Bombay High Court seeks assistance of Attorney General KK Venugopal in plea challenging Faceless Appeal Scheme

The Bombay High Court on Wednesday sought the assistance of Attorney General KK Venugopal, in a plea challenging the constitutional validity of 'Faceless Appeal Scheme' along with certain amended provisions of Income Tax Act, 1961..The plea filed by Chamber of Tax Consultants challenged two notifications issued in 2020 by which the scheme was rolled out, and Section 250 subsections (6B), (6C) and (6D) of the Act on the ground that the same are arbitrary and in excess jurisdiction and authority..A Bench of Justices KR Shriram and Abhay Ahuja observed that "since this matter involves serious questions of law and challenge to the constitutional validity of certain amendments, we intend to finally dispose the writ petition at the admission stage itself".The Court also issued notice to the Attorney General. Meanwhile, advocate Shyam Walve appearing for the Central Board of Direct Taxes and Ministry of Finance, Union of India informed the Court that he will instruct the Additional Solicitor General in the matter..Sub-section (6B) empowers Centre to make a scheme by notification for purposes of disposal by Commissioner of Income Tax (Appellate), (6C) empowers the Centre to exempt application of any provision relating to jurisdiction and the procedure for disposal of appeals for purpose of giving effect to (6B). As per (6D), every notification issued under (6B) and (6C) has to be laid before the Parliament..The notifications was issued in light of these amended provisions which came into effect in 2020.The scheme provide for review of order passed by one appeal unit by another appeal unit..The scheme contemplates that once a draft order is prepared by one appeal unit and if the disputed tax exceeds the prescribed limit, then the same has to be “mandatorily” referred to another appeal unit for review.If the disputed tax is less than prescribed limit, then the National Faceless Appeal Centre (NPAC) would examine the draft order in accordance with the risk management strategy and then either confirm it or send it to some other unit for review..“It is incomprehensible and at the same time unconstitutional to have a review of order of one judicial authority by another judicial authority or by administrative authority before passage of such order. This amounts to interference in the judicial work and that too by one of the party to the appeal. This cannot stand test of time,” the petition stated..The plea further said that the provisions in the scheme were in violation of Article 14, 19 and 265 of the Constitution.The scheme also did away with physical hearing of appeals and prescribed that oral hearing through video-conference will be granted at the direction of the Chief Commissioner or Director General in charge of the Regional Faceless Appeal Centre upon request of the assessee appellant.The same is not only unconstitutional but irrational and amounted to interference by the tax department in the independence of the judicial authority, the plea contended..The petitioner also pointed out that the delegation to frame the Faceless Appeal Scheme was given to the Central government which was one of the parties in the appeal was illegal.There is a reasonable apprehension in the mind of the tax payers that this scheme will have an adverse impact on the overall decision making process and the persons to be affected the most would be the tax payers, the petition stated seeking quashing of the provisions and the notifications..The Court has posted the matter for hearing on September 6, 2021..[Read Order]