The Central Board of Direct Taxes (CBDT) has chalked out an ambitious programme of clearing by December end all high-level disputes (involving an income tax demand of Rs 50 crore or more), which are pending with offices of the Commissioner of I-T (Appeals), or CIT (Appeals). As many as 841 such cases were pending as of April 1 this year. Thus, a quick back-of-the-envelope calculation shows that the value of these disputes, on the most conservative estimate, is Rs 42,050 crore.
At the other end of the spectrum, there are 1.15 lakh pending appeals where the demand is less than Rs 2 lakh. The CBDT also intends to prioritise speedy disposal during the year of such cases, which account for about 90% of all appeals filed before March 31, 2018.
When taxpayers dispute the income tax (I-T) demands raised on them, a structured appeal process has to be followed. The first level of appeal lies with the CIT (Appeals), who functions within the tax administration. Orders passed by the CIT (Appeals) can swing either in favour of the taxpayer or the I-T department, based on the facts of the case and the legalities involved.
The next level of appeal can be filed by the taxpayer or the I-T department, with the Income Tax Appellate Tribunal (ITAT) — an independent judicial body. Then, appeals against the orders of the tribunal can be filed with the courts, only if a question of law is involved.
In its 54-page detailed action plan drawn up for the current financial year 2018-19, the CBDT has said clearing the backlog of litigation is one of its top priorities to achieve the objective of the Vision 2020 document.
Pointing to various statistics, such as the nearly 3.2 lakh appeal cases pending across the country with offices of the CIT (Appeals) involving an aggregate tax demand of nearly Rs 6.4 lakh crore, the action plan admits that litigation — which has been rising over the years — has now assumed grave proportions. The action plan also indicates that demands stayed by the judicial authorities — such as tribunals and courts as of April 1, 2018 — amount to a whopping Rs 87,035 crore.
Appeals pending with the offices of CIT (Appeals) have been categorised into various baskets and the percentage of such cases that should be disposed together with the time lines have been set down in the action plan, with the highest priorities given to the high-value cases and those at the lowest rung in the basket. CBDT’s action plan points out that, while the number of appeals filed by the I-T department with the tribunals and courts has decreased, the number of disputes pending before the judiciary has been increasing over the years owing to lack of resources and support from field officials.
The backlog has a cascading effect as litigation on similar issues arises in subsequent years. It calls for streamlining the process, with Principal Commissioners of I-T having to identify top 30 litigation cases in their charge, where important issues are pending with the judiciary and the CIT (Appeals)
Source : Economic Times