Finance Minister Nirmala Sitharaman on Friday asked the Central Board of Direct Taxes (CBDT) to further explore ways to pace up their scale and review the strategy for disposing of pending tax appeals, warning that it could take “a century” to clear the backlog of pending 5.4 lakh appeals.
The minister also urged the department to shift its focus from “litigation management” to “litigation prevention”, saying tax certainty is essential for improving voluntary compliance and investor confidence.
Addressing the 167th Income Tax Day celebration on Friday, Sitharaman said the Income Tax Department still has 5.4 lakh pending appeals and the number has been piling up despite efforts in recent years to speed up disposal.
“We still have 5.4 lakh appeals. Three or four years ago, we had an exercise within our boards about how to reduce pending appeals. I am sure the blueprint is what is making a lot more speedier disposal and clearance,” she said. However, she cautioned that the inflow of fresh appeals continues to outpace disposals.
“Allowing the mounting of these to keep coming up, the newer ones coming up, even as the reduction is happening in a slower pace. I appeal to the board that you should have one more review to see how you are going to handle this. It cannot be that the cases keep mounting and you are clearing at some pace, which is going to make us the same in some numbers. It will take a century to clear it, if you are allowing the growth to go on like this,” mentioned the Minister during her address.
Calling for a taxpayer-centric administration, Sitharaman outlined 5-R’s structure that include— Recognise, Respond, Redress, Reflect and Reform, to make the process more simplistic. She emphasised that the tax authorities need to acknowledge taxpayer grievances, recognise the taxpayers grievances with clarity and empathy, and thereby resolve genuine complaints within defined timelines. While she lauded the department’s efforts for making significant progress , but called for more measures to analyse recurring issues for institutional learning, and continuously reform systems and procedures to minimise future disputes.
“The authority conferred by tax law must always be exercised with humility. A taxpayer is not merely an assessee; a taxpayer is a citizen and a partner in India's development,” she said.
