The Central Board of Direct Taxes (CBDT), which is the apex body under the Ministry of Finance has agreed to look into the suggestions made to combine virtual hearings with faceless assessments.
In the course of the meetings in the past few weeks, experts and large taxpayers reached out to the government with a suggestion to combine virtual hearings along with faceless assessments to tackle one of the most complex laws in the country.
The areas such as transfer pricing, capital gains, related party deals, and mergers and acquisitions are identified as areas that are prone to disputes by experts and multiple interpretations arrive are formed by different parties.
The taxpayers who have a contradicting view with the officials should be given a chance to present their views over a web conference with the officials with the Income Tax Department.
According to the two persons who participate in the meetings, the Central Board of Direct Taxes (CBDT), which is the apex body under the Ministry of Finance has agreed to look into the suggestions made in the course of meetings in the past few weeks.
Corporates and tax professionals fear that a faceless regime could increase litigation even though reducing corruption, hence an opportunity should be provided to explain the finer points of a transaction.
Under the faceless regime, personal hearings shall be granted only in exceptional cases as notified by the Central Board of Direct Taxes. The industry expects such hearings to be granted in complex matters like transfer pricing, mergers, and acquisitions, high-stake additions, etc.
The assessees will feel the need to explain their case in transactions such as related party transactions such as the sale of a division, payment of interest, or rent of a group company or parent, where it would be easier to convince the taxman over a meeting why the rate of transaction varies from the market of arm’s length`s price.
The new system that was introduced through an amendment in the Finance Act 2020 removes human interference and the notices are issued through a central cell and allocation of cases on a random basis to the assessment units, and the central cell acting as a single point of contact between the taxpayer and IT department.
The need for a virtual hearing is required, according to the opinion of the professionals to avoid the case going in favor of the Income Tax Department.