The author, founder of tax2.me, takes a cynical view of the Government’s decision to initiate an award scheme for officers of the income-tax department. An award scheme without a corresponding accountability scheme to rein in officers who step out of line and breach the law will encourage assessing officers to go on a rampage and spell doom for the taxpayers warns the author. He urges all stake-holders to protest against the proposal.
The Government’s decision to initiate an award scheme for officers of the income-tax department has raised the hackles of taxpayers across the country. While the fine print is waited and the scheme is worded in elegant language (“display of specific acts of exemplary devotion to duty”), the scheme is probably simply this “Collect more revenue by whatever means – fair or foul – and take home your reward”. The bottom-line of the scheme is unlike to be different from the plain words used by Laxman Das, the ex CBDT Chief who, in his missive to his underlings, was brazen enough to say that the officers’ posting and promotion prospects were directly proportional to the quantum of revenue that they brought in.
Of course, Laxman Das drew flak from the High Court for his brazenness. In UTI, the Court caustically observed “Administrative directions for fulfilling recovery targets for the collection of revenue should not be at the expense of foreclosing remedies which are available to assessees for challenging the correctness of a demand”. But then, who cares for what the High Court says!
The fact that this “award scheme” comes in the wake of (ex) Finance Minister Pranab Mukherjee’s exhortations to the department that they should “leave no stone unturned in ensuring that the targets for the current year are not only met but handsomely exceeded” is not a mere coincidence.
While one can’t deny the fact that the department does have its share of top-quality officers who administer the law with a sense of justice and fairness, the lumpen elements definitely outnumber them. The quality officers do not need incentive schemes for motivation. They know their job and do it dutifully. For the lumpen elements, an incentive scheme without an accountability safeguard is like letting a mad bull loose in a china shop. These officers, who think nothing of stepping out of line and breaching the law on a daily basis, will be uncontrollable if they feel that they will actually be rewarded by the department for doing so.
So, what is the solution? Nearly 20 years ago, Raja Chelliah, the great visionary, had mooted an accountability scheme for the officers of the department. In his immortal words, he had said “Ways must be found to hold the officer accountable for kinds of assessments he makes under present procedure” and “The Assessing Officers should be made accountable for their actions by being blamed for raising demands which are not upheld by a reasonable figure, say 50 per cent, the officer should be given a black mark and reprimanded. On the other hand an Assessing Officer should be protected and defended if he has observed instructions of the Board and followed the Court rulings even though audit might raise objections about his actions.” But, as usual, the Government cunningly cherry-picked the parts of Raja Chelliah’s report that were in its favour whilst dumping the parts that were against it into the dustbin.
So, before thinking of an “awards scheme”, let’s look at some at some of the burning issues where the officers need to be pulled up for gross inefficiency and harassment:
(i) Habitual delay in filing appeals and SLPs:
So much has been said about this that one feels nauseous about it. Though hundreds of crores are at stake, the appeals are routinely filed late by a few months to even a few years. Repeated warnings by courts have had no effect. In exasperation, the Supreme Court threw out an appeal of the department for delay without appreciating the sufferers of its action would be the innocent citizens of the Country and not the inefficient officers. The Court ought to have hauled up the officer(s) concerned and fined them heavily;
(ii) Throwing the law to the winds at the time of recovery:
Courts have gone hoarse “warning” the assessing officers to follow the law whilst recovering arrears but this has as much effect as water has on a duck’s back. Ignoring the stay applications or rejecting them on flimsy grounds, attaching bank accounts without warning, issuing threats and false inducements. The list of transgressions is long. But, you really can’t blame the officers for this. If Chief’s like Laxman Das openly tempt you with promotions and postings for bringing home the loot, who cares for the law?
(iii) Raising exorbitant high-pitched demands by ignoring case laws and binding precedents:
Your success in the department is measured by how much revenue you have raised. The present is important. Whether those demands will be sustained in the future or whether they will collapse like a pack of cards is irrelevant. In this state of affairs, who cares about what the law is and what the precedents say. You make the additions, take home the award, and let the assessee move heaven and earth to shake off the demand.
