The first appeal: form, timeline, the stay deposit myth, and new-evidence rules
If you disagree with an assessment, the first appeal is to the Commissioner (Appeals), filed on Form 35 within 30 days of the demand notice or order being served, with a modest fee based on your assessed income. The appeal is now conducted faceless through the National Faceless Appeal Centre. Two practical points matter: the often-quoted 20% deposit for a stay of demand is not actually mandatory (courts require the officer to weigh your merits and hardship), and new evidence at appeal is admitted only on four narrow grounds under Rule 46A, with the assessing officer given a mandatory chance to respond. If you lose, the second appeal lies to the Income-tax Appellate Tribunal.
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Filing the first appeal
An order such as a scrutiny assessment (Section 143(3)), a best-judgment assessment (Section 144), a reassessment, a penalty order, or a refund denial can be appealed to the Commissioner (Appeals). You file Form 35 online within 30 days of the order or demand notice being served, paying a fee scaled to assessed income (Rs 250 up to Rs 1 lakh, Rs 500 between Rs 1 and 2 lakh, Rs 1,000 above Rs 2 lakh). The appeal is allocated and heard faceless through the National Faceless Appeal Centre under the Faceless Appeals Scheme.
The 20% stay-deposit myth
It is widely said that you must deposit 20% of the disputed demand to get a stay while your appeal is pending. That figure comes from administrative instructions, not the statute, and the High Courts have repeatedly held that it is not a rigid rule: the officer must apply discretion, weighing the prima-facie merits of your case and any genuine hardship, and may grant a stay on less (or nil) in a strong case. So do not assume 20% is the unavoidable price of a stay, make the case on merits.
tipThe 20% deposit for a stay is a guideline, not the law. If your appeal has strong merits or the demand causes genuine hardship, ask for a stay on a lower deposit, courts have backed that discretion.
New evidence: Rule 46A
You generally argue the appeal on the record before the assessing officer. New evidence is admitted only on four narrow grounds under Rule 46A: where the officer refused to admit it, where you were prevented by sufficient cause from producing it, or where the officer gave no proper opportunity. When new evidence is admitted, the Commissioner (Appeals) must record reasons and give the assessing officer a chance to examine it, skipping that confrontation can get the order set aside on further appeal. So assemble your evidence properly at the assessment stage, not the appeal stage.
warningDo not hold back evidence for appeal. Rule 46A lets it in only on four narrow grounds, and even then the officer must get to see it, or your win can be sent back. Put your full case to the assessing officer first.
The first appeal is to the Commissioner (Appeals), filed on Form 35 within 30 days of the order or demand being served, with a fee scaled to your assessed income. It is heard faceless through the National Faceless Appeal Centre. If you lose there, the second appeal goes to the Income-tax Appellate Tribunal within 60 days.
Do I have to deposit 20% to get a stay?+
No, not as a rigid rule. The 20% figure comes from administrative instructions, not the statute, and the High Courts have held that the officer must exercise discretion, weighing the merits of your case and any genuine hardship, and may grant a stay on less or nil. So argue for a stay on the merits rather than assuming 20% is compulsory.
Can I produce new evidence at the appeal?+
Only on the four narrow grounds in Rule 46A: the assessing officer refused to admit it, you were prevented by sufficient cause from producing it (two limbs), or the officer gave no proper opportunity. Even then, the Commissioner (Appeals) must record reasons and let the officer examine it. So put your full evidence to the assessing officer at the assessment stage.
How long does a CIT(A) appeal take and what does it cost?+
The fee is modest, scaled to assessed income (Rs 250 up to Rs 1 lakh, Rs 500 between Rs 1 and 2 lakh, Rs 1,000 above). The timeline varies; faceless appeals are processed through the National Faceless Appeal Centre. Engaging a Chartered Accountant or counsel to draft the grounds of appeal and statement of facts is sensible, and their fees are a deductible business expense.