Section 364 of the Income-tax Act, 2025 — Procedure of the Appellate Tribunal (ITAT)

In plain language

What Section 364 is about

Section 364 of the Income-tax Act, 2025 lays down the internal working procedure of the Income Tax Appellate Tribunal (ITAT) — the independent, second-appeal forum that hears appeals against orders of the Commissioner (Appeals) / Joint Commissioner (Appeals). It does not decide who can appeal or the fee (those are in the appeal-filing sections); instead it governs how the Tribunal organises itself to hear and decide cases: how Benches are formed, when a single member can decide a case alone, when a larger Special Bench is set up, what happens when members disagree, and the Tribunal's power to run its own procedure. This provision is the 2025 Act's re-enactment of the old Section 255 of the Income-tax Act, 1961, carried forward with substantially the same rules.

Who it applies to

• Any taxpayer — individual, HUF, firm, company, trust — whose case has reached the ITAT stage of appeal.
• The Income Tax Department, which is equally a party and can file appeals before the Tribunal.
• Members and the President of the ITAT, whose powers to constitute and sit on Benches flow from this section.

The key rules inside Section 364

• Benches are constituted by the President: The powers and functions of the Tribunal are exercised through Benches formed by the President of the ITAT from among its members.
• Normal Bench = 2 members: A Division Bench consists of one Judicial Member and one Accountant Member, so both the legal and the accounting sides of a tax dispute are examined.
• Single Member Bench (₹50 lakh limit): The President or a member authorised by the Central Government may, sitting singly, dispose of a case where the total income computed by the Assessing Officer does not exceed ₹50 lakh. This speeds up smaller matters.
• Special Bench (3 or more members): For a particular difficult or important case, the President may constitute a Special Bench of three or more members, of whom at least one must be a Judicial Member and one an Accountant Member.
• Difference of opinion / tie-breaking: If members differ, the point is decided by the majority. If they are equally divided, they record the points of difference and the President refers the case to one or more other members; those points are then decided by the majority of all members who have heard the case (this extra referee is commonly called the "Third Member").
• Power to regulate its own procedure: Subject to the Act, the Tribunal can regulate its own procedure and that of its Benches, including deciding where Benches will sit.

How it interacts with related sections

• Appeal-filing sections: The right to appeal to the Tribunal, the time limit and the filing fee live in the appeal provisions (the 2025 Act equivalents of the old Sections 253/254); Section 364 only handles the mechanics once a case is admitted.
• Orders of the Tribunal: After hearing under Section 364, the Tribunal passes its order; a further appeal on a substantial question of law goes to the High Court.
• Deemed Civil Court powers: The Tribunal enjoys powers of income-tax authorities and is treated as a Civil Court for specified purposes, which supports the procedural authority in this section.

Practical implications for a taxpayer

• If your assessed income is ₹50 lakh or less, do not be surprised if a single member hears and decides your appeal — this is legally valid and usually faster.
• Large or precedent-setting disputes may be sent to a Special Bench; a Special Bench decision carries more weight as persuasive precedent.
• A split verdict is not the end — the Third Member mechanism ensures your case is finally resolved by majority, so you are never left without a decision.
• Because the ITAT is the final fact-finding authority, present all evidence and arguments fully at this stage; the High Court will only look at questions of law.