Representation regarding disposal of appeals before CIT (Appeals)

Introduction: A recent representation to the Hon’ble Finance Minister, Smt. Nirmala Sitharaman, has highlighted significant delays and challenges in the faceless appeal scheme. Drafted jointly by the Income Tax Bar Association (ITBA) and the All Gujarat Federation of Tax Consultants (AGFTC), this representation dives deep into the issues plaguing the system and offers practical solutions.

Income Tax Bar Association & All Gujarat Federation of Tax Consultants: Overview Founded in 1947, the ITBA stands tall as one of India’s oldest and most active Bar Associations, with a primary mission of representing Tax Consultants and educating Taxpayers. With over 1200 members, the association is a hub for Tax Advocates, Chartered Accountants, and Tax Practitioners. Similarly, the AGFTC, created in 1992, is Gujarat’s foremost apex regional body for tax professionals, boasting a membership of over 1500 from across 37 local bar associations. Both entities emphasize educating the public, bridging gaps between citizens and government authorities, and organizing events like Seminars and Tax Conclaves.

Faceless Appeal Scheme: The Good and the Bad The Faceless Appeal Scheme has revolutionized the appeal procedure with its efficiency, transparency, and impartiality. However, it’s not without its shortcomings:

1. Slow Disposal of Appeals: Despite the scheme’s inception, pending appeals, especially those from 2015 and 2016, remain unresolved. The delay is not just tiresome but also damaging to businesses that need to deposit 20% of the disputed tax.
2. Communication Gaps: The current system functions primarily as a one-way channel. The Commissioner (Appeal) often remains disconnected, leading to ambiguities in case understanding.
3. Calls for Prioritized Disposal: The representation suggests prioritizing certain categories like cases covered by Supreme Court decisions, cases involving senior citizens, and appeals against certain sections of the Act.
4. Potential Floodgate Problem: The slow pace of appeals’ disposal might result in a flood of appeals at the Income Tax Appellate Tribunal if accelerated disposal is initiated.
5. Two-Way Communication: Emphasizing the essence of mutuality, the representation calls for a system where the Commissioner (Appeal) can engage in direct, faceless communication with the appellant, thus fostering a balanced decision-making process.

A Plea for Swift and Effective Action The representation concludes with an earnest plea to the Hon’ble Finance Minister to direct the CBDT and NFAC for expedited and effective hearings. They believe that framing guidelines for appeal disposal will preserve the justice delivery system’s integrity.

Conclusion: As the ITBA and AGFTC jointly submit their concerns and suggestions, it’s evident that while the Faceless Appeal Scheme is a milestone, it needs significant refinements. As India moves towards digitization and efficiency, it becomes essential to address these challenges head-on and create a robust system that upholds justice and fairness.

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Income Tax Bar Association
All Gujarat Federation of Tax Consultants

Date: 29^th August 2023

To
Hon’ble Smt. Nirmala Sitharaman
Honorable Finance Minister
Ministry of Finance
134, North Block, Parliament Street
New Dehi – 110001
[email protected]

Respected Madam,

Sub: Representation regarding disposal of appeals before the Commissioner of Income Tax (Appeals)

1. About Income Tax Bar Association and All Gujarat Federation of Tax Consultants:

The Income Tax Bar Association (ITBA) was established in 1947 with the aim of representing the issues of Tax Consultants and increasing awareness among Taxpayers. The Income Tax Bar Association is one of the oldest and most active Bar Associations in India. It regularly organizes Conferences, Study Circle Meetings, a Two-Day Tax Conclave, etc. for the benefit of the members. It has a membership strength of more than 1200 Tax Advocates, Chartered Accountants, and Tax Practitioners.

The All Gujarat Federation of Tax Consultants (AGFTC), founded in 1992, is the first and only Apex Regional Body of Advocates, Chartered Accountants, and Tax Practitioners and Tax Professionals of Gujarat, with a membership strength of more than 1500 professionals and institutional members from 37 local bar associations from all the districts of Gujarat.

The prime object of the Federation and Association is not only to work for the cause of the professionals but also to educate the public at large. We act as a catalyst between citizens and government authorities. We regularly organize Seminars, Webinars, Tax Conclaves, and Lectures on legal awareness in mofussil areas across Gujarat. The Two-Day Tax Conclave is a landmark event and has become an annual highlight for the tax professionals in the state of Gujarat.

