Tax Practitioners from across the country salute the Income-Tax Appellate Tribunal oldest Temple of Justice, which is considered as Mother Tribunal in India, on completion of 80years of its purposeful existence and wishes that the Income tax Appellate Tribunal retain its glory as one of the finest Institution of our Country for years ahead (25-1-1941 to 25-1-2021) – Whether faceless appeals proposed by the  Hon’ble Finance Minister in the Finance Bill 2021,  before the Income Tax Appellate Tribunal will inspire the confidence of the Tax payer?

Dr. K. Shivaram, Senior Advocate,Bombay High Court

January 25, 2021 was the 80th Foundation Day of the Income tax Appellate Tribunal (ITAT)which is considered as Mother Tribunal of our country. The Income-tax Appellate Tribunal is one of the oldest Temples of Justice in our country. The older the temple, the greater is its sanctity and reverence. It is the strong foundation of this great institution which is made possible to retain the glory as one of the finest institutions of our country. It is due to very successive Hon’ble Presidents, Hon’ble Vice-Presidents, Hon’ble Members, the value ethics and convention which the Tax Bar inherited from the stalwarts of the Tax Bar and learned Departmental Representatives. I am associated with this great institution for more than 42 years. During the early days of my practice, I have had the opportunity to appear before various judicial and quasi-judicial forums. Eventually, I decided to practice mostly before the Income Tax Appellate Tribunal and the Hon’ble High Court on Direct taxes, according to me on account of its efficiency and justice-oriented approach of the hon’ble Members of the institution, the Income tax Appellate Tribunal is one of the best institutions to practice.

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Dr. K. Shivaram, Senior Advocate, has made the fervent appeal, on the auspicious occasion of the 80th Foundation Day of the ITAT, that all stakeholders, namely, the Tax Bar, the Ld. Members, the CBDT etc, shoud collectively make an honest attempt to maintain and preserve the glory of the ITAT as one of the finest institutions of our country. The Ld. Advocate has systematically set out the precise expectations and obligations of each stakeholder

Income tax Appellate Tribunal (ITAT) – 80th Foundation Day – Vision 2022 – Celebrating 75 years of Independence of our great Nation
Expectation of the stake holders from Income-tax Appellate Tribunal on celebrating 80th Foundation Day – Vision 2022 – Celebrating 75 years of Independence of our great Nation

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Dr. K. Shivaram, Senior Advocate, has lauded the recent philosophy of the Income-tax Dept of “Honouring the Honest“. He has described it as a “Game Changing Fiscal Policy“. He has advised that the tax administration has to make sincere efforts to satisfy at least 10 expectations of high tax payers. He has opined that this will be a way forward to eliminate the so-called “Trust Deficit” between the Tax Department and the Asseessees

The Hon’ble Prime Minister on August 13, 2020 launched the “Transparent Taxation – Honouring the Honest” platform. The intention of the Government is to enhance Transparency, Efficiency and Accountability and. With a view to achieve its objective it has proposed three areas of work viz. i. Faceless Assessment, ii. Faceless Appeals and iii. A Citizens Charter.

Superstar Amitabh Bachchan and other eminent personalities listen attentively to Late Shri D. M. Harish during a function conducted by CTC in 1995 to honour high taxpayers of Mumbai

The Scheme for Faceless Assessment been notified by the Central Board for Direct taxes (CBDT) vide Notification dated August 13, 2020 bearing Notification no. 60 of 2020 & 61 of 2020. This comes as an update to the E – Assessment Scheme, 2019 (2019) 417 ITR (St.) 12which was announced by the vide Notification dated September 12, 2019 bearing Notification no. 61 of 2019 & 62 of 2019.

Superstar Shah Rukh Khan addresses the distinguished audience and articulates the expectations of taxpayers

Further, The Finance Bill, 2020 (2020) 420 ITR145/ 221 (St) vide amendment in section 250 and section 274 of the Income tax Act, 1961 (Act) proposed to expand the scope of e-assessment to include e-appeals and e-penalty respectively. The provision for e-penalty has been included in the Scheme for Faceless Assessment. The Scheme for Faceless Appeals is awaited and is expected to be launched by September 25, 2020.

