After partly hearing public interest litigation (PIL) challenging the constitutional validity of the faceless appeal scheme, the Bombay High Court (HC) adjourned the matter to 29 November 2021.
Chamber of Tax Consultants (CTC) had filed a writ petition in a representative capacity. Considering the relief prayed for and the averments made by the CTC in a representative capacity, the HC, on 6 September 2021, had directed the petition to be listed as a PIL.
In its plea, CTC, one of the oldest industry bodies of professionals, had argued that there is a reasonable apprehension in the mind of the taxpayers that this scheme will harm the overall decision-making process, and the persons to be affected the most would be the assessees.
Senior counsel Arvind Datar, representing the Chamber, submitted that the faceless appeals scheme is a change in policy that cannot be made by way of delegated legislation. "The scheme poses a palpable threat to the independent functioning of the commissioner of income tax- appellate (CIT-A), which is a quasi-judicial body and expected to function impartially. The provision of review of appellate orders by another unit poses a threat to the independent quasi-judicial function of CIT(A). The scheme creates a system for a mandatory review in certain cases which itself is contrary to statutory provisions," he submitted.
Last year, the Union government launched faceless appeals to eliminate human interface from the first appellate system in the income-tax (I-T). Under the scheme, a taxpayer or an assessee is not required to visit an I-T department or meet an official for I-T related businesses.
The PIL filed by the CTC contends that the opportunity for a personal hearing is not given at the first appellate stage under the scheme. The first time the appellant or the representative will be heard in person will be directly before the Income Tax Appellate Tribunal (ITAT). Since ITAT is the final fact-finding authority, the scheme challenges the system, CTC said.
On 1 October 2021, while hearing transfer petitions concerning the faceless appeals scheme, the Supreme Court had clarified that it had neither transferred the matters nor impeded the hearing in any case about the scheme.
After this clarification, the Bombay HC proceeded to hear the CTC's submission. It will hear the submission by tax authorities on 29 November 2021.
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