How do I file a Form 35 appeal to the Commissioner (Appeals) under the Faceless Appeal Scheme?

You opened the e-Filing portal to check your refund and instead found a demand notice: the Assessing Officer (AO) has added Rs 4,00,000 to your income and raised a tax demand you believe is wrong. The clock is now ticking. Under section 249(2) of the Income-tax Act, 1961, you have 30 days from the date the notice of demand was served to file a first appeal in Form 35 to the Commissioner (Appeals) or the Joint Commissioner (Appeals). This guide walks through the statutory basis, the fees, and a fully worked example so you can file before the window shuts.

The Scenario

Picture a salaried taxpayer, Priya, with a total income of Rs 14,00,000 for the assessment year 2025-26. After scrutiny assessment under section 143(3), the AO treats a Rs 4,00,000 bank credit as unexplained, pushes her assessed income to Rs 18,00,000, and issues a notice of demand under section 156 dated 1 October 2026. Priya disagrees: the credit was a documented gift from her father, supported by his bank statement and a gift deed executed on 12 April 2024.

Her choice is not to simply ignore the demand. An unpaid demand attracts interest under section 220(2) at 1% per month and can trigger recovery action. The correct route is a first appeal in Form 35, which must be filed online within 30 days of 1 October 2026, that is by 31 October 2026. Missing that date does not end the matter, but it forces her to plead for condonation of delay, which the appellate authority may or may not accept.

This is the single most common "what if the AO is wrong" situation, and the Income Tax Department's own Form 35 user manual confirms the form is available "for filing appeal" by any assessee or deductor against an order of the AO.

Statutory Answer

Three provisions govern this appeal, and it helps to keep them straight.

First, section 246A lists the orders that are appealable to the Commissioner (Appeals), including assessment orders under section 143(3), reassessment orders under section 147, and penalty orders. Priya's section 143(3) order squarely qualifies.

Second, section 249(2) fixes the limitation period at 30 days. For an assessment or penalty order the 30 days run from the date the notice of demand is served; in other cases they run from the date the order sought to be appealed against is communicated. Section 249(3) allows the Commissioner (Appeals) to admit a late appeal if satisfied there was sufficient cause for the delay.

Third, section 250 prescribes the procedure, including the appellant's right to be heard. Since 2020 that hearing happens electronically. The Faceless Appeal Scheme, 2020 was notified by Gazette notification S.O. 3296(E) dated 25 September 2020, amended as the Faceless Appeal Scheme, 2021, and supplemented by the e-Appeals Scheme, 2023, notified by S.O. 2352(E) dated 29 May 2023. Under these schemes the National Faceless Appeal Centre allocates each appeal through an automated system to an appeal unit, and an appellant who asks for a personal hearing by video conference must be granted one.

A critical practical point: filing the appeal does not automatically stay the demand. Per the CBDT Office Memorandum F.No. 404/72/93-ITCC dated 29 February 2016, as modified on 31 July 2017, an assessee generally needs to pay 20% of the disputed demand to obtain a stay while the first appeal is pending. Priya should budget for this alongside her appeal fee.

Worked Resolution

Form 35 is filed entirely online on incometax.gov.in. Here is how Priya's filing unfolds, with the exact numbers.

Step 1 - Fix the appeal fee. The fee depends on the total income determined by the AO, not on the disputed amount. The Form 35 user manual sets the slabs as follows.

Priya's assessed income is Rs 18,00,000, which is above Rs 2,00,000, so her fee is Rs 1,000. She pays it first through e-Pay Tax (Pending Actions > e-Pay Tax) and notes the Challan Identification Number, because Form 35 asks for the payment details before submission.

Step 2 - Assemble the documents. The portal requires a defined set of attachments, each capped at 5 MB, with a combined limit of 50 MB, uploaded as PDF or as a ZIP containing only PDFs.

Step 3 - Draft the grounds. Priya frames a single clear ground: "The learned AO erred in treating the Rs 4,00,000 credit dated 12 April 2024 as unexplained under section 68, despite documentary evidence of a gift from the appellant's father." She attaches the gift deed and her father's bank statement as documentary evidence.

Step 4 - E-verify and submit. Filing is completed by e-verification using either a Digital Signature Certificate registered and unexpired on the portal, or an Electronic Verification Code (EVC). On success the portal displays a transaction ID and lets her download the acknowledgement. The appeal then flows to the National Faceless Appeal Centre.

The money at stake. If Priya had simply paid, the Rs 4,00,000 addition taxed at the 30% slab plus 4% cess would cost roughly Rs 1,24,800, before interest. Against that, the appeal costs a Rs 1,000 fee and a possible 20% stay deposit of about Rs 24,960 (20% of Rs 1,24,800), which is refundable with interest under section 244A if she wins. To sanity-check how the disputed addition moves her liability across regimes, she can model it on the income tax calculator and compare outcomes on the old vs new regime tool. If the dispute instead concerned tax deducted at source, the TDS calculator helps reconcile the figures before drafting the grounds.

Any amount she eventually recovers appears as a tax refund, and if she had paid the demand as self-assessment tax rather than under protest, the character of that payment is still preserved in her favour on a successful appeal.

FAQ

What is the time limit to file Form 35, and can it be extended?

Section 249(2) gives 30 days from the service of the notice of demand for an assessment or penalty order. There is no automatic extension, but section 249(3) lets the Commissioner (Appeals) condone a delay if you show sufficient cause, such as hospitalisation or non-receipt of the order, supported by evidence.

How much is the appeal fee for Form 35?

Per the Income Tax Department's Form 35 user manual, the fee is Rs 250 if the assessed total income is up to Rs 1,00,000, Rs 500 for income above Rs 1,00,000 up to Rs 2,00,000, and Rs 1,000 for income above Rs 2,00,000. For any other subject of appeal the fee is Rs 250. Pay it via e-Pay Tax before filing.

Do I have to pay the disputed tax before appealing?

Filing Form 35 does not by itself stay recovery. Under the CBDT Office Memorandum dated 29 February 2016, modified on 31 July 2017, paying 20% of the disputed demand generally secures a stay while the first appeal is pending. The unpaid balance still accrues interest under section 220(2) at 1% per month if you ultimately lose.

What happens under the Faceless Appeal Scheme after I file?

The National Faceless Appeal Centre, set up under the Faceless Appeal Scheme, 2020 (S.O. 3296(E) dated 25 September 2020) and the e-Appeals Scheme, 2023 (S.O. 2352(E) dated 29 May 2023), allocates your appeal to an appeal unit by automated system. Communication is electronic, and you may request a personal hearing by video conference, which must be granted on request.

Can I file Form 35 without a Digital Signature Certificate?

Yes. E-verification can be completed with an Electronic Verification Code (EVC) generated through net banking, a bank account, or a demat account, if you do not hold a Digital Signature Certificate. A DSC is mandatory only where the law otherwise requires it for your category of taxpayer.

What if I lose the appeal before the Commissioner (Appeals)?

You may file a second appeal to the Income Tax Appellate Tribunal (ITAT) in Form 36 within 60 days of the date the Commissioner (Appeals) order is communicated, under section 253. Further appeal lies to the High Court on a substantial question of law and then to the Supreme Court.

How large can my attachments be on the portal?

Each individual attachment is capped at 5 MB, and the total across all attachments must not exceed 50 MB. Files must be PDFs, or a ZIP archive that contains only PDFs. Scan your gift deed, bank statements, and the assessment order within these limits before uploading.