Sections 359 and 360 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 359 of the Income-tax Act, 2025 lays down how a first appeal is heard: notice of hearing, who may be heard, adjournment and further inquiry, a reasoned written order and a target time. Section 360 sets out what the appellate authority can do in disposing of the appeal. This article reads both as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
The Joint Commissioner (Appeals) or the Commissioner (Appeals) fixes a day and place and gives notice to the appellant and the Assessing Officer; both have a right to be heard. The order must be in writing and state the points for determination, the decision and the reasons. The authority may (not must) hear and decide within one year from the end of the financial year of filing or transfer. In an assessment appeal the authority can confirm, reduce, enhance or annul; enhancement needs a reasonable opportunity of showing cause.
Where these sections sit
Both sections are in part A of Chapter XVIII, in the first group, "Appeals to Joint Commissioner (Appeals) and Commissioner (Appeals)". Which orders are appealable is in sections 356 and 357; form, fee and limitation are in section 358. The Chapter is summarised in the Chapter XVIII guide. For the earlier Act's provisions see our appeal sections mapping note. Later amendments, rules and notifications should be checked.
If you are preparing for a hearing, see our page on legal dispute resolution.
Section 359: procedure in appeal
Notice and right to be heard (sub-sections (1) and (2))
The Joint Commissioner (Appeals) or the Commissioner (Appeals) shall fix a day and place for the hearing and shall give notice to the appellant and to the Assessing Officer against whose order the appeal is preferred. Two persons have the right to be heard:
| Clause | Who | How |
|---|---|---|
| (a) | The appellant | In person or by an authorised representative |
| (b) | The Assessing Officer | In person or by a representative |
What the authority may do (sub-section (3))
Before disposing of the appeal the authority may:
- (a) adjourn the hearing;
- (b) make such further inquiry as he thinks fit, or direct the Assessing Officer to make further inquiry and report the result; or
- (c) allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable.
Clause (c) is a relief for an appellant who left out a ground. The test is the authority's satisfaction that the omission was neither wilful nor unreasonable.
The order (sub-section (4))
The order disposing of the appeal shall be in writing and shall state:
- the points for determination;
- the decision on them; and
- the reasons for the decision.
Time target (sub-section (5))
The authority, where it is possible, may hear and decide the appeal within one year from the end of the financial year in which the appeal is filed or transferred to him under section 356. The words "where it is possible" and "may" make this a target and not a fixed deadline. The text does not state a consequence of exceeding it.
Communication (sub-section (6))
On disposal, the authority shall communicate the order to the assessee and to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
Section 360: powers on disposal
Sub-section (1)
In disposing of an appeal the Commissioner (Appeals) or the Joint Commissioner (Appeals) has these powers:
| Clause | Appeal against | Power |
|---|---|---|
| (a) | An order of assessment | Confirm, reduce, enhance or annul the assessment |
| (b) | An order of assessment made under section 271 | The Commissioner (Appeals) may set aside the assessment and refer the case back to the Assessing Officer for a fresh assessment |
| (c) | An order of assessment for which the proceeding before the Settlement Commission abates under section 245HA of the Income-tax Act, 1961 (43 of 1961) | The Commissioner (Appeals) may, after considering all the material and information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment |
| (d) | An order imposing a penalty | Confirm or cancel the order, or vary it so as either to enhance or to reduce the penalty |
| (e) | Any other case | Pass such orders in the appeal as he thinks fit |
Section 271 is assessment to the extent of the Assessing Officer's judgment (the Act uses a different heading for it). The reference to the 1961 Act in clause (c) is quoted as printed; check that Act where it matters to you.
Sub-section (2): no enhancement without a chance to show cause
The authority shall not enhance an assessment or a penalty, or reduce the amount of refund, unless the appellant has had a reasonable opportunity of showing cause against the enhancement or reduction.
Sub-section (3): matters not raised by the appellant
The authority may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, irrespective of the fact that the appellant did not raise it before him.
Sub-section (3) is wide. Read it with sub-section (2): where the matter would enhance the assessment or penalty or reduce a refund, the appellant must be given the chance to show cause.
Worked example
Sunita Rao (an invented name) appeals against an assessment order. The Commissioner (Appeals) fixes a hearing, gives notice to Sunita and the Assessing Officer, and hears Sunita's authorised representative and the Assessing Officer's representative. Sunita had not raised a ground about a disallowed expense, because the ground was left out of the form of appeal by mistake. The authority is satisfied that the omission was not wilful or unreasonable, and allows her to argue it (section 359(3)(c)).
While examining the matter the authority notices that an income item arising from the same proceedings was left out of the assessment. Under section 360(3) he may consider it even though Sunita did not raise it. Since this might enhance the assessment, section 360(2) requires that she be given a reasonable opportunity of showing cause before any enhancement. If the authority then enhances the assessment, or reduces, confirms or annuls it, his order must be in writing, state the points for determination, the decision and the reasons (section 359(4)), and be communicated to Sunita and to the Commissioner-rank authority concerned (section 359(6)).
Need help with a first appeal?
If you are preparing grounds of appeal, a reply to the Assessing Officer's report or a hearing, our team can help. Please contact us through the page for legal dispute resolution.
Key takeaways
- The appellate authority must fix a day and place and give notice to both the appellant and the Assessing Officer.
- Both sides may be heard, in person or through a representative.
- The authority may adjourn, order further inquiry, or allow a new ground whose omission was not wilful or unreasonable.
- The order must be in writing with the points for determination, decision and reasons.
- Enhancement of an assessment or penalty, or reduction of refund, needs a reasonable opportunity of showing cause.
Read next
- Sections 356 and 357: appealable orders
- Sections 361, 363 and 364: Appellate Tribunal
- Section 358: form of appeal, fee and limitation
- Appeal sections mapping note
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.