Delhi HC Issues Notices To Centre & IT Department In A Petition Filed Challenging 'Faceless Income Tax Appeal Scheme 2020'

The Bench of Justice Manmohan and Justice Sanjeev Narula was hearing a petition filed seeking a direction to the respondents (Union of India and Income Tax Department) to grant an opportunity of hearing to all taxpayers/assessee and to hold that the same is not at the discretion of the Chief Commissioner or the Director-General as proposed in the Faceless Appeal Scheme, 2020 notified from 25th September, 2020.

It may be noted that Prime Minister Narendra Modi had launched this programme/scheme in August 2020 to honour honest income taxpayers in the country.

According to a report by The Hindu's Business Line, 'Faceless Income Tax Appeal' is aimed to further ease compliance and reduce physical interface between the assessee and the Income Tax Department.

While introducing the Scheme, it was said that out of 4.6 lakh appeals pending at the level of the Commissioner (Appeals) in the IT Department, about 4.05 lakh appeals (88 per cent of the total) will be handled under the new mechanism. Almost 85 per cent of the present strength of Commissioners (Appeals) will be utilised for disposing of cases under the faceless appeal mechanism.

It was stated by the CBDT that, "There will be no physical interface between the taxpayers or their counsel/s and the Income Tax Department. The taxpayers can make submissions from the comfort of their home and save their time and resources".

Petitioner's Case

Petitioner prayed before the Court for a declaration that Faceless Appeal Scheme, 2020 is discriminatory, arbitrary and illegal to the extent that it provides a virtual hearing as per the circumstances to be approved by the administrative authorities under the Income Tax Act, 1961 (hereinafter referred to as the 'Act').

The counsel for the petitioner stated before the Court that in terms of the new Faceless Appeal Scheme, 2020, the right of being heard, even through the videoconferencing mode, shall be subject to the approval of the Chief Commissioner or the Director-General and therefore the same is discretionary, i.e. he "may' or "may not" provide a right of personal hearing in the matter.

Further, it was submitted that the aforesaid mechanism is discriminatory and is against the settled principles of law and in violation of Article 14 of the Constitution of India.

He also submitted that the right to provide or not to provide a hearing in the matter is also against the principle of audi alteram partem i.e. no person should be judged without a fair hearing in which each party is given an opportunity to respond to the evidence against them.

Court's Order

The Court directed that notices be issued in this matter. Ms.Nidhi Banga, Sr.Standing Counsel accepted the notice on behalf of respondent no.1/UOI and Mr.Zoheb Hossain, Sr.Standing Counsel accepted the notice on behalf of respondent no.2/Income Tax Department.

The Court permitted them to file their counter-affidavits, within four weeks. Rejoinder affidavits, if any, be filed before the next date of hearing.

The matter has been listed on Tuesday (15^th December, 2020) for further hearing.