Tax professionals have voiced growing concerns over the massive backlog of 549,042 income-tax (I-T) appeals that remain pending before the commissioner of income-tax (appeals) (CIT-A) and the national faceless appeal centre (NFAC), with some of these appeals languishing for over five years. Urging for the expeditious disposal of these appeals that have created significant delays and uncertainty for taxpayers across the country, the All India Federation of Tax Practitioners (AIFTP) requested the Union finance minister Nirmala Sitharaman to take immediate and effective steps to address this issue (
https://itatonline.org/digest/wp-content/uploads/2025/03/Representation-to-Finance-Minister-8-3-25-1.pdf).
NFAC was established with the aim of streamlining and digitising the appeal process in the Indian tax system. This was done to ensure a more transparent, efficient, and hassle-free mechanism for resolving tax-related disputes. However, despite the promises of this system, the volume of pending appeals continues to grow, causing delays in the resolution of taxpayers' grievances, AIFTP says.
According to tax practitioners, the backlog of over 549,000 appeals is not just a number but a serious issue affecting businesses and individual taxpayers. "Many of these appeals have been pending for more than five years, which is unacceptable by any standard. In several cases, taxpayers are left in limbo, unable to get clarity on their tax liabilities or avail themselves of refunds, despite having resolved their cases."
For businesses, AIFTP says these prolonged delays have a direct impact on cash flow and operational planning. It says, "Smaller businesses, in particular, are disproportionately affected, as they may not have the financial leeway to withstand the prolonged uncertainty. Additionally, individuals who are awaiting appeal decisions are often burdened with the stress of an unresolved tax matter, which in some cases can lead to penalties and interest charges accumulating."
Tax professionals argue that the current pace of disposal is contributing to a negative perception of the tax system, eroding trust in the fairness and transparency of the process. These delays have also placed a heavy burden on the income-tax officers who are managing an overwhelming caseload, making it difficult to address new cases promptly.
In response to these mounting concerns, tax practitioners have collectively raised their voices in a formal representation to the FM, urging her to take swift and decisive action to reduce the pendency of these appeals. The practitioners have recommended a series of measures, including the allocation of additional resources, the introduction of more streamlined processes and even the setting up of special task forces to clear the backlog.
The appeal to FM Sitharaman also highlights the need for targeted reforms to address the root causes of the delays. One key suggestion is to enhance the technological infrastructure of the NFAC which could help in automating some of the manual processes currently contributing to the delays. The establishment of dedicated teams to focus on older cases is another proposal aimed at prioritising appeals that have been pending for the longest time.
NFAC was introduced as part of the government's initiative to modernise the Indian tax system and make it more accessible to taxpayers. The system was designed to allow taxpayers to file and follow up on their appeals without the need to physically visit the I-T department's offices, making the process more efficient and less prone to human error or corruption.
However, AIFTP says that, despite the good intentions behind the creation of NFAC, the backlog has remained a major concern. Tax professionals argue that while the shift to a digital system is commendable, the reality of implementation has not kept pace with expectations. The volume of pending appeals continues to rise and the lack of sufficient resources dedicated to resolving these cases has exacerbated the problem.
While the technology behind NFAC has undoubtedly improved the overall process, tax professionals believe that a more holistic solution is needed. "The backlogs could be reduced by employing a combination of modern technology, enhanced manpower, and a clearer framework for prioritising appeals. Appeals related to high-value cases or cases involving small businesses and individuals who are disproportionately affected by the delays should be given priority."
The tax professionals also call for more transparency in the process, urging the government to set clear timelines for the resolution of appeals. A fixed timeline would not only provide taxpayers with more clarity but also create a greater sense of accountability within the system.
The tax practitioners' call for early disposal of appeals is not only a request for efficiency but also a plea for justice and fairness in the tax system. With an estimated five-year wait for many cases, the government must take immediate steps to clear the backlog and restore taxpayer confidence. This issue is not just about numbers – it directly impacts the livelihoods and businesses of countless individuals and its resolution is critical for a fair and functional taxation system in India.
