She acknowledged the department’s efforts in reducing pending appeals but asked it to undertake a review to prevent fresh accumulation of cases. While the number of pending departmental appeals has declined significantly, she said the remaining backlog must not continue to grow at a pace that makes disposal a never-ending exercise.
Addressing officers on the 167th Income Tax Day, the finance minister said the department must draw a clear distinction between genuine mistakes and wilful non-compliance.
“Our approach should ensure convenience for the honest taxpayer and opportunity to correct bona fide errors, and firm consequences for deliberate evasion,” Sitharaman said. “We have to be intelligent, we have to be discreet and we should know to draw our line between those who are deliberately evading tax from bona fide errors.”
She cautioned officials against creating a negative experience for taxpayers while using powers granted under tax laws.
“The authority conferred by tax law must always be exercised with humility,” Sitharaman said, adding that a taxpayer is “not merely an assessee”. “The taxpayer is a citizen and a partner in India’s growth and development,” she said.
The finance minister said the department’s role has expanded beyond tax collection to ensure fairness, efficiency, ease of doing business and improved taxpayer services. She said the implementation of the Income Tax Act, 2025 has simplified the law by reducing uncertainty and lowering compliance burdens.