Representation on Issues in Faceless Assessments/Penalties/Appeals

Direct Taxes Professionals’ Association made a Representation for issues assessees are facing in Faceless Assessments / Penalties and Faceless Appeals to CBDT Chairman. Full text of their Representation is as follows:-

DIRECT TAXES PROFESSIONALS’ ASSOCIATION
Income Tax Building, 3, Govt. Place West, Ground Floor, Kolkata 700001 Ph 033-22420638
Email : dtpakolkata@gmail.com

Ref. No. – DTPA/Rep/21-22/28

Date: 2nd August, 2021

To,

The Chairman,
Central Board of Direct Taxes,
Ministry of Finance,
North Block, New Delhi 110 001
Respected Sir,

Sub: Representation for issues assessees are facing in Faceless Assessments / Penalties and Faceless Appeals

We would like to make following submission regarding issues assessees are facing in Faceless Assessments/ Penalties and Faceless Appeals for kind consideration by your Honour:

1. Faceless Assessments:

a) The faceless assessment orders in many cases are high pitch assessments and the taxpayers are made to suffer. The Officials are not providing reasonable time for compliance. They should be instructed to give at least 2 weeks time for compliance of any Notice for the sake of natural justice. If the faceless mechanism is not just and proper, the purpose will be belied. People will loose confidence in the same. Kindly set up a study group to review at least 100 high pitch orders.

b) The NeAC invariably issues draft assessment orders and show cause and grant only 48 hours time for response, which is too short. In many cases, even though response to the show cause has been made, final assessment orders are being passed without considering the adjournment request and/or response thereto. Many courts have also passed judgments setting aside such orders on the principle of violation of natural justice. The officials of Ministry of Finance/ Income Tax Department must be made aware of this fact and minimum time of TWO Weeks should be allowed for compliance of any Notice.

c) The Officials are not affording opportunity for Video Hearing despite request by the taxpayer.

d) With regard to the NFAC scrutiny proceedings, we would like to state that detail of loan and deposits are already mentioned in the tax audit report in Schedule 269SS. However Query is being raised to substantiate the opening balance which has already been accepted in the earlier years, and if the explanation for the opening balance is not provided the additions are being made for this opening balance in the final order. This is NOT JUSTIFIED at all. Please issue appropriate Instructions so that query is not raised in respect of opening balances.

e) We humbly submit that in case of faceless assessments the officials need to have a justified approach and they should not proceed only for raising REVENUE.

2. Penalty: Penalty notices are being issued at random even in cases where Form 3 has been issued by the Pr. Commissioner in Vivad Se Vishwas Scheme cases and Form 4 has also been filed by taxpayers.

3. Appeals:

a) Adequate time is not being allowed to the taxpayers for compliance/ furnishing their submissions and evidences in case of faceless appeal proceedings. This is creating bad image of the functioning of Faceless Appeal System. Further the CIT (Appeals) are not even looking at the records as to whether the taxpayer has made declaration under Vivad Se Vishwas Scheme. In many cases it has been noticed that despite submissions made by the assessee, the appeals are not being disposed of by the NFAC and there is huge backlog.

b) Certain Orders are being passed by the Appellate Authority in cases where the additions are made during the scrutiny assessment u/s 143(3) and/or u/s 143(1) on account of Employees Contribution to Provident Fund, sustaining such addition on the ground that by the Finance Act, 2021 amendment has been made to the provision of section 43B and it is retrospective. Accordingly employees contribution paid beyond the due date under the specific Act are being added and sustained even though there are many judgements where the law is well settled that Employees Contribution to PF & ESI is allowable if paid within the due date of filing of the return. The Hon’ble ITAT in some cases have also admitted such addition post amendment. We would like to make humble submission in this regard that necessary amendment should be made in the PF & ESI Act and allowability should be on payment basis as per the earlier well settled principle to avoid unnecessary additions and litigations.

Your goodself will further appreciate that these are some of the issues being faced by the assessee and professionals causing difficulty in making proper compliances.

We request your honour to kindly consider the above representation favorably and we shall be obliged for such consideration.

For this act of kindness, we shall remain grateful to you.

With Best Regards,

Yours faithfully,

For DIRECT TAXES PROFESSIONALS’ ASSOCIATION

CA N.K. Goyal
President Chairman,

Adv Narayan Jain
Representation Committee