On Friday, in another major reform in the Income Tax (I-T) department, the Central Board of Direct Taxes (CBDT) launched faceless income tax appeals where all future appeals in tax dispute cases will be resolved only through e-mails, e-inquiries or e-hearings.

Currently, there are over 4.6 lakh appeals pending before I-T Commissioners & the amount locked in dispute is more than Rs 5.6 lakh crore.

The total amount locked in litigation till 2018-19 was Rs 12 lakh crore, including those before various tribunals, HC's & the Apex Court. Earlier, the I-T department had launched a faceless return filing system. 

The CBDT said, “All I-T appeals will be finalised in a faceless manner under the faceless ecosystem with the exception of appeals relating to serious frauds, major tax evasion, search matters, international tax & Black Money Act related cases".

The CBDT said that under the faceless appeals, from now on, in income tax appeals, everything from e-allocation of appeal, e-communication of notice/ questionnaire, e-verification/ e-enquiry to e-hearing & finally e-communication of the appellate order, the entire process of appeals will be online, dispensing with the need for any physical interface between the appellant & the Department. 

“The faceless appeals system will include allocation of cases through Data Analytics & AI under the dynamic jurisdiction with central issuance of notices which would be having Document Identification Number (DIN),” it said. As part of dynamic jurisdiction, the draft appellate order will be prepared in one city & will be reviewed in some other city resulting in an objective, fair & just order, the CBDT explained about the functioning of the new system.

At present there is a pendency of almost 4.6 lakh appeals at the level of the Commissioner (Appeals). About 88 per cent of these cases will be sent to the new Faceless Appeal mechanism engaging 85 per cent of the present strength of Commissioners (Appeals).

The Income Tax arrears of demand has increased from Rs 11 lakh crore in 2017-18 to Rs 12.3 lakh crore in 2018-19 of which 99 per cent of the demand would be difficult to recover, according to the Comptroller & Auditor General which has tabled a report on direct taxes in Parliament on Wednesday.

The auditor observed that the number of appeals pending with Commissioner I-T (Appeals) increased from three lakh in financial year (FY) 2017-18 to 3.4 lakh in FY 2018-19. The amount locked up in these cases was Rs 5.6 lakh crore, CAG noted.

The total cases pending at higher levels (ITATs/high courts/Supreme Court) increased from 82,000 cases in FY 2017-18 to 1.35 lakh in FY 2018-19. 

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