Income Tax Bar Association’s Stance on Technological Shift in Tax Proceedings
The Income Tax Bar Association (ITBA) of Varanasi, well-known for its continuous engagement in suggesting improvements for tax-administration and reforms, has shed light on the pressing concern regarding the rampant use of technology in tax proceedings. This association is making a case not against the technology itself, but rather its unintended consequences on a vast, non-tech-savvy populace.
The Context of the Communication
The communication addressed to Smt Nirmala Sitharaman, the Hon’ble Minister of Finance, hearkens back to a meeting in December 2022. During this meeting, the tax professionals provided valuable suggestions, with a key focus on the challenges of faceless appeals in the Income Tax department.
The Shift to Technology: A Double-edged Sword
Over the past half-decade, manual tasks have seen significant substitutions with technology-driven processes in the domain of tax proceedings. The intentions behind such a shift are undoubtedly praiseworthy – faster processes, lesser human errors, and broader reach. However, there’s a flip side.
Challenges Identified by the ITBA:
Digital Divide: India, a country with a sizable rural population, still grapples with issues like limited computer literacy and internet access. As a result, conducting tax proceedings via e-filing portals has unintentionally ostracized a significant segment of taxpayers.
Unintended Consequences: The lack of response from the taxpayer often leads to ‘high-pitched assessments’. Such situations arise when a person, unfamiliar with the technology, misses out on crucial notices leading to financial repercussions.
The Essence of Fair Play: One cannot be deemed non-responsive or defiant towards departmental notices if they haven’t been duly served. Thus, simply uploading a notice on a portal isn’t synonymous with the proper delivery of notice, especially when dealing with non-assessees from rural backgrounds.
The Irony of Technological Advancement
A key observation shared by ITBA reveals an alarming increase in high-pitched assessments due to the existing system’s unintended barriers. The association strongly posits that while technology aims to simplify, the existing system caters predominantly to regular taxpayers with access to tax experts. The dream of 100% computer-based proceedings can only be realized with 100% computer literacy.
Key Suggestions by ITBA:
Traditional Notice Delivery: Initial notices should be served traditionally via speed-post or through notice servers to ensure they reach the concerned person.
Grace Period for Filing Appeals: Due to the sharp rise in appeal filing delays, ITBA recommends condoning all delays from A.Y.2017-18 onwards.
Establishing Help Desks: Setting up help desks in all Income Tax Offices to assist the non-computer savvy or illiterate taxpayers. Interestingly, ITBA Varanasi has already spearheaded such an initiative.
Broad Application: ITBA emphasizes that their suggestions hold relevance not only for Direct Tax proceedings but also for GST and other financial domains.
Conclusion: The ITBA Varanasi’s proactive approach in identifying and addressing the challenges faced by taxpayers in this digital age is commendable. While the transition to a tech-driven system is inevitable and beneficial, ensuring inclusivity and fairness for all taxpayers, regardless of their tech-savviness, is crucial. The association’s suggestions serve as a constructive roadmap towards achieving this balance.
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INCOME TAX BAR ASSOCIATION
Room No. 22 (Ground Floor) Ayakar Bhawan Maqbool Alam Road,
Varanasi – 221002 (U.P.) E-mail :[email protected]
Smt Nirmala Sitharaman
Hon’ble Minister of Finance
Government of India, North Block
New Delhi
Re: Use of Technology in Tax Proceedings
Respected Madam,
The Income Tax Bar Association (ITBA) Varanasi has been consistently making positive suggestions for better tax-administration and Tax Reforms from time to time and in the same spirit we wish to bring the following suggestions for your kind consideration. It may be recalled that during your recent visit to Varanasi in Dec., 2022 a delegation of tax Professionals had given you a memorandum regarding problems relating to faceless appeals in the Income Tax department besides other valuable suggestions. We wish to draw your kind attention towards a very important and burning topic which is causing deep resentment and problems particularly for the small taxpayers.
In the last about 5 years technology has substituted lot of work which was earlier done manually. The aim and intention was definitely laudable but certain problems has unintentionally arisen which have not been visualized by the Government. India is still not fully educated and the use of computers and internet is still alien for a large population particularly living in rural areas. Conducting of tax proceedings through e-filing portal has become cause of great catastrophe for non-computer savvy assessees and even non-assessees. Record would reveal that in the last 5 year the number of high-pitched assessments mostly due to non-response by the assessee have increased manifolds. Please appreciate a situation where some information based notice has been generated against a non-assessee say, an agriculturist or a person having below taxable income but he never receives any information about the proceedings against him. The department also issues several notices on the portal to discharge their obligation and goes on to frame high-pitched assessment. There are hundreds of thousands of cases where the assessee receives a bolt from the blue when his accounts are attached or demand is pressed by the department.
The need of the hour is that no person should be fastened with tax liability without giving actual proper opportunity of being heard. It is strongly felt that the person should not be condemned as nonresponsive and guilty of deliberate defiance of departmental notices unless it is ensured that the proper person has been served with the departmental notice. Most respectfully, it may be appreciated that uploading of notice on the portal of a non-assessee and non-computer savy villager cannot be treated as proper service of notice.
Madam, the departmental records will reveal that in the last 5 years the number of high-pitched assessment coupled with the non-responsive assesses has increased more than 10 times. The reason is very clear that the assessee never got proper information about the ongoing proceedings. The departmental records will also reveal that the number of appeals filed with request of condonation of delay has also increased drastically only due to the fact that the assessee comes to know about the order passed against him only when the demand is pressed and/or the bank accounts of the assesses are attached.
Madam, the purpose of the technology is to assist in making the proceedings easier. The present system is definitely very good for regular assesses having assistance of tax-experts but it is a cause of great agony for small and illiterate assesses who do not access to internet. 100% computer based proceedings can be successful only when there is 100% computer literacy and use of internet.
We wish to make the following suggestions for your kind consideration:-
1) The initial notice for any proceedings like notice u/s.133 or notice u/s.142 calling for return of income or 148A for initiating reopening of cases must be properly served in the traditional manner through speed-post or through notice server. Similarly, final SCN before passing order should also be ensured to be properly served.
2) Looking to the high increase in delays in filing appeals suitable instructions may be issued to condone all delays in filing appeals from A.Y.2017-18 onwards.
3) In all Income Tax Offices there must be a help desk to assist such non-computer savy/illiterate assesses in making compliances such help desk may comprise of departmental officers, computer experts and even tax-professionals. It may not be out of place to mention that ITBA Varanasi is already running a free help desk to assist small assesses.
4) The submissions made above are applicable not only on Direct Tax proceedings but also to GST proceedings etc.
Respectfully Submitted for kind consideration.
Thanking you,
Yours faithfully,
For Income Tax Bar Association, Varanasi
(Asim Zafar)
President
