Instituting new era of 'faceless', 'jurisdiction-less' proceedings before income tax appellate tribunal

Updated : February 22, 2021 03:50 PM IST

One of the key priorities of the current government is the development of a citizen-friendly and growth-friendly environment.

Authored by Vijay Dhingra, Parul Shah and Nikhil Sangtani

Union Finance Minister Nirmala Sitharaman, on February 1 announced several initiatives, which once implemented should help the current government in moving towards its objective and commitment towards ‘Minimum Government, Maximum Governance’.

One of the key priorities of the current government is the development of a citizen-friendly and growth-friendly environment.

In this tech-savvy age, technology is seen as the need of the hour. The government has set forth an e-governance framework by capitalising on emerging technologies, in its sprint towards digital transformation.

Implementation of the ‘Faceless Assessments’, ‘Faceless Appeals’ and ‘Faceless Penalty’ schemes, by eliminating personal interactions between tax authorities and the taxpayers, are the steps in this digital transformation journey.

For ease of compliance and to reduce physical interface with taxpayers, the government is committed to making the tax administration and litigation processes faceless.

The Finance Minister at paragraph 159 of the speech has indicated that a National Faceless Income-tax Appellate Tribunal Centre is proposed to be established and all communication between the Tribunal and the appellant shall be made electronically and wherever personal hearing is needed, it shall be through video conferencing.

The Budget proposals provide for insertion of new sub-sections in section 255 of the Income-tax Act, so as to provide that the Central Government may notify a scheme for the purposes of disposal of appeal by the ITAT, to impart greater efficiency, transparency and accountability by:

(a) eliminating interface between ITAT and parties to the appeal in the course of proceedings, to the extent technologically feasible;

(b) optimising utilisation of resources through economies of scale and functional specialisation; and

It is also proposed to empower the Central Government for issuing a notification in the Official Gazette, to direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. Such directions are to be issued on or before March 31, 2023. It is proposed that every notification issued shall be laid before each House of Parliament. This amendment will take effect from April 1, 2021.

The current pandemic scenario had enforced the need to conduct the ITAT proceedings in a virtual set up. The pandemic led simulation of e-proceedings before the ITAT has evidenced a glimpse of the future of the ITAT proceedings and the experience has been enriching. The faceless proceedings before the ITAT is a step forward in the digital litigation era.

While the guidelines in relation to the actual functioning of the Faceless Income-tax Appellate Tribunal Centre is awaited, the Government may consider setting in place processes that provide the taxpayer with an adequate opportunity of being heard i.e. a personal hearing. This is in light of the fact that business transactions may be complex and explaining the underlying documentation may require an interface.

Further, considering that the Tribunal is the last fact-finding authority, it is imperative that the facts are appreciated and considered appropriately and thus if due to oversight or communication gaps if any fact is missed or not recorded correctly in the order, that may lead to the filing of a Miscellaneous Application for carrying out rectifications, leading to additional work at all ends.

To make the initiative of Faceless Income-tax Appellate Tribunal Centre a success, the government may consider sharing a draft of the Scheme with the stakeholders for their comments/inputs before implementation.

To conclude, the faceless e-tribunal proceedings have the potential to change the landscape and the future of tax litigation.

Vijay Dhingra is Partner, Parul Shah is a Manager and Nikhil Sangtani is a Deputy Manager at Deloitte Haskins and Sells LLP. Views are personal

Instituting new era of 'faceless', 'jurisdiction-less' proceedings before income tax appellate tribunal

You May Also Like

Closing Bell: Sensex rallied 1,030 points, Nifty at 14,982; Nifty Bank rallies 4%

Nifty Bank jumps over 1,400 points post FM Sitharaman's comment; all constituents in the green

Stock Market Highlights: Sensex ends over 1,000 points higher, Nifty above 14,950; Nifty Bank rallies 4%

Trending on CNBC-TV18

recommended for you