Taxpayers In Limbo: Over 5 Lakh Appeals Pending Before CIT-A, Tax Practitioners Call for Early Disposal

It seems that thousands of taxpayers across India are caught in the vortex of awaiting justice. Around 5.49 lakh appeals are pending before the Commissioner of Income Tax (Appeals), short for CIT(A), and the National Faceless Appeal Centre (NFAC). Some of these appeals have been pending for a hearing for more than five years now.

To bring this issue in notice, the tax practitioners have called the government's attention to intervene and fast-track the resolution process for taxpayers.

In a letter addressed to Finance Minister Nirmala Sitharaman, the All India Federation of Tax Practitioners (AIFTP), a national body representing over 11,000 tax professionals, including chartered accountants (CAs) and advocates highlighted this growing issue caused by the slow disposal of appeals.

Taxpayers Stuck In Limbo

The letter mentions that since the introduction of the Faceless Appeal Scheme, the disposal of pending appeals filed prior to the introduction of this scheme is still very slow. The faceless appeal scheme was brought into action to streamline tax despite resolutions by removing physical interactions between taxpayers and tax officials.

The practitioners note that appeals filed even before the scheme's implementation have barely moved forward. In many cases, even after taxpayers have repeatedly uploaded their submissions, no final orders have been passed.

"The first level of appeal is crucial because taxpayers must deposit at least 20 per cent of the disputed tax amount to get a stay," the letter states. When appeals remain unresolved for years, taxpayers are forced to lock in their funds indefinitely, creating severe financial hardships. If they win the appeal, the tax amount has to be refunded with interest, which ultimately adds to the burden on the exchequer, borne by the Indian taxpayers themselves.

The AIFTP has also pointed out the ripple effect these delays are having on higher appellate bodies. “This slow disposal of Appeals by NFAC has now led to a spiral effect on the working of the Income Tax Appellate Tribunal. The pendency at ITAT has reduced drastically resulting in ineffective utilisation of available resources,” it said.

This inefficiency in the system could ultimately slow down India's tax dispute resolution process even further.

Call for a ‘Time-bound Appeal Resolution’

A major loophole in the current system is the lack of a time limit for CIT (A) to dispose of appeals. In contrast to this, under Rule 34(5) of the Income Tax Appellate Tribunal (ITAT) Rules, 1963, the tribunal is required to pronounce an order within 60 days of the hearing, extendable by another 30 days only in some extraordinary cases.

The practitioners have pointed out that no such rule exists for CIT (A), leading to indefinite delays. The tax professionals, therefore, have urged the government to introduce a similar provision in the upcoming Income Tax Bill 2025 to ensure that appeals before CIT (A) are decided within a fixed timeframe.

A petition was filed in the Gujarat High Court in 2024 on the ground that the CIT (A) are not disposing of the pending Appeals on one hand and the recovery proceedings are initiated by the respondent - Income Tax Department for the outstanding demand. It noted that some of the appeals were pending for more than four years.

The Revenue has filed an affidavit-in-reply showing the details of total appeals pending before the appellate authority as of 26.09.2024 are as under:

In this case, the HC held that no recovery should be made from the assessees during the pendency of the Appeals. The AIFTP also stated that in all such petitions, there shall be no recovery of any outstanding dues from the petitioners whose Appeals are pending during pendency of petition.

With lakhs of taxpayers awaiting resolution, the delay in disposing of appeals is becoming a serious roadblock in country’s tax administration system. The AIFTP has urged the Finance Minister to intervene and direct the CBDT to ensure faster disposal of pending appeals, preventing unnecessary hardship to taxpayers.

If timely action is not taken, India's tax dispute system may continue to be bogged down, creating avoidable financial strain on both individuals and businesses. As the government is already trying to create a simpler tax structure for the taxpayers, building a fair, efficient, and time-bound appeal process is also the need of the hour.

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