[Faceless appeal scheme] Why are hearings not stayed if scheme is being reconsidered: Bombay High Court to Centre

The Bombay High Court on Monday asked the Central Board of Direct Taxes (CBDT) why the hearings before the National Faceless Appeal Centres have not been stayed considering the fact that National Faceless Scheme is being reconsidered by the Central government (Chamber of Tax Consultants v. Central Board of Direct Taxes & Anr.). .A Bench of Chief Justice Dipankar Datta and Justice MS Karnik was hearing a public interest litigation (PIL) petition challenging the constitutional validity of the 'Faceless Appeal Scheme' along with certain amended provisions of the Income Tax Act, 1961..Additional Solicitor General Anil Singh appearing for the Central authority, informed the Court at the outset, that the parliament would be reconsidering the scheme.Senior Advocate Arvind Datar appearing for the petitioner, stated that the Appeal Units constituted under the scheme were issuing hearing notices and proceeding with the same despite the reconsideration move..In response, the Bench said that it does not want to waste time hearing a petition only for it to be eventually decided by the parliament.The Court, however, demanded why Centre was “not holding their hands on the appeals being heard” till their scheme is reconsidered. “You cannot have it both ways, if you are reconsidering the scheme, then don’t hear the appeals,” the Bench said..The Bench was also informed of the Supreme Court being approached with a transfer petition on the issue, though the top court had not granted any stay on the High Courts hearing the appeals.In light of this, the Bench proceeded to hear the submissions on the appeal..The PIL was earlier filed as a writ petition by the Chamber of Tax Consultants, challenging two notifications issued in 2020 by which the scheme was rolled out, and sub-sections (6B), (6C) and (6D) of Section 250 of the Act on the grounds that the same are arbitrary and in excess jurisdiction and authority..Datar made the following submissions today on behalf of the petitioner:Excessive Delegated legislation- Essential statutory functions which included change in policy could not be delegated;- The entire amendment pertaining to the appeal had been brought about by way of a notification, instead of following the due procedure under law..Quasi-judicial authority of Commissioner (Appeals) threatenedThe provision of Faceless Appeal Scheme had directly threatened the quasi-judicial authority of the Commissioner of Income Tax (Appeals) and hence the scheme is unconstitutional..Mandatory review of draft order unconstitutional- Provisions of the scheme provide for a mandatory review of the order where the tax involved is more than a specified limit. Datar argued that such a review has to be done by a higher authority, and after the order is passed and not at a draft stage.- The order was passed without hearing the assessed as per the scheme, which is illegal..No physical hearing is against principles of equity- The scheme does not provide for physical hearings even though the parent act does not completely negate physical hearing;- The provisions of the Faceless Appeal Scheme which completely negate physical hearings or make it available to the assessee at the discretion of the respondents should be struck down.- If the scheme is implemented, what will essentially happen is assessment, appeals and subsequent appeals will be faceless and the first time the assessee’s voice is heard will be in the High Court..Oral hearing via video conferencing- Appellant has no right of oral hearings via video conferencing and at best can only make a request to be heard.- The authority must not determine how an appellant can argue his case..Administrative interference in judicial workNational Faceless Assessment Centre, an administrative wing, is going to control the entire appellate function which is otherwise a duty to be discharged by a quasi-judicial authority. .Scheme is violating articles of the constitutionDatar also argued that the provisions in the scheme were in violation of Articles 14, 19 and 265 of the Constitution..After Datar concluded his submissions, the ASG was to commence with his submissions. However, due to paucity of time, the ASG will respond next Monday.