Anjana Singh, Parul Shah and Nikhil Sangtani
The government's priority is the development of a corruption-free, citizen-friendly, and growth-friendly environment. The objective of the government is to provide for maximum governance with minimum government. In this complex, tech-savvy age, technology is seen as the need of the hour.
The government in its path towards digital transformation has already introduced and implemented e-assessment framework under the Income Tax Act.
With the advent of the e-assessment scheme, most functions/ processes under the Act, including filing of return, processing of returns, issuance of refunds or demand notices and assessment, which used to require personal human interface between the taxpayer and the Income-tax Department, are now in electronic mode.
This is a result of efforts by the department to harness the power of technology in reforming the system. All these processes are now not only faceless, but also very taxpayer-friendly. Now a taxpayer can manage to comply with most of his obligations under the Act without any requirement for physical attendance in the offices of the Income tax Department.
On the lines of e-assessment, Union Finance Minister, Nirmala Sitharaman, on February 1, 2020 has proposed to introduce framework for e-appeals.
The Face of Faceless appeals
The filing of appeals before Commissioner of Income Tax (Appeals) ‘CIT(A)’ has already been enabled in an electronic mode. However, the complete process was not digitised. A taxpayer can file his appeal through his registered account on the e-filing portal. However, the subsequent process post the filing of appeal is neither electronic nor faceless.
The Finance Bill 2020 has now augmented an e-appeal scheme empowering the Central Government to make a scheme, by notification in the Official Gazette, for the purposes of disposal of appeal by CIT(A), so as to impart greater efficiency, transparency and accountability by—
- (a) eliminating the interface between the CIT(A) and the appellant in the course of appellate proceedings to the extent technologically feasible.
- (b) optimising utilisation of the resources through economies of scale and functional specialisation.
- (c) introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more CIT(A).
It has been provided that the Central Government will issue necessary notifications and directions stipulating the provisions of this Act relating to jurisdiction and the procedure for disposal of appeal that shall not apply or shall apply with such exceptions, modifications and adaptations as may be relevant. Such directions are to be issued on or before 31 March 2022.
The implementation of this initiative is aimed at making the whole system transparent, accountable, effective and environment-friendly, thereby promoting a smooth, taxpayer-friendly and expeditious process for completing appeals, without the taxpayer's personal interaction with tax officials.
The government will have to consider the deficiencies, nuances existing in the current regime e-assessment, address apprehensions of the taxpayers while releasing the new scheme such that it leads to a win-win situation for both the taxpayer and the department.
Faceless appeals will change the landscape of appellate proceedings and the future of tax litigation in India.
(The author Singh is a Director, Shah is a Manager and Sangtani is Deputy Manager with Deloitte Haskins and Sells LLP.)Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.