One of the key highlights of Budget 2021 is the introduction of the 'National Faceless Income Tax Appellate Tribunal Centre', which replaces the existing Income Tax Appellate Tribunal.
The Income Tax Appellate Tribunal (ITAT) is often called the 'Mother Tribunal' and said to be the oldest Tribunal in the country. It has been said that it is the success of the ITAT that has prompted the Government of India to constitute similar Appellate Tribunals for indirect taxes i.e. Customs, Excise, Service Tax Appellate Tribunal (CESTAT), Central Administrative Tribunal (CAT), Railway Claims Tribunal, Foreign Exchange Appellate Board, etc. Nonetheless, the Union Budget has now taken this ambitious measure that would consequentially eliminate the most decisive part in promoting justice – the 'Oral Hearing'.
Common Law Nations and Civil Law Nations
The legal systems across the globe fall broadly fall under two categories – (i) Common Law systems such as in England and India (ii) Civil Law systems such as in Netherlands, Germany or Indonesia.
Amongst other differences between Common Law Nations and the Civil Law Nations, one of the significant facets of Civil Law Nations will be their minimal emphasis on oral arguments and examination. Written communications prevail in the Civil Law Nations and clarifications and responses are made in writing after seeking the leave of the Court. On the contrary, the Common Law system entails a much greater role for oral hearings. Therefore, the question now arises whether the introduction of 'National Faceless Income Tax Appellate Tribunal Centre' that entirely does away with the aspect of the oral hearing will be construed as a departure from the Common Law aspect of the Indian legal system.
Principles of natural justice
Audi alteram partem ("hear the other side") is one of two principles of natural justice. (The other principle being nemo judex in cause sua which postulates that noman shall be a judge in his own cause").
A corollary to the said rules of natural law has been deduced, which is "he who shall decide anything without the other side having been heard, although he may have said what is right, will not have done what is right". These principles of natural justice are also a part of the indestructible right conferred under Article 14 of the Constitution of India. It makes one wonder if a 'Faceless Tribunal' bereft of oral hearings will rob the litigants of this fundamental natural right. The proponents of 'faceless proceedings' will argue that right of being heard is not eliminated but is only the oral hearing that is dispensed with. The chief merit of 'Faceless proceedings' is an accelerated rate of disposals amidst an increase in the volume of cases.
Are oral hearings the rule?
Albeit the fact that a hearing will normally be an oral hearing, there appears to be definite norm that an oral hearing cannot be replaced. In other words, there must be a hearing, although not necessarily an oral one.
A number of judgements have been penned by eminent jurists on origins and scope of 'oral hearings' but the judgment of the Constitutional Bench in the PN Eswara Iyer vs The Registrar, Supreme Court Of India (1980 AIR 808) will in our humble opinion be the jewel in the crown. The Supreme Court in the said case dealt with the powers of a sub rule that dispensed oral arguments in an application for review but permitted additional written arguments. The court agreed that the normal rule of the judicial process is oral hearing and its elimination of an unusual exception. It was stressed that "the magic of the spoken word, the power of the Socratic process and the instant clarity of the bar-Bench dialogue are too precious to be parted with". The Bench further observed, "The Bench cannot dispense with the Bar. In our system advocacy becomes functional when present viva voce and is enfeebled if presented in muted print. We do not claim that orality can be given a permanent holiday…"
Income Tax Appellate Tribunal, the final fact-finding authority
The faceless initiative at first commenced with the scrutiny assessment. Subsequently, the appeals before the Commissioner of Income Tax (CIT) was also made 'faceless' thereby eliminating the interface between the Assessee and the authority. That being the case, an oral hearing in tax litigation will now normally take place only upon a third-tier appeal before the jurisdictional High Court. An appeal against the order passed by the ITAT will lie only if there is any determination of a substantial question of law. Thus, the extension of faceless proceedings will lead to the sequitur that an oral hearing will be impermissible during the adjudication of facts and law. The ITAT is the final fact-finding authority in the trajectory of tax litigations and even the High Court on an appeal cannot reverse a factual finding of the ITAT. Furthermore, it is also deemed to be a 'Civil Court'. Needless to state that a proceeding before the ITAT is a 'judicial proceeding'. Hence, a dispensation of an 'Oral Hearing' in the present scenario is an unprecedented action.
Conclusion
The faceless experiment is beyond any doubt a pragmatic evolution of adjudication as it may possibly yield results in terms of efficiency, effectiveness and convenience. However, as a lawyer or practitioner, it strikes at the root of what you stand for by virtue of your profession, and leaves a helpless pinch in your stomach.
Nonetheless, the aspect to be considered is the extent of implementation of such mute proceedings. An oral hearing is way more persuasive and real. It facilitates a higher level of reception in comparison to written submissions. An oral presentation engages a receiver's mind far more than plain words, no matter how well-drafted. History and lore stand testimony to the superiority of speech over words.
But for Antony's 'speech', would the conspirators have been driven away from Rome? Lincoln's speech at Gettysburg delivered more than a hundred years ago has endured to become an inevitable part of the political culture in America. Speech is irrefutably an irreplaceable form of communication. To deny a counsel of his oral hearing, would be to rob a marksman of his thumb.
A departure of oral hearings to the so-called 'National Faceless Income Tax Appellate Tribunal Centre' would certainly have far-reaching effects. The benefits that are promised to the assessee, its ease and simplicity are yet to be seen. Nonetheless, it will most certainly mould the landscape of tax law practice. Neither the practitioners nor the assessees will be mute spectators. It will be immensely intriguing to see how the Courts will discuss this aspect in the event of a judicial challenge, and even more as to how professionals will accept this change. They say change is the only constant thing in the world; however, this change may not be the one.
(Pawan Jhabakh and Salai Varun are Advocates at the Madras High Court. The views expressed are personal)