Faceless I-T appeal system kicks off today, leaves out fraud and evasion

FinMIn says will benefit both assessees and I-T department, critics say personal hearing required in complex cases

All appeals up to the level of commissioner of income tax (Appeals) — except for those relating to serious fraud, major tax evasion, sensitive search matters, and black money — went faceless from Friday. This is the first level of appeal in the income tax (I-T) system against orders of assessing officers.
 

The facility was introduced over a month ago by Prime Minister Narendra Modi. This means that the I-T appeals right from allocation of appeal, communication of notice/questionnaire, verification/ enquiry to hearing and finally communication of the order will be online.
 

The faceless appeals system will include allocation of cases through data analytics and artificial intelligence to dynamic jurisdiction with central issuance of notices, which will have document identification numbers (DINs).
 

As part of the dynamic jurisdiction, the draft appellate order will be prepared in one city and reviewed in another city, and is expected to result in an objective, fair, and just order, the finance ministry said.
 

The order passed by CIT (Appeals) will run through the risk management system (RMS), which uses artificial intelligence to flag outliers and picks up cases that require a review. RMS is supported by Tata Consultancy Services. Cases that require review according to the RMS will be sent to a commissioner of appeals in a different city. “Based on the faceless appeals order, either the department or a taxpayer can move the Income Tax Appellate Tribunal (ITAT),” said an official.
 

The commissioner of appeals will be allowed to take the help of technical units, comprising chief commissioner-level officers, which are tasked with giving officers legal and sectoral advice.

 

Personal hearing might be allowed in certain cases through video-conferencing, after approval of the principal chief commissioner or chief commissioners of income tax. The faceless appeal will not only provide great convenience to taxpayers but will also ensure just and fair appeal orders and minimise further litigation, finance ministry said.
 

However, experts aren’t convinced. Rakesh Nangia, chairman of Nangia Andersen India, said the scheme comes into effect in full force without any pilot. “A pilot phase would have provided constructive feedback from the stakeholders before the final launch pan-India,” he said.
 

Amit Maheshwari, partner, AKM Global, said discussion in person becomes important at the first stage of appeal. “In the case of faceless appeal proceedings, most discussions generally happen electronically without any personal interaction, which ends up making the issue more complex,” he said.
 

However, a senior official of the Central Board of Direct Taxes (CBDT) said assessees are used to face-to-face hearing, whereas now they will need to develop their writing.
 

According to CBDT data, about 460,000 appeals are pending at the commissioner of appeals level as on date.
 

Of this, about 405,000 appeals, or 88 per cent of appeals, will be handled through the faceless mechanism.