Section 361 of the Income-tax Act, 2025 — Constitution of the Income Tax Appellate Tribunal (ITAT)

In plain language

What Section 361 says in plain English

Section 361 of the Income-tax Act, 2025 is the provision that legally creates and constitutes the Income Tax Appellate Tribunal (ITAT) — the independent quasi-judicial body that hears the second stage of income-tax appeals. It carries forward, almost unchanged, what was Section 252 of the old Income-tax Act, 1961. The new Act (effective 1 April 2026, as amended by the Finance Act, 2026) re-numbered the whole statute, and the appeals machinery now sits together in one chapter: constitution of the Tribunal (Section 361), appeals to it, its orders, and onward appeals to the High Court and Supreme Court.

In simple terms, Section 361 empowers the Central Government to set up the Tribunal, decide how many members it has, appoint a President (and Vice-President / Senior Vice-President), and lay down who is qualified to be a member. It is a "structural" section — it does not itself tell you how to file an appeal or what fee to pay; it simply brings the Tribunal into existence and defines its make-up.

Who the Tribunal is made of

• Two kinds of members: The ITAT consists of Judicial Members and Accountant Members, in such numbers as the Central Government thinks fit.
• Judicial Member — broadly, a person who has held a judicial office in India for at least 10 years, or has been a member of the Indian Legal Service (Grade II or above) for at least 3 years, or has practised as an advocate for at least 10 years.
• Accountant Member — broadly, a Chartered Accountant with long standing, or a senior officer of the Indian Revenue Service (Income-tax) who has held the rank of Commissioner/Principal Commissioner for a specified period.
• President — appointed by the Central Government; typically a sitting or retired High Court Judge (with the required years of service), or a serving Vice-President of the Tribunal.

How the Tribunal actually sits (benches)

• Division Bench (the normal bench): One Judicial Member + one Accountant Member sit together. This is the default for most appeals.
• Single Member Bench (SMB): The President, or a member authorised by the Central Government, may sit alone to decide a "small" case — one where the total income assessed by the Assessing Officer does not exceed ₹50 lakh.
• Special Bench: For an important or conflicting question of law, the President may constitute a bench of three or more members (with at least one Judicial and one Accountant Member).
• Third Member reference: If the two members of a Division Bench disagree, the point of difference is referred to one or more other members nominated by the President, and the matter is decided by the majority.

Who it applies to and why it matters to you

Section 361 matters to every taxpayer who loses (fully or partly) at the first appeal stage — before the Commissioner (Appeals) / Joint Commissioner (Appeals) — and wants to fight on, as well as to the Income-tax Department, which can also appeal. The ITAT is the final fact-finding authority in the tax appeal chain. This is a big deal: on questions of fact (how much income, whether an expense is genuine, valuation, etc.), what the Tribunal decides is generally the last word. You can go higher — to the High Court and Supreme Court — only on a substantial question of law, not merely to re-argue the facts.

How Section 361 interacts with related provisions

• Definition link: The phrase "Appellate Tribunal" used throughout the 2025 Act means the Tribunal constituted under Section 361.
• Appeal to the ITAT: The right to appeal, the two-month time limit and the fee are governed by the following sections in the appeals chapter (the successors to the old Sections 253–255), not by Section 361 itself.
• Orders of the Tribunal: The power to pass orders and to rectify mistakes apparent from the record continues (successor to old Section 254).
• Onward appeals: A Tribunal order can be challenged before the High Court on a substantial question of law, and thereafter the Supreme Court.

Practical implications

• There is no change to the appellate ladder: Assessing Officer → CIT(A)/JCIT(A) → ITAT (Section 361) → High Court → Supreme Court. Only the section numbers changed.
• Because the ITAT is not part of the tax department (it functions under the Ministry of Law and Justice), it offers taxpayers a genuinely independent forum.
• Knowing the ₹50 lakh single-member threshold helps you anticipate whether a small case will be heard by one member (faster) or a full bench.
• ITAT hearings are increasingly conducted through the e-filing / e-Court (faceless-style) system, and benches sit across many cities that have a High Court seat.