Faceless regime: Appeals will be filed in assessee's state, clarifies CBDT

Dept attempts to allay apprehensions over faceless appeals, which start tomorrow

With income-tax appeals going faceless from Friday, will all writs and appeals at the higher level such as the income-tax tribunal or high court have to be filed in Delhi? This is among taxpayers’ key concerns as all orders will be issued through the National e-Assessment Centre in Delhi.

However, senior officials at the Central Board of Direct Taxes (CBDT) have clarified that the appeals at the tribunal or high court will be filed in the state where the assessee resides.

Though all appeals till the Commissioner of Income Tax (Appeals) level will go faceless, personal hearing might be allowed via video-conferencing in some cases after approvals from designated senior officers. CIT (Appeals) is the first level of appeal against a demand raised by the assessing officer. Appeals against orders at the CIT level can be filed at the Income Tax Appellate Tribunal (ITAT) and later in high courts and the Supreme Court.   

“All appeals will be filed on the e-filing portal from Friday. Suppose one has to go to the ITAT or high court, it will be in the address of jurisdiction of the taxpayer. For example, if the taxpayer’s address in her PAN card or returns is Mumbai, the litigation will also be in Mumbai,” an official clarified.

However, appeals will be randomly sent to CIT (Appeals) in any city other than the place of residence of the taxpayer.

“With faceless schemes kicking in, the appeals like in case of assessment will be sent to commissioner appeals in a city other than where the taxpayer resides,” said the official.

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. The RMS technology is supported by Tata Consultancy Services. Cases requiring a review according to the RMS will be sent to a commissioner of appeals in a second city. “Based on the faceless appeals order, either the department or a taxpayer can move ITAT,” said an official.

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

Besides, personal hearing may be allowed in certain cases through video-conferencing, after approval of the principal chief commissioner (PrCCIT) or chief commissioners of income tax (CCIT).

“Suppose a person says, I want personal hearing, we are making a rule where we are giving power to PrCCITs or CCITs to examine whether personal hearing is needed. But it will be via video-conferencing as we do not want any interface,” the official said.

For submissions that are not in English, verification units under the 30 regional e-assessment centres in 20 cities may be used for translation. “Some submissions or documents can be in a different language. There we are making arrangements for translation. It should not be very difficult,” said the official.

Tax consultants are apprehensive about the effectiveness of the scheme and worry that litigation may go up at the tribunal level. Tax experts argue that assessees prefer presenting their arguments in person.

However, a senior CBDT official pointed out that assessees are used to face-to-face hearing, whereas now they will need to develop the skill of writing. “If they expect self-explanatory orders, then you need to give self-explanatory submissions also,” he said.

Amit Maheshwari, partner, AKM Global, said discussion in person becomes important at the first stage of appeal by the taxpayer, which is generally missing in faceless appeals. 

“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. 

The commissioner has the power to confirm, reduce, enhance or annul the existing order and if taxpayers fail to convince the commissioner, the assessees may not get relief. “The risk of enhancement or confirmation of tax demand is substantial,” Maheshwari said.