Direct Tax Alert - Faceless Appeal Scheme, 2020 applies to Income-tax Act, 1961 only and not to any other Direct Tax Law

Background

The Central Board of Direct Taxes (CBDT) issued a notification¹ on 25 September 2020 to introduce the Faceless Appeal Scheme, 2020 (the Scheme). The said notification also contains the process of conducting appeal proceedings in a faceless manner. Subsequently, the CBDT received communications from field officers seeking jurisdictions over appeals under various other Direct Tax Laws, including the erstwhile Direct Tax Laws after the implementation of the Scheme.

Recently, the CBDT has issued a circular² clarifying the applicability of the Scheme. We, at BDO in India, have analysed and summarised the said circular and provided our comments on its impact hereunder:

Applicability of Faceless Scheme to Other Direct Tax Laws

• The CBDT has clarified that the provisions of the Scheme shall apply only to the Income-tax Act, 1961 (IT Act) and not to any other Direct Tax Laws including the following:
  • Wealth-Tax Act, 1957;
  • Interest-Tax Act, 1974;
  • Gift-Tax Act, 1958;
  • Expenditure-Tax Act, 1987;
  • Securities Transaction Tax in Chapter VII of Finance (No. 2) Act, 2004;
  • Commodities Transaction Tax in Chapter VII of Finance Act, 2013 and
  • Equalization Levy in Chapter VIII of Finance Act, 2016.
• The CBDT has also clarified that it has not issued a direction for the finalisation of appeals under any Direct Tax / Direct Tax Acts other than the IT Act, in a faceless manner under the Scheme.

CBDT notifies First Appellate Authority to exercise jurisdiction over appeals pertaining to other Direct tax Acts

• The CBDT has accorded approval with effect from 25 September 2020 and notified First-Appellate Authorities to exercise jurisdiction over the appeals in cases pertaining to the aforesaid Direct Tax Laws other than the IT Act in their respective income-tax regions/charges.  

BDO comments

The clarification provided by CBDT is a welcome move as it helps in reducing the ambiguity with respect to the applicability of the Scheme. The clarification will assist revenue authorities in disposing appeals other than those of the IT Act in a timely and effective manner.

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