BackCBDT sets up panel to look into dispute resolution
The 6 member panel will examine the assessment orders, appellate orders and scrutiny report for the appeal to the ITAT related to orders
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New Delhi: In an attempt to curb rising litigation, the Central Board of Direct Taxes (CBDT) has constituted an internal committee to look at ways of improving the efficiency of existing dispute resolution mechanisms.
The committee, which was notified on Thursday, has been tasked with analysing orders passed by the appellate authorities as well as reviewing the existing system of appeals filed by the income tax department.
There is an estimated ₹ 4 trillion locked up in disputes and litigation in various courts and appellate authorities, though the entire amount is not recoverable.
“It has been decided to constitute a committee to appraise the efficacy of existing dispute resolution forums of CsIT (A) (commissioner of income tax (appeal)) and ITAT (income tax appellate tribunal) and to suggest steps to reduce litigation before these forums," the notification said.
CIT (appeals) is the first step of dispute resolution followed by ITAT. However, with CIT (appeals) generally ruling in favour of the tax department, most of the cases go to ITAT. Tax experts estimate that the tax department loses around 80% of its appeals in ITAT.
This is the second such step in the last one week by the tax department to reduce disputes. Last week, the tax department increased the so-called monetary limits for tax officials to appeal a ruling in various courts and tribunals.
Finance minister Arun Jaitley, in his budget speech, proposed to bring in administrative changes in addition to the legislative changes announced in the budget to reduce the number of disputes.
In the budget, the government extended the option of approaching the authority for advanced ruling (AAR) to resident taxpayers as well. It had also proposed a number of steps to reduce transfer pricing disputes.
“If this committee can look at ways to reduce the tax litigation, then this will be a welcome step,"said Sunil Jain, a partner at J Sagar Associates, a law firm. “Along with the changes in the settlement commission and AAR, this can go a long way in reducing litigation," he said.
The committee has been asked to analyse the success rate of appeals filed by the department before ITAT, amid complaints from taxpayers that some of the appeals filed by the tax department are baseless. The committee has also been asked to look if the tax officer, before filing an appeal, looks into the merits of the case or does so mechanically if the monetary limits allow him to do so.
According to new monetary limits, a tax officer can file a appeal before the appellate tribunal only if the tax demand is greater than ₹ 4 lakh; in the high court if the tax demand is more than ₹ 10 lakh; and the Supreme court wherein the tax demand is more than ₹ 25 lakh.
The terms of reference of the committee also involve checking if the orders of the CIT (A) are in lines with the legal position laid down by the courts.
The committee has been asked to arrive at its conclusions separately for four income groups—less than ₹ 25 lakh, between ₹ 25 lakh to ₹ 1 crore, ₹ 1 crore to ₹ 10 crore, and more than ₹ 10 crore.
The committee will be headed by Rani S. Nair, chief commissioner of income tax in Ahmedabad, and has five other income tax commissioners belonging to different regions. The committee has been asked to submit its report within eight weeks of its constitution.
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