New Delhi, July 25 -- With the 31 July income tax return (ITR) filing deadline approaching, finance minister Nirmala Sitharaman on Friday asked officials to make the system more taxpayer-friendly by easing compliance for honest taxpayers while taking action against evasion. She said certainty in the tax regime is critical for the economy. Addressing the 167th Income Tax Day celebrations, FM said the department should give taxpayers with an opportunity to correct bona fide mistakes. "Our approach should ensure convenience for the honest taxpayer, an opportunity to correct bona fide errors, and firm consequences for deliberate evasion," she said, adding that a taxpayer is "not merely an assessee; a taxpayer is a citizen and a partner in India's development". The minister called for a shift from litigation management to litigation prevention, saying tax certainty is one of the strongest foundations of voluntary compliance and an economic imperative that improves the ease of doing business while strengthening India's competitiveness as a global investment destination. She urged tax officers to resolve appeals fairly and consistently, so that taxpayers gain confidence in the system instead of returning to litigation. Litigation prevention should rest on three pillars: clarity in taxpayer obligations through timely circulars, consistency in interpretation across jurisdictions, and institutional learning from appellate orders to shape future reforms. Appeals, returns and refunds The minister noted that the total pendency of appeals is down by over 34,000 cases to about 5.4 lakh, while around 6,000 departmental appeals have been withdrawn following the enhanced monetary thresholds announced in Budget 2024-25, enabling the department to focus on cases involving substantial questions of law. The tax department has evolved from being primarily a tax collection agency into one focused on fairness, efficiency, ease of doing business and taxpayer service, she said....