Tax Experts Urge Swift Action on 5.49 Lakh Pending Appeals at CIT-A, NFAC

Massive Backlog of Tax Appeals Causes Concern

Tax professionals across India are raising serious concerns over the backlog of 549,042 income-tax (I-T) appeals pending before the Commissioner of Income-Tax (Appeals) (CIT-A) and the National Faceless Appeal Centre (NFAC). Some appeals have remained unresolved for over five years, causing significant delays and uncertainty for taxpayers.

The All India Federation of Tax Practitioners (AIFTP) has urged Union Finance Minister Nirmala Sitharaman to take swift action to address this growing issue, which is affecting businesses, individual taxpayers, and the overall efficiency of the tax system.

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NFAC’s Digital System Fails to Reduce Pending Appeals

The National Faceless Appeal Centre (NFAC) was established to modernize India’s tax system by digitizing and streamlining the appeal process. The goal was to make tax dispute resolution faster, more transparent, and efficient. However, despite these efforts, the number of pending appeals continues to grow.

According to AIFTP, taxpayers are suffering due to long delays in their appeals. The backlog has resulted in:

• Uncertainty over tax liabilities
• Delayed refunds
• Financial stress on businesses
• Accumulation of penalties and interest charges

Businesses and Individuals Face Financial Strain

Tax professionals argue that the five-year delay in tax appeals is severely impacting businesses and individuals. Many companies, especially small and medium enterprises (SMEs), are struggling with cash flow and financial planning due to the uncertainty of their pending appeals.

For individual taxpayers, unresolved tax cases lead to mental stress, financial instability, and potential penalties. The delayed resolution of appeals has also affected taxpayers’ trust in the fairness and transparency of the tax system.

Urgent Reforms Suggested to Clear Tax Appeal Backlog

To address the issue, tax experts have submitted a formal representation to Finance Minister Sitharaman, suggesting immediate reforms to reduce the backlog. The key recommendations include:

• Allocating additional resources to speed up the disposal of appeals
• Setting up special task forces to focus on clearing long-pending cases
• Enhancing NFAC’s technological infrastructure to automate processes and reduce delays
• Prioritizing high-value cases and appeals affecting small businesses and individuals
• Establishing clear timelines for appeal resolutions to improve transparency and accountability

Need for a Holistic Solution in India’s Tax System

While the introduction of digital tax systems like NFAC has helped improve tax administration, tax professionals believe that technology alone is not enough. AIFTP argues that a combination of technology, manpower expansion, and a structured framework for prioritizing appeals is necessary to resolve this crisis.

Tax experts are also urging the government to set fixed deadlines for tax appeals to prevent further delays. A defined timeline for resolving tax disputes would enhance taxpayer confidence and improve the efficiency of the tax system.

Government Must Act to Restore Taxpayer Confidence

The delayed disposal of tax appeals is not just a bureaucratic issue—it directly affects the financial stability of businesses and individuals. With many taxpayers waiting over five years for resolutions, tax professionals believe that immediate government action is needed.

AIFTP emphasizes that reducing the tax appeal backlog is crucial for ensuring justice and fairness in the Indian tax system. The government must take decisive steps to clear pending cases, improve tax administration, and rebuild trust among taxpayers.

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