Appeal to the Commissioner (Appeals): the first real appeal
The last forum that will reconsider your facts cheaply — and the only one that can increase your assessment as well as reduce it.
The first real appeal — 30 days from service of the demand, ₹250 to ₹1,000, filed in Form 35 (Form 99 from tax year 2026-27). It reconsiders facts and law, and it is the last cheap opportunity to do that. It can also enhance your assessment, though not without warning you first.
If you miss it: A late appeal can be admitted for sufficient cause, on evidence — a request rather than a right. Meanwhile the demand stands and interest runs at 1% for every month or part of a month.
s. 249 up to 2025-26 · s. 358 from 2026-27 · checked 10 September 2026
Key takeaways
- It is the last forum that will reconsider your facts cheaply. The Tribunal will too, but at counsel's rates.
- Two separate payments: the tax on your returned income, to get admitted, and roughly 20% if you want the demand stayed.
- It can confirm, reduce, enhance or annul — and enhancement needs a show-cause first, which is a real protection.
- Appeals are largely faceless. The submissions are the case, because nobody is going to ask you a supplementary question.
- New evidence is admitted only in defined circumstances, so the record you build here is the record that goes up.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 on 1 April 2026 and renumbered almost everything. It did not renumber your notice. Under the repeal-and-savings provision, an assessment, reassessment, appeal or penalty for a tax year before 1 April 2026 stays under the 1961 Act — even where the notice itself arrives after that date. So the number that governs the letter in your hand is decided by the year the letter is about, not by the date it was posted. Both numbers are given on every page here, with the governing one first.
“The provisions of the repealed Income-tax Act shall continue to apply to any proceeding pending on the date of commencement of this Act and to any proceedings initiated on or after the 1st April, 2026 (including notices, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals) in respect of any tax year beginning before the 1st April, 2026.”
- Notice about 2025-26 or earlier
- The Income-tax Act, 1961 numbering is the one that governs it — s. 143(2), s. 156, s. 220, Form 26AS, Form 16. That is most letters arriving in 2026.
- Notice about 2026-27 or later
- The Income-tax Act, 2025 numbering governs — s. 270(8), s. 289, s. 411, Form 168, Form 130. In practice, letters from 2027 onward.
What this forum can actually do
The powers are wider than people expect, in both directions. The first appellate authority can confirm an assessment, reduce it, enhance it, or annul it altogether. It can set an assessment aside and send it back for a fresh one. On a penalty it can confirm, cancel, enhance or reduce. And it can pass such other orders as it thinks fit.
That breadth is why the first appeal is worth taking seriously rather than treating as a formality on the way to the Tribunal. It is a genuine reconsideration of the year — the whole year, not the paragraph you disliked.
The limit on the downside is a proper one and it is worth knowing precisely: no enhancement of an assessment or a penalty, and no reduction of a refund, without giving the appellant a reasonable opportunity of showing cause against it. An enhancement cannot appear for the first time in the order. If one does, that is a point in itself.
| Outcome | What it means for you |
|---|---|
| Annul | The assessment goes entirely |
| Reduce | The addition comes down, wholly or in part |
| Confirm | It stands, and the next rung is the Tribunal |
| Enhance | It goes up — but only after a show-cause giving you the chance to argue against it |
| Set aside | Sent back to the Assessing Officer for a fresh assessment, which restarts that process |
s. 251 of the 1961 Act for a tax year up to 2025-26; s. 360 of the 2025 Act from 2026-27. The safeguard on enhancement is s. 360(2).
What has to be paid, and when
Two payments, for two different purposes, and running them together is the commonest and most expensive confusion in this area.
- 1To be admitted: the tax due on your returned income must have been paid. That is the income you yourself declared in the return — not the addition you are disputing, and not a percentage of anything. Where no return was filed, an amount equal to the advance tax payable. There is an exemption where the authority is satisfied on reasons recorded in writing.