(iv) Not giving credit for TDS and pre-paid taxes. Raising bogus demands and adjusting future refunds against that:
This is probably the most frustrating of all because the department can take shelter of the computer scheme at CPC to justify its incompetence. A hundred reasons can be given for not granting TDS credit – PAN is not matching, Deductor has not uploaded the form, challan no is not correctly stated – your imagination is the limit. In the meantime, show a bogus demand, charge interest on that and quietly adjust the assessee’s future refund claims against that. This gross harassment has met the ire of the High Court and Tribunal but who cares about what the judicial bodies say or do when there is an “award” waiting for you.
So, that’s how the sorry state of affairs is. Are there any other transgressions? I can’t recollect more though I am sure there must be many others. If you can think of any, do pen them down here because we must all present a united front to battle this irrational and sorry state of affairs from continuing.
Vellalapatti Swaminathan Iyer
Hyderabad (tax2.me)
This entire country is harrassed by the goddamn income tax department and goddamn CAs.
The kind of rude and idiotic and criminal advertisements that the income tax department gives in the newspapers shows what it is – a criminal organisation.
And the goddamn CAs think they are God. And now the govt wants to reward these criminals. Interesting. The govt is full of criminals anyway.
The govt, the Tax deptt and the goddamn CAs — is nothing but the “theatre of absurdity”. Or should we call it the dance of scoundrals.
In my experience there are all type of people in the department. some officers are very good and helpful. once you meet such people you tend to look for same response from others. when it does not come you tend to feel otherwise. The young brigade is perhaps not too bad and act fast. I think to reward an officer is not incorrect and perhaps if such reward is tuned to fast resolve of assessee’s applications for refunds, rectifications, appeal effects, PAN allotments/mismatch, tax credit ,corrections, exemptions etc. then it is certainly a good keep. No one should get reqard for framing high demands or making colections by coersive means as the award will turn negative. I.e, awards can be given based on overall merits. Obviously, the time has come to bring certain accountability on the executers of law. Most unfortunate part is raising huge demands without giving any reasons or computation of arriving such demands. Nobody bothers to issue consequential orders & refunds even after getting the appellate orders. Basic concept is raise demand by any means to increase collection and while giving refund delay as much as possible as it reduces the net collection. Department pays interest only 0.5 % p.m. that too subject to tax again i.e, implication for delay is not much for the department but is substantial for the assessee. It will be good enough if the department officials follow the rules, provisions, time limits prescribed under the Act. Hope for the best.
Dear V S Iyer,
The note on reward to income tax officers is lucid and dipicts the factual field problems being faced by tax payers.In India the government offiocers born to enjoy high remuneration and perquisities without corresponding accountability unlike in western countries. Further our ministers and so called peoples representatives should be made accountable with severe punishments for deviations. kudoes to you Iyer.
in my experience there are all type of people in the department. some officers are very good and helpful. recently I got to meet ramanjeet kaur sethi at laxmi nagar post who is a superb officer. know her job well, manages her all men staff, meet everyone and sort out issues there and then. once you meet such people you tend to look for same response from others. when it does not come you tend to feel otherwise. the young brigade is perhaps not too bad and act fast. i think to reward an officer is not incorrect and perhaps if such reward is tuned to fast resolve of assessee’s applications for refunds, rectifications, appeal effects, PAN allotments/mismatch, tax credit ,corrections, exemptions etc. then it is certainly a good keep. no one should get reqard for framing high demands or making colections by coersive means as the award will turn negative. award an officer for sorting out grievances such as non issue of TDS certificate by employer. award an officer for giving ample time and opportunity to the assessee before completing assesment proceedings. all I mean is encourage good practices in day to day working. start with assessee’s week every month when all officers must hear on assessee’s grievances of any kind and provide on the spot action. stop the blame game.
