Income Tax Law: Faceless Assessment System 2021


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The tax department has made several changes to its anonymous appeal system, which is currently the subject of a constitutional challenge in the Bombay High Court. One of the main concerns of taxpayers has now been addressed by the Central Council for Direct Taxes, which is the discretion given to the tax office with regard to requests for personal hearings.

But the industry body that challenged the project in the High Court maintains the changes are not enough.

The changes are rather favorable but insufficient, Quint Ketan Vajani, chairman of the House of Tax Advisers, told Bloomberg. Further changes are needed. So the plea in the Bombay High Court will remain, he said.

In addition, Vajani said, the department has still not addressed a key aspect of the program relating to the introduction of new evidence at the appeal stage.

In accordance with the newly notified regime, during the appeal process, the Commissioner (appeals) while carrying out investigations, may order the taxpayer or authority, regardless of who filed the appeal, to produce additional documents or evidence. A similar provision was also present in the previous regime.

Vajani says this is problematic since income tax rules specifically state that new evidence cannot be presented at the appeal stage except in certain specific circumstances, for example if the taxpayer has been prevented from producing it. in front of the evaluation officer.

While the new regime allows either party – the valuation officer or the taxpayer – to submit additional evidence if requested, it is virtually likely to work to the detriment of taxpayers. , Vajani said.

That being said, the CBDT has addressed some of the taxpayer concerns in the new regime. Here are the main changes:

The Faceless Appeals System, 2021, now requires the Commissioner (Appeals) to allow all requests for a personal hearing via video conference when a tax claim is raised by the department. The date and time of the hearing must be communicated to the taxpayer via the National Faceless Call Center.

The personal hearing can now also take place by videoconference. Taxpayers do not need to physically appear in front of the tax office at the Faceless National Call Center.

The previous version of the regime gave discretion to the chief commissioner or the director general in charge of an anonymous regional call center to grant a personal hearing. Once this was authorized, the taxpayer was required to appear in person at the center.

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