- 2To stop recovery: a separate application to the Assessing Officer to be treated as not in default while the appeal is pending. The Act gives an express discretion. In practice it is exercised against an administrative benchmark of 20% of the disputed demand, which is CBDT guidance rather than statute — so an officer can order less, and the Supreme Court has confirmed a lesser amount can be directed.
- 3The filing fee itself: ₹250 where assessed income is ₹1,00,000 or less, ₹500 up to ₹2,00,000, and ₹1,000 above that. It is flat above ₹2 lakh, so it is ₹1,000 on a ₹5 crore assessment.
It runs at 1% for every month or part of a month on whatever is unpaid, throughout the appeal. On a ₹5,00,000 demand that is ₹5,000 a month, and a two-year appeal is ₹1,20,000. If the appeal succeeds the interest falls away with the demand; if it does not, you have financed the dispute at 12% a year. That number, rather than the ₹1,000 fee, is what the decision to appeal should be made on.
Building the appeal — where it is actually won
First appeals are largely conducted faceless, which changes what works. There is no officer to persuade in a room and nobody will ring you for the document you left out. What you file is the case.
- The grounds of appeal should be specific and separately numbered. A ground saying the addition is 'bad in law and against the facts' gives the authority nothing to decide.
- The statement of facts should tell the year's story in plain sequence, because whoever reads it knows nothing about you beyond the file.
- Attach the evidence rather than describing it — bank statements, agreements, confirmations, the ledger extracts that show what actually happened.
- Deal with the reasoning in the assessment order directly, paragraph by paragraph. An appeal that restates the return without engaging with why it was rejected does not move anything.
- Explain the commercial reality. A great many additions are made because a transaction looked odd on paper and the context was never supplied.
- Where a legal point exists — limitation, jurisdiction, a denial of opportunity below — take it explicitly and early rather than leaving it implicit.
New evidence is admitted at the first appeal only in defined circumstances — broadly where the Assessing Officer refused to admit it, where you were prevented by sufficient cause from producing it, or where it was not asked for. So the material you put in here is largely the material the Tribunal will see. Holding something back for a later stage is a plan that usually fails.
How long it takes, and what to do meanwhile
One to three years is an ordinary range for a first appeal, and the demand is live throughout unless stayed. So the period after filing is not dead time — it is the period in which the demand has to be managed.
Practical things worth doing: keep the stay alive and renew it if it was granted for a limited period; respond to any further query promptly, because a query left sitting is the part of the delay you own; and watch for any refund for another year being proposed for set-off against this demand, which requires written intimation and is your opportunity to object.
If the appeal succeeds and the demand is reduced, the interest reduces with it and any excess already paid is refundable. Chasing appeal effect is its own small task — an appellate order that nobody has given effect to is a standing reason for disagreeing with a demand on the portal, which tells you how often it happens.
After the order
Whichever way it goes, two clocks start on communication of the order.
- If you want to go further: the Appellate Tribunal, within two months from the end of the month in which the order was communicated — not two months from the date. An order communicated on 15 August runs to 31 October.
- If the department goes further and you do not: a memorandum of cross-objections, within 30 days of receiving notice of their appeal, on the points decided against you. It carries no fee and is treated as an appeal in its own right.
- If the order reduced the demand: chase appeal effect, and check the demand has actually been revised on the portal.
- If the order enhanced it: a fresh demand follows, with its own 30 days, and its own consequences from day 31.
Worked examples
Example 1: A first appeal that was worth the ₹1,000
- Addition
- ₹22,00,000, unexplained cash credits
- Assessed income
- ₹34,00,000
- Evidence
- Confirmations, bank trails, both parties assessed
- 1.Fee ₹1,000, because assessed income exceeds ₹2 lakh. The tax on the returned income was already paid, so admission was not in question.
- 2.Grounds drafted separately and specifically, each engaging with a paragraph of the assessment order rather than asserting the addition was wrong generally.
- 3.Every confirmation, bank statement and ledger extract attached rather than described, because the appeal is decided on the file.
