Orders of Appellate Tribunal.

363(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.

363(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.

363(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.

363(4)

Any application filed by the assessee under sub-section (2) shall be accompanied by a fee of fifty rupees.

363(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).

363(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.

363(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.

363(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.

363(9)

The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal.

363(10)

The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the Principal Commissioner or Commissioner.

363(11)

Save as provided in section 365, orders passed by the Appellate Tribunal on appeal shall be final.

Explanation

Section Summary:

Section 363 of the Income Tax Act governs the powers and procedures of the Appellate Tribunal in handling appeals. It outlines how the Tribunal can pass orders, amend them, grant stays, and ensure timely disposal of appeals. The section also specifies conditions for stay orders, timelines for appeal resolution, and the finality of Tribunal orders.

Key Changes:

1. Timeline for Appeal Disposal: The Tribunal is now required to dispose of appeals within four years from the end of the financial year in which the appeal is filed (Section 363(5)).
2. Stay Order Conditions: A stay on proceedings can be granted for up to 180 days, provided the assessee deposits 20% of the disputed amount or furnishes equivalent security (Section 363(6)).
3. Stay Extension Limits: The total period of stay (including extensions) cannot exceed 365 days, and the appeal must be disposed of within this period (Section 363(7)).
4. Automatic Vacation of Stay: If the appeal is not disposed of within the allowed stay period, the stay order automatically lapses, even if the delay is not the assessee's fault (Section 363(8)).

Practical Implications:

1. For Taxpayers:

   • Taxpayers must be prepared to deposit 20% of the disputed amount or provide equivalent security to obtain a stay on proceedings.
   • They must ensure timely compliance with Tribunal requirements to avoid the lapse of stay orders.
   • Appeals must be filed promptly, as the Tribunal has a four-year window to resolve them.

2. For the Appellate Tribunal:

   • The Tribunal must adhere to strict timelines for disposing of appeals and granting stay orders.
   • It must ensure that amendments to orders (under Section 363(2)) do not increase the assessee's liability without giving them a chance to be heard.

3. For Tax Authorities:

   • The Principal Commissioner or Commissioner must be informed of all Tribunal orders (Section 363(10)).
   • The finality of Tribunal orders (Section 363(11)) means that appeals can only be challenged as per Section 365.

Critical Concepts:

1. Rectification of Mistakes: The Tribunal can amend its orders within six months to correct errors apparent from the record, but such amendments cannot increase the assessee's liability without giving them a hearing (Section 363(2) and (3)).
2. Stay Order: A temporary halt on proceedings, granted under specific conditions, to prevent immediate enforcement of tax demands during the appeal process.
3. Finality of Orders: Tribunal orders are final and binding unless challenged under Section 365, which allows for appeals to higher courts.

Compliance Steps:

1. For Filing Appeals: Ensure appeals are filed within the prescribed timelines under Section 362.
2. For Stay Applications:
   • Submit an application for a stay order along with the required deposit (20% of the disputed amount) or equivalent security.
   • Monitor the stay period and ensure the appeal is disposed of within the allowed time.
3. For Rectification Requests:
   • File an application for rectification of mistakes within six months of the order, accompanied by a fee of ₹50 (Section 363(4)).

Examples:

1. Stay Order Scenario:

   • A taxpayer disputes a tax demand of ₹10 lakh and files an appeal. To obtain a stay, they deposit ₹2 lakh (20% of ₹10 lakh) or provide security of ₹2 lakh. The Tribunal grants a stay for 180 days, during which the appeal must be resolved.

2. Rectification Scenario:

   • The Tribunal passes an order in favor of the taxpayer but makes a calculation error. The taxpayer files a rectification application within six months, and the Tribunal corrects the mistake without increasing the taxpayer's liability.

3. Stay Lapse Scenario:

   • A taxpayer obtains a stay order, but the appeal is not resolved within 180 days. The stay automatically lapses, and the tax authorities can enforce the demand, even if the delay was due to the Tribunal's workload.

This section ensures a structured and time-bound process for appeals, balancing the interests of taxpayers and tax authorities.