The appeal process in any case requires human interaction, so as to serve the principles of natural justice. However, this may not seem to be a case with the Revenue Department.
Going by the chronology, the Explanatory Memorandum to Finance Bill, 2020, says:
“The filing of appeals before Commissioner (Appeals) has already been enabled in an electronic mode. It prescribes that a taxpayer can file appeal on the income tax department website through his registered account. But, the procedure that is prescribed after filing of appeal is neither in an electronic format nor faceless. In order to guarantee that the reforms initiated by the Revenue Department to do away with human annexation from the system reach the next level, it is crucial that an e-appeal scheme be commenced on the lines of e-assessment scheme.”
E-assessment, in vogue for quite some time now, eliminates the human interface that is widely acclaimed to be responsible for fostering corruption. Many departments at the State level have embraced e-processing of issuance of birth and death certificates, registration of land records, with remarkable success. E-processing speeds up the system. Also, camouflaging the applicant, as it were, forgo the likelihood of corruption. On the other hand, when the citizens present themselves before the authorities, they use subtle judgment to extract their hard earned money. It is in this sense that faceless assessment is assailed.
Despite its intrinsic merits, e-assessment is not suitable for all. In trading segment assessments, especially those entailing entities with composite issues, scrutiny compulsorily brings in human alliance. Appeals, too, are inherently tangled and are not amenable to complete faceless methodology.
From the order of the assessing officer, an appeal lies with the Commissioner (Appeals), and it is this stage of the process that the Finance Bill 2020 seeks to render faceless. The objectives are laudable. First, it curbs harassment leading to corruption, when authorities and citizens meet in person. Second, it allows for better utilization of the resources at the disposal of the income tax department. To wit, the Commissioner (Appeals) in Assam may not have to deal with as many appeals as his counterpart in, say, Delhi. The software can even out this lopsidedness. Likewise, the Commissioners may get to specialize according to industry; the existing territory-based jurisdiction system does not have these features.
Nonetheless, appeals are more prejudiced than assessments, and so need human communication. It is justified to ask a Calcutta resident (taxpayer in appeal) to appear before a Chennai Commissioner, especially after knowing this fact that the appeals are often prolonged and lengthy? It is justified to protect an appellant completely from meeting the Commissioner? Unlike in e-assessment, which is a one-way street, appeals require a dialogue. It is not disputed that the process of E-appeals will shorten the appellate process to a form-test. The most indispensible question then is how come a taxpayer/appellant will be able to use the services of a CA or an income-tax advocate on e-appeals? To be sure, they may help the taxpayer in drafting the appeals, replies and rejoinders.
The fact that the government has been given time till March 2022 to roll out the e-appeal regime is fortunate. It appears the Parliament is aware of the numerous kinks in the proposal and has wisely refrained from steam-rolling it with jet speed.
It is very well known that after the order stands concluded by the CIT(A), the appeals lie before Tribunals. If even these are rendered faceless, the judicial process may be further undermined, as authorities will refuse to reduce the process to a robotic exercise. Blind appeals under fiscal laws are easier said than done and the judicial proceedings cannot be mechanized.