Karnataka State Chartered Accountants Association (KSCAA) has submitted a detailed representation to Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, addressing significant delays and pendency issues related to appeals filed with the Commissioner of Income Tax (Appeals) (CIT(A)) under sections 246/246A of the Income-Tax Act, 1961. They highlight that a large number of appeals remain unresolved for over four years, attributing this backlog to factors such as the Vivad se Vishwas scheme, COVID-19 disruptions, and the introduction of faceless appeal schemes.
Acknowledging the acknowledged pendency of appeals, KSCAA emphasizes the creation of a new Appellate Authority, the Joint Commissioner of Income Tax (Appeals), to address the workload. They cite an Internal Party Audit revealing a target for the CIT(A) to dispose of 150 appeals by June 30, 2024, prompting the need for streamlined Standard Operating Procedures (SOPs) to ensure fair and efficient proceedings.
The representation outlines specific grievances and proposes solutions. These include advocating for mandatory timelines for disposal of appeals where representations are made, ensuring adherence to natural justice principles during hearings, and standardizing procedures through SOPs. They recommend measures like mandatory provision of video conferencing for hearings, issuance of show cause notices based on appellant submissions, and allowance for cure of appeal document defects instead of dismissal on technical grounds.
Furthermore, KSCAA suggests granting sufficient time for appellants to respond to hearing notices, discouraging ex parte orders, and ensuring comprehensive disposal of all grounds raised by appellants. They also advocate for the FAA’s consideration of rectification applications and the application of stay of demand provisions in pending appeals.
In conclusion, KSCAA urges for the consideration of their recommendations to improve the appeal process’s efficiency and fairness, ensuring that the challenges faced by taxpayers, professionals, and industries due to procedural inefficiencies are addressed promptly and effectively.
KARNATAKA STATE
CHARTERED ACCOUNTANTS ASSOCIATION (R)
To,
Smt. Nirmala Sitharaman
Hon. Union Minister of Finance and Corporate Affairs
Government of India
Date: 22nd June 2024
SUBJECT: REPRESENTATION REGARDING APPEALS FILED WITH THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER SECTION 246A OF THE INCOME-TAX ACT, 1961
The Karnataka State Chartered Accountants Association (R) (in short `KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by Chartered Accountants and the business community.
In the past, we have written to your good selves many times populating various issues, challenges and hardships being faced by taxpayers and Chartered Accountants and suggesting possible solutions on the same. Herein, we are presenting before your good selves for your kind consideration, issues with respect to Appeals filed with the Commissioner of Income Tax (Appeals) or the Joint Commissioner of Income Tax (Appeals) [First Appellate Authority, in short “FAA” under section 246/246A of the Income-Tax Act, 1961 (“the Act”).
1. INTRODUCTION:
1.1. It is well known that most of the appeals are pending before the FAA and have not been taken up for hearing and subsequent disposal after a period of over four years. It is on account of the dispute settlement scheme known as Vivad se Vishwas scheme (in short VSVS), COVID-19 and the introduction of a faceless appeal scheme.
1.2. Admittedly, there is a huge pendency of appeals before the FAA which has been acknowledged by the Honourable Finance Minister while presenting the Finance Bill, 2023 on. 1′ February 2023.
1.3. The above pendency has necessitated the creation of a new Appellate Authority i.e Joint Commissioner of Income Tax (Appeals).
1.4. We are given to understand that as per Internal Party Audit (in short IAP) 2024 dated 5th April 2024, the FAA has been given a target of 150 appeals to be disposed of by 30th of June 2024.
1.5. All the above developments have necessitated the requirement of SOPs’ to streamline the proceedings before the FAA. Against this backdrop, certain grievances have come to the notice of the Appellants/Authorised Representatives/Professionals. We have listed the grievances below along with suggested possible solutions and practices to ensure that there is no miscarriage of justice.
2. ISSUES ON THE TIMELINES
2.1. Speedy disposal in cases wherein representation has been made by filing of submissions: Presently, the time limit for the disposal of appeals is directory in nature, the same may be made mandatory (or similar directions may be issued) for the speedy disposal of appeals in cases where written (or oral) representations have been made.
2.2. To ensure principles of natural justice in the disposal of appeals:
To direct the FAA to give a window of six months from the date of the first issue of hearing notice (issued in the year 2024 or subsequently), if there is a request for adjournment by the Appellant. It has been noticed that many notices are issued within a span of a fortnight or a month to quickly dispose of the appeals in view of the target given by the Board vide issue of LAP.
