CBDT's Central Action Plan: Strategies to Resolve Income Tax Appeals Fast

Introduction

The Central Board of Direct Taxes (CBDT) has ramped up its action towards disposal of pending income tax appeals, particularly those pending for three and five years and beyond. The most recent Central Action Plan (CAP) for 2025–26 lays down ambitious targets with a focus on acceleration of litigation, enhancing collection of revenue, and boosting confidence that taxpayers place in the system.

Background and Earlier Directives

Historic Mandate

The CBDT, in a previous order, instructed all Principal Chief Commissioners of Income Tax (Pr. CITs) to clear all appeals pending since more than five years as on April 1, 2019, by March 31, 2020, with no exceptions.

Redistribution of Cases

Income Tax (Appeals) Commissioners were authorized to redistribute cases under their jurisdictions in order to accomplish these disposal targets.

• Pending over 3 years: 96,850 (19,768 disposed)
• Overdue for more than 5 years: 31,325 (7,597 disposed)

Major Updates and Progress (2024–2025)

Historic Disposal Registered

Income Tax Department has registered a historic disposal of 1.72 lakh appeals in FY 2024–25, a record higher by 155% over the previous fiscal.

Reducing the backlog

The outstanding appeals at the first appellate level decreased from 5.49 lakh in April 2024 to 5.38 lakh in April 2025 for the first time in some years.

Central Action Plan 2025–26

The new CBDT plan will dispose of over 2 lakh appeals, which can release up to ₹10 lakh crore of disputed tax assessments, with an "all hands on deck" approach.

Faceless Appeals System

The establishment of the National Faceless Appeal Centre (NFAC) and the Joint Commissioner (Appeals) position have encouraged faster and more transparent disposal procedures.

Priority Guidelines (March 2024)

Out-of-turn disposal is permitted for:

• High-demand cases (above ₹1 crore)
• VIP/PMO references
• Court-directed cases
• Appeals by senior citizens
• Cases involving actual hardship

Judicial Oversight and Stakeholder Input

High Court Directions

Courts have directed expeditious disposal of pending long appeals and emphasized responsibility in unreasonable delay cases.

No Statutory Time Limit for CIT(A)

Currently, no statutory time limit is there to bind the CIT(A) to pass orders, as against the ITAT, which has to pass orders within 60 days, under the existing or proposed Income Tax Bill, 2025.

Practitioner Suggestions

Tax professionals and institutions are demanding that statutory timelines be introduced for CIT(A) to expedite the resolution process even further.

Challenges and Policy Recommendations

Manpower Shortages

Appellate level staffing shortages continue to be a challenge notwithstanding recent improvements.

Complex Cases

Even though the faceless appeals system is more efficient, it may not be so for complex or high-value cases necessitating elaborate hearings.

Revenue and Taxpayer Impact

• Delayed appeal procedures cause financial burden on taxpayers through mandatory pre-deposits and constant uncertainty.
• Speedy dispositions can enhance revenue realization and restore taxpayer confidence.

Policy Recommendations

• Enact legislative timelines for CIT(A) orders.
• Enforce accountability for officers indulging in excessive delay or unmeritous orders.

Frequent Questions (FAQs)

**Q: What is the present penance of income tax appeals in India? A: As of April 2025, 5.38 lakh appeals remain pending at the first appellate level, a steep decline from 5.49 lakh in April 2024.

Q: What has the CBDT done for appeal backlog reduction? A: The Central Action Plan 2025–26 targets disposal of over 2 lakh appeals, alongside redistributed case handling and implementation of a faceless appeals process to enhance efficiency.

Q: Is there a statutory deadline for CIT(A) to dispose of appeals? A: No statutory time limit for CIT(A) resolutions is there as of now, but the courts and tax professionals have requested the introduction of such provisions.

Q: What has been the impact of the faceless appeals system? A: The faceless appeals system has improved transparency and disposal ratios but is also confronting challenges, especially with complex cases.

Conclusion

The CBDT's new focus on disposing of pending appeals is yielding dividends in terms of record disposals and reduction in the backlog. More reforms such as prescription of statutory time limits and enhancing accountability are necessary to dispose of taxpayer grievances to the extent possible and to achieve a fair and efficient tax dispute resolution mechanism.