Introduction: The current tax assessment and appeal procedures in India demand significant reform to ensure fairness, efficiency, and reduced stress for taxpayers. This article explores key areas that require attention, including the rectification process, partial payment for appeals, and the granting of stay for tax collection.
On receipt of an assessment order, if the assessee finds a mistake, a rectification petition can be filed under section 154. For this the assessee is given time of 30 days as given for payment of tax i.e. either the assessee has to pay the demand within 30 days or if he disagrees with the demand since there are mistakes in the order and if the same are rectified either the demand will get reduced or there won’t be any demand at all, he can file a rectification petition. As per the present Act the Assessing Officer/CPC/NFAC can take four years to dispose of the rectification petition. It is not just and equitable to direct the assessee to respond within 30 days (1 month) for payment of the wrong demand and the department will take 4 years (48 months) to rectify or reject the petition. To be fair and equitable, the Income Tax Act should be amended in such a way that the Assessing Officer/CPC/NFAC will also be given time of 30 days only for rectification and if the rectification order is not passed rejecting the petition within the time allowed, the petition made should be deemed to have been allowed and once the rectification petition is filed the assessee should automatically be given time till the disposal of the petition to pay tax as well as to prefer an appeal. Many assesses are suffering because even clerical errors are not rectified and made to pay huge amounts as tax.
Alternatively, if he prefers an appeal, he has to pay the demand and file an appeal. But if he is not able to pay the demand in full, he must apply for granting stay for the collection of taxes to the jurisdictional income tax officer to grant stay. Ironically, while the officer concerned has power to stay only 20% of the demand, why the law should not be changed to the effect that if the assessee is not able to pay the entire demand and if he is going to file an appeal it is sufficient if he pays 20% of the demand and file an appeal with proof of payment of 20% of the demand. Ultimately if he is in such a position that he is not able to pay even the 20% of the demand he may be required to make a representation to the jurisdictional officer or the Commissioner for stay of collection of the entire demand or for payment of lesser percentage from that of 20% and stay should be granted till the disposal of the appeal. This will reduce a lot of time and stress for the assesses as well as for the department.
Conclusion: The suggested reforms in tax procedures are essential to create a fair, efficient, and less stressful system for taxpayers. Shortening the rectification processing time, allowing partial payments for appeals, and streamlining the stay of collection requests would go a long way in achieving these objectives. These changes would benefit both taxpayers and tax authorities by promoting transparency and expediting the resolution of tax-related issues.