S Murlidharan

E-appeal bid is flawed

S Murlidharan | Updated on February 11, 2020

The appeal process requires human interaction

The Explanatory Memorandum to Finance Bill, 2020, says: “The filing of appeals before Commissioner (Appeals) has already been enabled in an electronic mode…. A taxpayer can file appeal through his registered account on the e-filing portal. However, the process that follows after filing of appeal is neither electronic nor faceless. In order to ensure that the reforms initiated by the Department to eliminate human interface from the system reach the next level, it is imperative that an e-appeal scheme be launched 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 etc, with remarkable success. E-processing speeds up the system. Also, hiding the applicant, as it were, eschews the possibility of bribery. On the flip side, when the citizens present themselves before the authorities, they use discretion to extract their pound of flesh. It is in this sense that faceless assessment is hailed.

Despite its intrinsic merits, e-assessment is not suitable for all. In business assessments, especially those involving companies with complex issues, scrutiny inevitably brings in human interface. Appeals, too, are intrinsically complicated 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 utilisation 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 specialise according to industry; the existing territory-based jurisdiction system does not have these features.

At the same time, appeals are more adversarial than assessments, and so need human interaction. Would it be prudent or possible to ask a Delhi appellant to appear before a Bengaluru Commissioner, especially given the fact that appeals are often protracted and time-consuming? Would it be possible to insulate an appellant completely from meeting the Commissioner? Unlike in e-assessment, which is a one-way street, appeals require a dialogue. E-appeals would reduce the appellate process to a questionnaire, if not a tick-box system. The most important question is, how would one be able to use the services of a chartered accountant or income-tax lawyer on e-appeals? To be sure, they may help the appellant draft the appeals, replies, rejoinders, etc. Yet, court-craft often is all about prompt explanations.

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 must temper its enthusiasm for another reason too — faceless appeals foster and reinforce the impression that there is corruption in the higher echelons.

From the orders of the Commissioner (Appeals), 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. Judicial proceedings cannot be mechanised.

The writer is a Chennai-based chartered accountant

Published on February 12, 2020

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