3. STANDARDIZING THE PROCEEDINGS BY ISSUING SOPs’ OR SUGGESTED SOPs’ TO ENSURE THAT THERE IS CERTAINTY AND THAT THE CAUSE OF JUSTICE IS FURTHERED:
3.1. Make it mandatory to provide an opportunity to be heard through video conference in all cases irrespective whether the option is exercised by the Appellant. The importance of such an opportunity has been emphasised by multiple judicial precedents. The same may be strictly followed in the view of principles of natural justice.
3.2. It is noticed that no show cause notice is issued after considering the submissions of the Appellant, nor is there a productive discussion during the course of VC (in cases where VC proceedings are being conducted) on the submissions filed previously, which is also in violation of the principles of natural justice. We implore your good self to direct FAA to issue a show cause notice and also consider the suggestions on the effectiveness of VC made wide the representation given in Annexure.
3.3. To provide an opportunity to the Appellant to cure the defect, if any, in the appeal document, filing of additional evidence, petition, filing of condonation application and such other defects, instead of dismissing the appeal on these technical grounds. It is well accepted that the provisions dealing with the appeal are remedial in nature and the technical consideration should not prevail over substantial justice.
3.4. The FAA may be directed to conduct further enquiries, whether or not the assessee has filed responses to the hearing notices. The powers to conduct such enquiries are contained under section 250 of the Act.
3.5. The FAA may be discouraged from passing ex parte orders in the event of non-prosecution by the Appellant and to decide the case on merits. It is well accepted that such an order cannot be passed as per the provisions of section 250 of the Act.
3.6. Instances of FAA not waiting for a report from the assessing officer upon a remand lead to multiplicity of litigation which can be avoided by also providing an opportunity for the asset to file a rejoinder upon receipt of the remand report.
3.7. The FAA may also be directed to dispose of all the grounds of the Appellant by passing a speaking order against each ground especially when the Appellant has made detailed submissions in support of the grounds.
3.8. To give clarity to the Appellants on consideration of early hearing petitions.
3.9. To direct the FAA to consider the application for rectification of mistakes apparent from the records. Although the procedure has been enabled online, there is no such activity in terms of processing such applications in a timely manner.
4. When the provisions of section 249(4) are invoked to dismiss the appeal, an opportunity to be heard may be provided to the Appellants if there is any dispute on the admitted income. In some cases, the basis of rejection is incorrect due to the confusion on admitted vs assessed income. If required, may grant additional time to the Appellants in deserving cases to pay the admitted taxes. This will avoid multiple rounds of litigation.
5. Due to faceless proceedings and dynamic jurisdiction, the FAA may not be aware of the jurisdictional ITAT and High Court rulings leading to reliance being placed on non jurisdictional precedents. The same may be discouraged by sticking to judicial discipline of following binding precedents, including that of jurisdictional ITAT and High Court especially when the same has been brought to the notice by the Appellant.
6. The FAA has the power to grant a stay of demand for appeals pending before them. Considering the same, it is implored to direct such authorities to consider an application for stay, if any filed. Presently, it is noticed that such applications are not being disposed of either by granting or refusing the stay of demand.
7. OTHER TECHNICAL ISSUES
7.1. An option may be given to the assessee to change the challan particulars in the event of the wrong selection of minor code/major head/non-payment under the ‘others’ tab/ and such other deficiencies. Directions may also be given to the assessing officer to change the challan particulars if there is any application moved by the assessee, within a week or in a time-bound manner.
7.2. In addition, explore an option to add Authorised Representative (AR) details for a particular case in the income tax portal to ensure that notices are also served to ARs.
REPRESENTATION:
We are presenting before your good selves the above enumerated issues, challenges and hardships which may be faced by the trade, industry and professionals due to ineffective implementation of the provisions of the Act. Wherever required, we have also given recommendations for your kind consideration. We herewith earnestly request your good selves to kindly direct the concerned authorities to check the system of dealing with the appeals and make the entire process smooth and easy and ensure that the principles of natural justice are followed while disposing off the appeals.
Taking into consideration the hardships caused due to the issue highlighted above, we the members of Karnataka State Chartered Accountants Association, on behalf of the entire Chartered Accountants community and also on behalf of the trade and industry in the state of Karnataka appeal to your good selves to kindly consider our above request and initiate resolutions for the removal of the problems faced.
Yours sincerely,
For Karnataka State Chartered Accountants Association
CA Sujatha G
President
CA. Sunil Bhandary
Secretary
CA. Babitha G
Chairperson, Representation Committee
Cc to:
1. Pankaj Choudhary, Hon’ble Minister of State, Finance, Government of India
2. Sanjay Malhotra, Hon’ble Revenue Secretary, Department of Revenue, Ministry of Finance, Government of India
3. Nitin Gupta, Chairman, Central Board of Direct Taxes
4. Shelly Jindal, PCCIT, Karnataka and Goa
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