FACELESS APPEAL SCHEME

2. The implementation of the faceless appeal scheme has undoubtedly streamlined the appeal procedure. The faceless appeal scheme has brought about many advantages in terms of efficiency, transparency, and impartiality. The issues faced by taxpayers and tax practitioners are as under:

(i) We have been informed by our members that after the introduction of the Faceless Appeal Scheme, the disposal of pending appeals filed prior to the introduction of the Faceless Appeal Scheme is very slow and in fact, several appeals filed in the Year 2015 and 2016 are still pending.

(ii) Only a few appeals have been disposed of, and there has been an inordinate delay in disposal. There have been very few appeals disposed of so far, even after written submissions have been made. The taxpayers have no update on the status of pendency before the CIT(A) as to what has caused the problem. The pendency of appeals for over 6–7 years has become quite normal. Taxpayers have no recourse in seeking expeditious disposal because there is no person whom they can approach to ask for an early hearing or, in an alternative, arrange a mechanism through which the assessee can file a letter for an early hearing and an early disposal request with the JAO (Jurisdictional Assessing Officer).

(iii) Non-Disposal of Appeals after repeated and multiple submissions uploaded: Some faceless appeals were fixed for hearing more than once in the last two years, and the appellants duly submitted their papers and representation, but the appeals are not being disposed of. In many cases, our members have reported that even though appellants have uploaded their submissions multiple times, no order has been passed.

(iv) When the first appeal is pending, the appellant must deposit at least 20 percent of the tax in dispute for a stay of balanced demand. As stated, we have been informed that some of the appeals have been pending for more than five years. Depositing tax without simultaneous early disposal of appeals causes hardship to the businessman.

(v)     It is requested to that suitable arrangement may be made so as to priority Disposal of few categories of cases like:

• Cases on covered matters by decisions of Hon’ble Supreme Court and jurisdictional High Courts
• Cases where opportunity was not given, and matter is remand back to lower authority.
• Cases involving appeals of senior citizens &Cases of widows.
• Penalty cases where quantum has already been deleted.
• Appeals filed against order u/s 143(1) of the Act.
• Appeals filed against order u/s 272A of the Act.

(vi) Kindly note that this slow disposal of Appeals by NFAC have now led to a spiral effect on the working of the Income Tax Appellate Tribunal. Also, the other worry now is flooding of appeals to the ITAT if the NFAC were to dispose of all the pending appeals within a short span of time.

(vii) Members have also expressed the viewpoint that the present communication mechanism primarily functions as a one-way channel, where information is predominantly disseminated from the appellant to the Commissioner (Appeal). But there is a perceived gap in the ability of the Commissioner (Appeal) to share their concerns on the matters raised or to seek clarification when necessary.

We believe that the appeal process, while efficient, could be further strengthened by introducing a means for the Commissioner (Appeal) to engage in direct communication facelessly with the appellant. By allowing the Commissioner (Appeal) to voice concerns, seek elucidations, and address potential ambiguities, a more comprehensive understanding of the case can be achieved. This, in turn, would contribute to a more informed and balanced decision-making process. By addressing the concerns expressed by our members, we endeavor to uphold the principles of fairness and natural justice in the appeal process. A system that encourages two-way communication aligns with the essence of mutuality, ensuring that both parties are given an equal opportunity to present their viewpoints and contribute to the resolution process.

3. We are making an appeal before your honour to direct the CBDT to direct the NFAC to hear the appeals expeditiously and effectively so that the taxpayers will be able to get finality on the tax dispute at the earliest. Also, considering the huge quantum of pendency, CBDT may be directed to frame guidelines for the disposal of pending appeals so that there are no untoward effects of such disposal that would affect the justice delivery system.

4. We humbly request that you consider the above representation by the All Gujarat Federation of Tax Consultants (AGFTC) and the Income Tax Bar Association (ITBA), do the needful, and oblige.

Thank you for your attention to this matter. We look forward to a positive response from the esteemed board.

Yours sincerely,

C.C.
To
Hon’ble Chairman, Central Board of Direct Taxes,
North Block, New Delhi -110001
Email: [email protected]