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Income-tax Act, 1961 · Chapter XX: Appeals and Revision · B. Appeals to the Appellate Tribunal

Section 254: Orders of Appellate Tribunal

The Income-tax Act, 1961 was repealed by the Income-tax Act, 2025 from 1 April 2026. The text is kept here because the judgments below apply it.

In plain words

This section sets out the powers of the Appellate Tribunal. After hearing both sides, it may pass any order it thinks fit on the appeal, and it may correct mistakes apparent from the record within six months from the end of the month in which its order was passed.

  • An amendment that increases the assessee's liability can be made only after notice and a hearing.
  • The Tribunal should try to decide appeals within four years from the end of the financial year in which they are filed.
  • It may stay proceedings for up to one hundred and eighty days, and may extend the stay if the delay in deciding the appeal is not the assessee's fault.
  • Orders of the Tribunal on facts are final, and only questions of law can be taken further.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

(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, at any time within2[six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing Officer]:

Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard: [Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.] [(2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) [or sub-section (2)] *** of section 253: [Provided that 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 sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order:

Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, 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: [Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.]]

(2B) The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal.]

(3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the [*** [Principal Commissioner or Commissioner]].

(4) *[Save as provided in section 256 or section 260A], orders passed by the Appellate Tribunal on appeal shall be final.

Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 254