The Central Board of Direct Taxes (CBDT) has notified an modification within the Faceless Penalty Scheme, permitting obligatory private listening to via video conferencing to any taxpayer who has requested for it. With this modification, consultants imagine that the taxpayers going via the penalty proceedings can current their circumstances to the tax authorities in a extra elaborate method. This can also be anticipated to handle the difficulty of pure justice because the assessee can ask for a private listening to as a matter of proper and the identical have to be allowed.
What is the scheme?
The Faceless Penalty Scheme was launched in 2021 alongside the strains of The Faceless Assessment Scheme, 2019. As the identify suggests, all of the penalty proceedings beneath the Income Tax (I-T) Act are carried out electronically beneath this scheme with none human interface. Before the introduction of the Faceless Penalty Scheme, taxpayers have been required to go to the workplace of the tax authority to answer any present trigger discover issued for the penalty.
Let’s say, a taxpayer is issued a present trigger discover stating why a penalty beneath part 270A of the I-T Act shouldn’t be levied for under-reporting of revenue. A taxpayer, who has cause to imagine that there isn’t any under-reporting of revenue and so penalty isn’t relevant, has to answer the discover by submitting an argument with supporting paperwork by visiting the tax division.
From 12 January 2021—when the Faceless Penalty Scheme was launched —one should submit all paperwork electronically with none human interface. “The erstwhile approach of submitting submissions and assembly a tax officer was completed away with beneath this scheme and all steps, from begin to finish, shall be undertaken electronically,” said Saurrav Sood, practice leader (international tax), SW India. “Even the old cases under which the penalty proceedings were kept in abeyance were also transferred to Faceless Penalty Scheme,” Sood added.
Further, there was additionally an possibility given to a taxpayer beneath the scheme to hunt for private listening to through video convention whereas responding to the present trigger discover of penalty. But it was on the discretion of the tax authority to just accept or reject the taxpayers’ request for a private listening to.
Subsequently, the taxpayers should abide by the penalty order handed by the tax authority, until they resolve to enchantment in opposition to the order.
Challenges
While it was a welcome transfer to shift your complete strategy of penalty proceedings to digital mode, this didn’t permit for direct interplay with the assessing officer beneath the Faceless Penalty Scheme, as per consultants.
“Earlier there was at all times a possibility to satisfy the assessing officer in individual, make a submission and clarify the deserves of the case,” stated Sood from SW India.
The current modification to the Faceless Penalty Scheme to mandatorily permit private listening to through video conferring or video telephony, when taxpayers search it, is anticipated to enhance the effectivity of the system. “When the case is subjective and if the taxpayer needs to clarify the case in a extra elaborate method to the tax authority, they will achieve this in the course of the private listening to through video conferencing,” added Sood.
“The modification within the faceless penalty scheme will deliver uniformity with the opposite faceless schemes equivalent to faceless evaluation scheme and faceless enchantment scheme whereby private listening to via video conferencing has been given as a compulsory proper to taxpayers,” Said Sandeep Sehgal, tax companion, AKM Global.
The complete system of penalty proceedings is centralized and every case could be randomly allotted to any tax authority throughout the nation.
On the query of whether or not language could be any barrier for taxpayers in the course of the private listening to with tax authorities, Sood stated all of the proceedings are performed in English language.
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