The new Scheme of Faceless Assessment, is not devoid of challenged, however, they are not incapable of being addressed. It is the need of the hour to tackle the issues from the regarding the launching and implementation of the New Scheme, as operation of the New Scheme will pose new challenges in the times to come. The Hon’ble Chairman (CBDT), Members of the Board, and the high-ranked officers are patiently attending virtual conferences to clear any ambiguity or query in the minds of the tax practitioners.

There will be certain inherent limitation in the inception years of the New Scheme. However, in the years to come, with constant improvement and updates, the New Scheme would be a game changer for its stake holders. Tax payers and tax professionals should cooperate with the initiative of our Government.

The New Challenge is a welcoming initiative by the tax payers, taxman and tax professionals. It is important to be updated with technology and to leverage technology to the benefit of mankind. Further, in the past issues arising out of transparency, accountability and efficiency have been faced by the tax payers and their representative. The All India Federation of Tax Practitioners (AIFTP) from time to time have an appeal to the government to bring Accountability provision in the income tax Act , as suggested by Dr. Raja J. Chelliah in his committee report (1992) 197 ITR 99 (St) (112).The tax Practitioners are pleased to note that Finance Bill, 2020 (Supra), a new section 119A of the Act “Taxpayers’s Charter”, wherein the CBDT was empowered to adopt and declare a charter and issue such orders, instructions, directions or guidelines to the income tax authorities for the administration of such Charter. It is pertinent to understand that a “Citizen’s Charter” was published on the income tax website on April 29, 2014, which briefly explains the mission and vision of the department and explains its expectations and duties towards a tax payer. However, the Charter lacked a legislative sanction. Not only is the New Charter legally binding, it also has a redressal mechanism for any non-compliance under the it. The enforcement of the New Charter is yet to be understood. Considering its intention, it is definitely a welcoming piece of legislation, it will play a significant role in improving the taxman-taxpayer relationship. Both domestic and international tax payers would be benefitted by this Charter. This will also help in improving the ease of doing business in India.

This new proposed relationship will change the perspective of the tax payer towards the department. The Department would be looked as “tax facilitator” rather than a “tax collector”.

For the first time in the history of taxation, a function was held to appreciate hard work, enterprises and to encourage tax compliance. On November 27, 1991 the Chamber of Income tax Consultants (CTC), Mumbai had taken the initiative for honouring high tax payers of Mumbai. A grand function was organized at Birla Mathurshri Sabhagriha to felicitate high Tax payers of Mumbai, which included Shri Amitabh Bachchan, Late Shri Ashok H. Desai, Late Shri D.M. Harish and many more. Former Attorney General of India, Shri Ashok H. Desai who was one of the highest tax payers of our Country for many years, stated “I wish the state could follow the advice of Kautilya who says that king must tax like Sun, who takes the moisture gently from the sea but returns it manifold as bountiful rain.” According to us the tax administration should adhere to this philosophy.

CTC once again honoured the high tax payers of Mumbai in the year 1995, where in included Shri Shahrukh Khan, Late Shri Dinesh Vyas, Shri Rakesh Jhunjunwala and many more, and the Chairman of CBDT was also present. In the vision 2000 tax law and tax Administration which was published in the year September 1996, views of high tax payers were published, based on their suggestions. Ten important expectations are as under:

  1. The law as it stands need to be fairer, reasonable, simple and enforceable.
  2. In the admiration of law, sense of justice needs to be upgraded.
  3. The goal of any tax law should be to collect not the budgeted amount but the right amount in accordance with law.
  4. Some of the provisions of the income-tax law are very complicated. These provisions are difficult to understand, difficult to interpret and consequently difficult to administer.
  5. Lack of accountability has driven out the sense of justice from tax administration and this has assumed dangerous proportions.
  6. Tax payer’s money is to be used effectively, without wastage.
  7. Maximum tax rate should not be more than 20 to 25 per cent.
  8. As regards incentive or pension scheme to tax payers on the basis of taxes paid, when a tax payer is not able to earn the tax payer have nothing to fall back on, some sort of Social Security system. Government is a partner only in profits not otherwise.
  9. A high tax payer does no favour to any one including Government when he pays a high tax, for he simply performs his duty and nothing more. However, if conferring honour on high tax payers can stimulate others to reach greater levels of compliance, one can support the recommendations of the tax consultants that the Government should honour the tax payers.
  10. Tax administration should treat the tax payers as respected citizens and not as Tax Evaders.

