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Norms for ‘faceless’ appeal scheme eased: Income-Tax dept.

Context:

The Income Tax department has brought in changes to the existing faceless appeal scheme, easing the process for taxpayers wanting a personal hearing through video conference while appealing against a tax demand by the department.

Relevance:

GS-II: Governance (E-Governance, Government Policies & Interventions), GS-III: Indian Economy (Economic Development, Taxation)

Dimensions of the Article:

  1. About the easing of norms for ‘faceless’ appeal scheme
  2. Transparent Taxation – Honouring the Honest (T2-H2)
  3. Faceless Tax Assessment
  4. Criticism of Faceless Tax Assessment and Appeal System
  5. E-Assessment v/s Faceless Assessment
  6. About Central Board of Direct Taxes (CBDT)

About the easing of norms for ‘faceless’ appeal scheme

  • The Central Board of Direct Taxes (CBDT) notified the ‘Faceless Appeal Scheme, 2021’ and said that the Commissioner (Appeals) shall allow the request for personal hearing via video conference and communicate the date and time of hearing to the appellant via the National Faceless Appeal Centre.
  • However, a person would not be permitted to appear before the Income-Tax authority either personally or through an authorised representative in connection with any proceedings under this scheme.
  • Under the previous ‘Faceless Appeal Scheme, 2020, a taxpayer’s request for a personal hearing for making oral submissions, required the approval of the Chief Commissioner or the Director General of I-T.

Transparent Taxation – Honouring the Honest (T2-H2)

  • The Transparent Taxation – Honouring the Honest [T2-H2] is an extension of E-assessment scheme 2019 launched by Government of India.
  • The new platform will be having Faceless Assessments, Faceless Appeal and Taxpayer Charter.
  • Government has acknowledged that the country can move forward and can develop when the life of honest taxpayer is made easy and the launch of Taxpayer’s Charter is to ensure fair, courteous, and rational behaviour to the honest taxpayers.
  • The issue of tax harassment by officers has gained a lot of attention in India and the government introduced faceless income tax assessment to reduce the scope for corruption and overreach by officials.
  • The CBDT has given a framework and put in place a system in the form of this platform using technology such as data analytics and AI, a transparent efficient and accountable tax system.

 

Faceless Tax Assessment

  • The Faceless Assessment aims to eliminate human interface between the taxpayer and the income tax department and the selection of a taxpayer is possible through systems using analytics and Artificial Intelligence.
  • Faceless assessment is administered through separate units within the tax department each of which has a specific and important role in the process, viz assessment units, verification units, technical units and review units. All these units work closely with the National e-assessment Centre (NeAC) and Regional e-assessment Centre (ReAC).
  • The scheme brings greater flexibility for taxpayers and professionals representing before tax authorities. It has resulted in substantial time savings on account of travel to the tax office, waiting time over there, etc.

Faceless Appeal System

Under the Faceless Appeal system, appeals will be randomly allotted to any officer in the country. The identity of the officer deciding the appeal will remain unknown.

Dispute Resolution Committee:

  • In Budget 2021, the Minister of Finance has proposed the formation of a Dispute Resolution Committee (DRC) in order to provide quicker relief to taxpayers in tax disputes.
  • The DRC will cater to small taxpayers having a taxable income of up to Rs. 50 lakh and a disputed income of up to Rs. 10 lakh.

Criticism of Faceless Tax Assessment and Appeal System

  • In a joint letter sent to the Central Board of Direct Taxes (CBDT) in 2021, representatives of the Income Tax Employees Federation and the Income Tax Gazetted Officers’ Association voiced their displeasure.
  • Concerns were raised but tax officials that faceless tax assessment may reduce tax collection and raise pressure on officers that are under stress to meet lofty tax targets for the current fiscal year.

E-Assessment v/s Faceless Assessment

  • In E-assessment the assessee will be aware of the assessing officer who will be carrying out the assessment proceedings.
  • In Faceless Assessment, the assessee will not be aware of assessing officer who will be doing his tax assessment.
  • The e-assessment was more of one assessing officer carrying out the assessment whereas in faceless assessment there will be a team of assessing officers who will be carrying out the assessment.

About Central Board of Direct Taxes (CBDT)

  • The Central Board of Direct Taxes (CBDT) is a Statutory Body functioning under the Central Board of Revenue Act, 1963.
  • It is official Financial action task force unit.
  • CBDT is a part of the Department of Revenue in the Ministry of Finance, Government of India.

Composition of CBDT

The CBDT Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service of India, whose members constitute the top management of Income Tax Department.

The Central Board of Direct Taxes consists of a Chairman, and six members that deal with the following:

  1. Income Tax & Revenue
  2. Administration
  3. Legislation & Computerization
  4. Audit and Judicial
  5. Investigation
  6. Transaction Processing System (TPS) & System

Functions of CBDT:

  • CBDT is responsible for administration of the direct tax laws through Income Tax Department.
  • The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes.
  • CBDT provides essential inputs for policy and planning of direct taxes in India as well.
  1. It deals with matters related to levying and collecting Direct Taxes.
  2. Formulation of various policies.
  3. Supervision of the entire Income Tax Department
  4. Suggests legislative changes in Direct Tax Enactments
  5. Suggests changes in tax rates
  6. Proposes changes in the taxation structure in line with the Government policies.

-Source: The Hindu

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September 2022
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