The author, an eminent senior advocate, is deeply anguished that the ITAT, which was at one time hailed as a “Model Tribunal”, is today facing the ignominy of being subjected to repeated strictures from the High Courts. The author has analyzed the reasons for this sorry state of affairs and offered valuable recommendations on what can be done to rectify the situation. He has also sent the clarion call to all stakeholders to rise to the occasion and work tirelessly towards restoring the glory and prestige of this august institution
The Income-tax Appellate Tribunal which is considered as mother Tribunal of all Tribunals which was established on 25th January, 1941 will be celebrating its 75th year on 26th January 2016. An honest attempt should be made by the Bar and the Bench to retain its glory as one of the finest Institution of Our Country.
While addressing the Chief Justices and Chief Ministers conference, the Honourable Prime Minister of India has expressed great anguish at the interminable delay in disposal of appeals by the Tribunals. With respect, the ITAT is an exception to the rule and cannot be subjected to the same criticism as the other Tribunals. In fact ITAT has largely lived up to the promise of ”Sulab Nyay! Satwar Nyay!” (Easy Justice! Speedy Justice!). Pendency of appeals is about 1,04,281/- as on 1-4-2015 (AIFTPJ April, 2015 Pg. No. 49) it is mainly because the Govt has not appointed the members within reasonable time. The sanctioned strength of the members of the ITAT is 126 whereas only 67 members are available discharging the duties. If the vacancy is filled up within reasonable time the pendency can be reduced to at least 50,000 within a reasonable time of two years. Ideally the tax payers should get the finality to the assessment at least within two years of the assessment.
Due to certain unfortunate incident few years back the confidence of the tax payers has shaken. Hence it is the Bar and the Bench which may have to play a positive role to bring back the status of the mother Tribunal as one of the finest institution of our country. It is the ITAT Bar Association Mumbai with the help of other associations and support of the then President of the ITAT, Honourable Mr. T.V. Raja Gopalal Rao, the independence of the Institution was saved by filing of a PIL. Then law Secretary was held liable for contempt for interfering with justice delivery system. According to me that was golden period of the ITAT. The Tribunal will be celebrating 75 years in the year 2016 and the ITAT BAR Association Mumbai will be celebrating its 50 years. Introspection of the 75 years will be required. We have many professionals who are practicing before this institution for more than 50 years by analysing the issues where we failed, how we failed, what remedial measures can be taken. We have to make the celebration as a memorable one so that the tax payers will gain the confidence that here is one institution, which renders the justice without any favour or fear within reasonable time .Some of the suggestions for debate are:
1. Reducing the pendency
i. When Finance Bill 2015 becomes an Act, the SMC bench can dispose the matters where the assessed income is Rs. 15 lakhs or less. Out of total pendency atleast 20% of the cases where the assessed income will be less than Rs. 15 lakhs, this will help to quick disposal of matters.
ii. Revenue’s appeal less than Rs. 4 lakhs may be taken out of turn for hearing.
iii. Covered matters by Supreme Court, jurisdictional High Court or in assesses own case, if an application is made can be taken out of turn for hearing.
Members of the ITAT or with the help of the Bar and revenue the matters can be sorted out and can be kept for direction. If it is fully covered the matters can be disposed if it requires detailed hearing a specific hearing may be given.
2. Quality of orders
The Tribunal being the final fact finding authority, it has greater responsibility to render highly qualitative order. One will have to appreciate that hearing the appeals before Tribunal the honourable members are not merely adjudicating on the issues before them but they are invariably deciding on the fortunes of the assesses. On fact the Order of the Tribunal is final. One wrong decision against an assessee may ruin his life and relegate him to the position of a pauper, the same against the Government may affect the coffers of the Government to an extent of a drop in an ocean. Tribunal has greater responsibility to the citizens.
By and large, quality of the orders of the Tribunal is the quintessence of judicial writing and has even been appreciated by the higher courts of the country. However, in certain instances, it has been found by the higher courts that some of the Tribunal’s orders have not been of the desired quality.
Very recently, the Bombay High Court has come down heavily on the quality of the Tribunal’s orders in three judgements:
(i) DIT v. Societe Generale, ITA No 1314 of 2013, dt. 15/4/2015
(ii) Madhukar Thakroor v. ITAT, WP No. 1133-34/ 1162 of 2014 dt. 22/4/2015
(iii) R. W. Promotions v. ITAT, WP No. 2238 of 2014 dt. 8/4/2015
However, the above judgements of the Bombay High Court do not represent an occasional occurrence. In the past as well, even other High Courts have made observations regarding the absence of reasoning in the Tribunal’s orders:
(i). CIT v. Jagjit Singh Chahal  369 ITR 260 (P&H) (HC)
(ii). CIT v. Orient Longman Ltd.  366 ITR 559 (T&AP) (HC)(iii). CIT v. Shah Ravindra Derogarh  367 ITR 223 (Guj.) (HC)
(iv). CIT v. GEC Alsthom India Ltd.  361 ITR 304 (Mad.) (HC)
(v). Pradeep Kumar Kapor v. ITAT (All.) (HC);
(vi). Dattani & Co. v. ITO  41 taxmann.com 360 (Guj.) (HC)
(vii). CIT v. Chetan Das Lachman Das  211 Taxman 61 (Delhi) (HC)
(viii). DCIT v. Rajasthan State Industrial Development & Investment Corporation  73 DTR 22 (Raj.) (HC)
Thus, it seems that almost all High Courts have, at some point of time, expressed dissatisfaction over the quality of Tribunal’s orders.
