CBDT reviewing its ‘faceless’ tax assessment scheme: Report
According to the report, the review was prompted by a recent order of the Allahabad high court in which it imposed a penalty of ₹50 lakh on erring tax officials.
To ensure that field income tax officers do not make aggressive tax demands, and thus allow natural justice to take its course, the Central Board of Direct Taxes (CDBT) is reviewing its ‘faceless’ tax assessment scheme, according to a report in Livemint.
Why the review?
According to the report, the review was prompted by a recent order of the Allahabad high court, in which the court gave instructions about instituting safeguards amid rising number of complaints over the ‘faceless’ system's alleged over-reliance on data instead of that on human interaction.
The scheme, which was introduced by prime minister Narendra Modi in August 2020, was rolled out to bring automation in the system, eliminate random individual discretion by tax officials, and control corruption. However, taxpayers have complained about aggressive tax demands, as well as about being denied a hearing to address issues such as these.
Though, initially, hearings were an area of concern, the Union government made a hearing mandatory if a taxpayer asked for one.
What was the Allahabad HC order and in which case?
On August 17, the high court slapped a fine of ₹50 lakh on erring revenue officers and directed the CBDT – the apex body of the Income Tax department – to amend the faceless mechanism in such a way that general public or assessee do not face any harassment, and erring officers face sanctions for their actions.
The ‘faceless’ tax assessment policy
The scheme was announced by PM Modi on August 13, 2020, and became available from September 25 onwards.
The main aim of the scheme is to eliminate the interface between the taxpayer and the IT department. Here, the term ‘faceless’ refers to the fact that appeals are randomly allotted to any officer in the country; the identity of the officer is not disclosed. Also, the taxpayer is not required to visit the IT department's office.
Cases on which this policy is not applicable include those related to serious frauds, major tax evasions, Black Money Act, Benami property etc.