- 4.A stay application to the Assessing Officer, arguing for less than 20% on the strength of the documentary case.
The point of the example is the ratio: ₹1,000 to put a ₹22,00,000 addition before an authority that can annul it. The work was in the submissions, not in the fee.
Example 2: An appeal where the enhancement was headed off
- Appealed
- A ₹4,00,000 disallowance
- Show-cause received
- Proposing to enhance on a different item
- Response
- Filed within the period given, with documents
- 1.The authority identified something else in the year and proposed to enhance. It could not simply do it — a show-cause had to be issued first.
- 2.That show-cause is the opportunity, and it is the only one. Ignoring it would have left the enhancement unopposed.
- 3.The response addressed the proposed item on its own facts, with the documents that explained it.
- 4.The enhancement was not pressed, and the original ground was decided on its merits.
The safeguard works, but only if you use it. An enhancement show-cause is not a formality — it is the single most important document to arrive during a first appeal.
Example 3: A small demand where the honest answer was not to appeal
- Demand
- ₹38,000
- Merits
- Arguable, not strong
- Representation quoted
- More than the demand
- 1.The filing fee is ₹250 or ₹500 on these figures, which is not the issue.
- 2.Representation costs more than the amount in dispute, and the appeal takes one to three years.
- 3.Meanwhile the demand runs at 1% a month unless stayed, and a stay application is itself work.
- 4.Paying, and separately pursuing a rectification if any part of it is an obvious error, reaches the same place faster and cheaper.
Included because most pages on this subject imply every demand is worth appealing. This one was not, and recognising that is a service rather than a failure. What is never right is ignoring it.
More questions about this page
What is a CIT appeal?▼
How much does a CIT appeal cost?▼
What must I pay before a CIT appeal is admitted?▼
Can the Commissioner (Appeals) increase my tax?▼
Does a CIT appeal stop recovery of the demand?▼
How long does a CIT appeal take?▼
Can I submit new evidence in a CIT appeal?▼
Is a CIT appeal faceless?▼
What happens after the CIT(A) order?▼
Should I appeal a small demand?▼
Official sources checked
The statutes, rules and regulator pages the statements on this page were checked against.
- Income-tax Act, 2025 — s. 357 (appealable orders), s. 358 (form, fee, limitation, and the condition for admission at s. 358(6)), s. 359 (procedure), s. 360 (powers, with the enhancement safeguard at s. 360(2)), s. 362 (onward appeal to the Tribunal), s. 411(12) (not in default pending appeal)s. 360(2): no enhancement of an assessment or penalty, and no reduction of a refund, unless the appellant has had a reasonable opportunity of showing cause.
- Income-tax Act, 1961 — ss. 246A, 249, 250, 251, 253, 220(6)Governs an appeal concerning tax year 2025-26 or earlier, by reason of the repeal-and-savings provision in s. 536 of the 2025 Act.
- Income-tax Rules, 2026 — rule 167, Form 99Replaces Form 35 for appeals concerning tax year 2026-27 onward.
- The 20% stay benchmark — administrative guidance, not statute.
You are here
Preparing a first appeal against an assessment or penalty order
What to do next
- 1
Work out your fee, form and clock
The slabs, the form number under both numbering systems, and what must be paid before admission.
Appeal fee calculator → - 2
If you want the whole ladder rather than this rung
Six forums, and the point at which you stop being able to argue about facts comes earlier than most people expect.
Income tax appeal → - 3
If the demand is running while you wait
Interest at 1% a month, a possible penalty up to the arrears, and set-off against every other year's refund.
Income tax demand notice → - 4
If the order came out of a faceless assessment
An addition that was never put to you is a procedural point of a different order from a disagreement about the facts.
Faceless assessment →
This page is general information about procedure and deadlines, checked against the provisions in force on the date shown. It is not advice on your own assessment, and a notice that looks routine can turn on facts a page cannot see. Where money or a limitation period is at stake, put the notice in front of a practising Chartered Accountant.