It is time for introspection by the Tribunal. In fact, words of sagely advice can be found not from outside but from within the Tribunal itself.
The above assumes greater significance especially when 45 new Members are about to join the Tribunal.
The speech of Hon’ble Justice (Retd.) Mr. R. V. Easwar on qualities of a judge and principles of natural justice [AIFTP journal – March 2012 pg. 7] delivered in 20/2/2012 during the Orientation & Training Programme of newly appointed members can serve a useful guide for all members. Similarly, his speech at the Regional Refresher Course for members at Mumbai on 4-5/11/2006 covered various issues pertaining to the dispensation of justice by the Tribunal. The guidelines dt. 25/6/2008 issued by the then President of the Tribunal, Hon’ble Shri Vimal Gandhi for drafting orders could serve as a useful guide for members while drafting orders. One may also refer to the speech of Hon’ble Shri D. Manmohan, Vice President of the Tribunal, on 21/2/2012 [reported on www.itatonline.org] on the topic of “Art of writing judgement”.
3. Use of technology
By use of technology the entire filing process of the ITAT may be digitalised. One may be able to find out which are the issues pending before various benches of the Tribunal. If common issues are involved in different benches, the matter can be taken out of turn for hearing and the issues can be decided. This will help to reduce the pendency of cases.
4. Role of the Bar
If the representation is good the quality of the orders will improve. Good bar makes a good Bench. It has been observed that many of the professionals send the clerks and staff members to take an adjournment before the Tribunal. It is only the persons authorised under section 288 who can appear and taken an adjournment .Lot of time of the Tribunal is lost due to not complying with the procedure, it is desired that the check list may be followed which is published in the itatonline.org.
5. Knowledge of General law and Refresher Course to Honourable members
Income tax Act, 1961 refers 98 other Central Acts and Various State Laws, therefore to decide an important issues before the Tribunal it is very essential to know the General law. The tax consultants must make an sincere attempts to be up to date on general law so that the representation can be better. Similarly there has to be annual refresher course for Honourable members where in the senior members and Judges who decide the tax matters may guide the Honourable members about the general law and International taxation issues. This will help to render to deliver quality judgments.
6. Institutionalisation of the process of elevation of Members to the High Courts
Till now very few members of the ITAT have been elevated to the High Courts. There are good number of Members who deserve to be elevated to the High Court, however there is no mechanism to find out the potential members. As the National Judicial Appointments Commission Act is notified, there has to be an institutional mechanism to elevate the deserving members to the High Court. If such a system is not developed the young professionals may not join the Bench. It will be great loss to the institution. Now the President being a retired judge of High Court, he can interact with the NJAC for elevation to High Court or he may propose the deserved members for the consideration as elevation to High Court.
7. Increase in age limit retirement of Members from 62 to 65
The President of the ITAT retires at the age of 65 whereas the members at the age of 62. The then law Minister, Mr. H.R. Bhardwaj, while addressing the members Conference Mumbai on 4th November, 2006 stated that the Government will increase the age limit of all the members from the present 62 to 65. In a PIL filed by the Sales Tax Bar Association to increase the age limit of Members of the Sales tax Tribunal, the Bombay High Court directed the Government the increasing the age limit of all members.
8. Infrastructure and allocation of funds
Tribunal being functioning under the Ministry of Law it is always short of sanctioned Funds. The ITAT has Benches in 26 centres. It is desired that unless the proper infrastructure is provided to the Bench the institution may not be able to render the justice at the speed it requires to be delivered.
9. Code of conduct for the professionals who practice before the ITAT
The code of conduct adopted by the Judges has been recommended by the Federation has been adopted by the members of the ITAT. Refer itatonline.org. Similarly the AIFTP and ITAT Bar Association adopted the Code of ethics to its members. It is desired that all of us must follow the code of ethics. If any of our members are not following the same may be brought to the notice of the respective associations.
10. In house mechanism
There has to be in house mechanism to evaluate the quality of order and the overall functioning of the Tribunal.
Federation and ITAT Bar Association at Mumbai has a high powered ethics committee headed by eminent professionals. Any members of the Bar, members of the ITAT or departmental representative can bring to their notice any unethical practice by the tax professionals who are representing before the Tribunal. However, neither the assesees nor the professionals have come forward to take advantages of the committee. We are concerned with unpolluted justice system in the Income–tax Appellate Tribunal in all over India. We are also having ITAT Bar Association’s Co-ordination committee, we desire that the members should sent objective suggestions for better law and better justice delivery system before the ITAT.
11. Honouring professionals who are practicing before the Tribunal for more than 50 years
When Tribunal celebrate 75 years, it is worth considering whether the ITAT can honour to those professionals who are men of integrity and contributed for development of the ITAT and who are practising more than 50 years before the ITAT.
These are the few thoughts, there could be number of other valuable suggestions about which the readers may write to us, the ITAT Bar Association’s Co–ordination committee will take up the issues with the concerned authority.
Dr. K. Shivaram
Editor-in-Chief, AIFTP Journal
Reproduced with permission from the AIFTP Journal, May 2015