 Financial express dt 22-9 – 2020 stated that only 1 percent of the Indian population pays income tax and declares earnings above the non-taxable income. Only 5.78 crore income tax returns were filed by individual tax payers for the financial year 2018-19 till February 2020. Out of this only 1.46 crores individual tax payers fled returns declaring above Rs 5 lakhs.

In the case of Mukul Kumar Singh v CIT (Pat) (HC) (WP No 12528 of 2009 dated September 7,2020), the Honourable High Court observed that“The Trust deficit between the Department and the Asseessee, perhaps has led to the litigation being prolonged for more than a decade and a half. Every public body and institution have a duty not only to build goodwill and defend its reputation but also to install faith in the mind of public with regard to its functionality. There are times when the Institution has to show magnanimity, even in existence of a bonafide error and not unnecessary embroil a party to litigation and prolong his agony”

Indian citizens have heritage of ‘High-Character’. There are number of obligations which the tax payers have to undergo, they have to deduct tax, deposit with in stipulated time, file the TDS return, if there is delay fee or penalty of Rs. 200/- for every delay, delay in payment of tax or delay in depositing the tax at source attracts interest, disallowance, penalty and prosecutions. Large number of prosecutions matters are on account of technical defaults. The Compounding fees are so high it may be difficult to most of the assessees to pay such a high fee. There is no provision under the Income tax Act, where in an assssee may realise certain mistake in the return and later desires to settle voluntarily by paying the tax. The taxpayer cannot file the return voluntarily after beyond period of limitation unless the notice is received from the tax administration. There has to be one-time settlement provision to deal with such technical and bonafide mistake of the tax payers.  

We appreciate our Prime Minister’s initiatives on this front. This is a proactive step taken by the Honourable Prime Minster of India we hope when India celebrates 75 years of independence there will be double the number of tax payers who will contribute to the development of the Country.

There could be number of issues which the tax professionals can help the tax administration to bring more assessees under tax net. One must appreciate that in a recent Webinar organised by the AIFTP on September 12, 2020 the subject of “Faceless Assessment- Chartinga Road Road map for a Painless Tax Regime & Seamless Tax Compliance” Honourable Chairman CBDT, Mr. P. C. Mody shared his vision and the Tax Officials Dr. Pushpinder Puniha, Principle Chief Commissioner of Income-tax National e-Assessment Centre and Shri Kamlesh Varshaney, Joint Secretary TPL, Central Board of Direct taxes in a panel discussion with Mr Mukesh M. Patel Advocate Ahmadabad Shri Ganesh Purohit, Senior Advocate, Jabalur, and Mr Samir Jani, Advocate, Secretary General AIFTP, have clarified the number of issues. Further the CBDT issued directions to its officers vide letter dated September 18, 2020 clarifying the number of issues. This shows proactive role played by the CBDT, we hope they will continue to have dialogue with the tax consultants from time to time for better administration of justice.

Jai Hind!

Dr. K. Shivaram,
Senior Advocate
September 20, 2020
Reproduced with permission from the AIFTPJ -September , 2020 

Dr. K. Shivaram, Senior Advocate, has pointed out that the stakeholders in the ITAT will have no option but to adapt to a mixture of virtual and physical hearings, in order to dispose off appeals and do justice. The ld. author has offered valuable suggestions on how the challenges can be overcome and the task achieved with least hardship to all concerned

Proposal before the Hon’ble Income Tax Appellate Tribunal to consider a combination of Virtual and Physical hearing abiding by the parameters laid down by the Government

Since March, 2020, the Hon’ble Appellate Tribunal, at Mumbai and at its other benches across the Nation have been constrained from conducting physical hearing. A reasonably good number of matters have been disposed by the Appellate Tribunal via virtual hearings. This has been made possible under the able leadership of the Hon’ble Justice Mr.P.P. Bhat, President of the Appellate Tribunal, ably assisted by the Hon’ble Vice Presidents, with the active involvement of the Hon’ble Members of the Appellate Tribunal. Tax Bars across the Country and the learned Departmental Representatives have been supportive and proactive regarding this process. Hyderabad, Visakhapatnam, Kolkata, Dehradun, Chandigarh, Mumbai etc. have all issued their respective Standard Operating Procedure for virtual hearings.

