit for filing an appeal to the High Court against the Tribunal's order?
One hundred and twenty days from the date the order is received by the assessee or by the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner/Commissioner, though the High Court may admit a late appeal for sufficient cause.
Can the High Court decide a question of law that wasn't originally formulated?
Yes - Section 365(6) allows the Court to hear the appeal on another substantial question of law, for reasons recorded, if it is satisfied the case genuinely involves that question.
Need help applying this provision to your situation?
Get help with your High Court tax appealLast updated 10 October 2026