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DR-K-SHIVARAM-SR-ADVOCATEDr K. Shivaram, Senior Advocate, has lauded the Income tax Appellate Tribunal and the Tax Professionals for playing a proactive role during lock down by organising Webinars on several subjects which have helped tax practitioners to better their understanding on various issues. He has pointed out that this salutary practice has also helped them to do away with negative thoughts that set in as a result of the Lockdown

There is no denying that the pandemic has changed the world forever, we as humans have undergone social and behaviour changes. From excessive use of hand sanitisers to the use of mask each time we step outside of our homes; the last few months have been spent in captivity in our homes as a precaution against a virus.

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NA-PalkhivalaDr. K. Shivaram, Senior Advocate, has pointed out that the lament by Nani Palkhivala several decades ago regarding the ‘maddening instability‘ of the Income-tax Act and it being a “national disgrace” holds good today as well as is reflected by the numerous amendments ushered in by the Finance Bill 2020. Some amendments are ill-thought of and have led to enormous confusion and anxiety amongst taxpayers. Also, the non-allocation of funds to the Judiciary shows a lack of seriousness in the Government regarding clearing the massive backlog of cases in Courts. The learned author has also made valid points regarding the ‘Vivad Se Vishwas’ scheme and other important proposals in the Budget

Finance Bill -2020 –In the visionary budget, there is no allocation of funds to the infrastructure, digitalisation and modernisation of the judiciary.The Judiciary is the backbone of Democracy, unless sufficient resources are allocated towards the judiciary efficient to render speedy justice by appointing judges and providing the much-needed infrastructure, we may not be able to achieve the desired object of becoming a 5 trillion economy.

1. No allocation of funds to the judiciary.

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Dr. K. Shivaram, Senior Advocate, has offered several valuable suggestions on what reforms in tax laws and tax administration have to be implemented so as to achieve the noble objective of improving the ease of doing business. He has opined that if these suggestions are followed, there will be a proper recovery of taxes as well as a drastic reduction in litigation, which will benefit the Government as well as the citizens

Envisaged under Article 51 of the Constitution of Indiaare the Fundamental duties of every citizen of India Article 51A(j) reads as under, “to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavor and achievement.”

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Dr. K. Shivaram, Senior Advocate, has stated that the step to cut corporate tax is a much needed bold reform-tax. He has pointed out that professionals have wholeheartedly appreciated the sincere efforts of the Honourable Prime Minister of India and Honourable Finance Minister of reducing the tax rates and creating investment-friendly atmosphere in the Country

1.Introduction: The Hon’ble Prime Minster of India, Shri. Narendra Modi has stated that “The step to cut corporate tax is historic. It will give a stimulus to Make in India, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians. Announcements in last few weeks clearly demonstrate that our Government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $ 5 trillion economy“. [source: Hindustan Times 20-09-2019]

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Dr. K. Shivaram, Sr. Advocate, has lauded Shri Narendra Modi, the Hon’ble Prime Minister, for unveiling the ‘New India Vision & Road Map’ for the Country. He has pointed out that in the ‘New India Vision’, the role of the judiciary cannot be left behind. The author has accordingly identified the issues in the judicial system which are stumbling blocks to progress and offered valuable suggestions on how to achieve speedy disposal of matters and administer justice to citizens in a more efficient manner

On the occasion of 72nd Independence day celebrations, Honourable Prime Minster of India Shri Narendra Modi addressed the occasion by putting forward a new India vision and road map to the Nation. It is the duty and obligation of the every citizen to support the vision of the Honourable Prime Minster.

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Dr. K. Shivaram, Sr. Advocate, laments that the Government has turned a complete blind eye to the woes plaguing the judiciary. There is not even a whisper about allocating funds to the judiciary in the latest Budget. He points out that apart from lakhs of pending cases, there are as many as 10,000 TDS prosecution matters which are pending before the Magistrate’s court in Mumbai alone. Many of the cases are pending for nearly 15 years and are frozen at the stage of framing charges. The author has pointed out that an effective judiciary is as important to the Country as is National security. He has urged the Government to take immediate remedial steps in the matter and not to splurge funds on frivolous issues like installing “justice clocks

The Judiciary is as important as National security – In the visionary budget presented by the Honourable Finance Minster, there was not a single word or proposal spelt out on how the Government in its second term won with an overwhelming mandate plans to meet the challenges of skyrocketing pendency of litigation in our country – A robust, efficient and efficacious dispute resolution method for speedy disposal of tax and commercial disputes would go hand in hand with the objective of the Government in boosting foreign investor confidence and providing a fillip to growth.

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