So, the Opportunity cost for the Tax Officer has gone up to decide the trade-off.
It is always Heads I win & Tails You Lose!
If a high pitched order is passed, award comes from the Exchequer( so what , if the Demand /so called Tax collection gets quashed in Appeal and the Award is just an additional Salary cost for the nation?. If passing such an order is only threatened, it may be otherwise profitable, for some officers.
What else can you expect when the CBDT chief promises favourable postings/Training/other rewards for collection and warns that collection is a ” Non Negotiable issue”…
Also, when the Finance Minister is clear that Economy ‘s growth will slowdown, how can he in the same breath ask the CBDT to increase the Tax collection? No one in the Finance Ministry is willing to explain this illogical belief, on its part -that Growth of the Economy and Tax collections are Negatively correlated!
Will just writing about this issue affect the govt decision? Its time for a coordinated action by all the trade forums and legal and accountant’s associations. Or else we shall just be writing articles about it.
Great article!!!!!!!! All the taxmen are demons and taxpayers and their representatives are Anna Hazares!!!!!!!!! It is common knowledge that several CAs in Mumbai enriched themselves by acting as middlemen between taxpayers and taxmen by collecting elephants from their clients and throwing mice at the taxmen. These CAs invested heavily in real estate and stock markets. Some CAs, who used to stay in distant suburbs now flaunt their houses and offices in South Mumbai. It is also known that one advocate from Kolkata got almost 100% favourable orders in all appellate fora. Ladies and Gentlemen, the taxmen are not aliens, who descended from space to man the IT Dept. They are a part of the society and not immune from the malice that plague society. They represent both good and bad of the society. It is high time your website stops bashing taxmen for the sake of it. When personnel from CBEC get president medals etc what is wrong in awarding the excellence in IT Dept. Are the taxmen second rate citizens of the country doomed only for condemnation by all and sundry (including unscrupulous people). Generalizations need to be avoided and the taxmen shall be condemned by citing specific instances of high handedness.
I agree to certain extent with the author. But, let the intermediaries introspect them as well. I can say with certainty that only a few C.As can resist such actions, simply cooperate with such officers to fleece their clients & in turn benefit them as well. In a country where even people in high positions any where can play the role of Amichands then God save the country. Look the glea which is being seen on the faces of big business & manipulators of markets after the change in a certain ministry. Is there a single person in the entire community of intermediaries who can fill the space of the Great Nani Palkhiwala. So you get what you deserve. Don’t crib, whine & weep. Change yourself first.
It is pointless to tar the Dept with thick black paint all the time, whereas, portray the assessees and tax representatives as innocent white lilies. The carping author, if has an any exposure to the field realities, must surely be aware that the system is sought to be corrupted by a rotten few from the Dept and also greedy professionals. There is no voluntary tax compliance culture. Whipping up frenzied hysteria and hatred against government servants, or against any section of the society, is dangerously counter-productive in this country. It seems a powerful vested interests are out to sabotage every initiative of the govt – lest officials be encouraged to work honestly and with commitment since that would be rather inconvenient to many !
During past 47 years of practice as C. A. I have come across very few respectable A. Os. CITs are by far sympathetic to assessee’s problems, but rarely go beyond lip service. GRIEVANCES PETITIONS are routinely sent to A.Os. In many a cases we have filed Indemnity BONDS thrice over and lo…. Still no refund!!! Going rate for claim of refund is 10% or else u forget. OUR OWN REFUND FOR 08-09 ON order u/s. 143 (3) is not yet granted inspite of filing TDS certificates twice over. REWARD IS NOT REQUIRED FOR THESE OFFICERS AS THEY GET REWARDED BY UNSCRPULOUS ASSESSES BY WAY OF ‘DASTURI’. I feel that those who reward themselves are better off than honest tax payers. JAI ANNA!!!! IT IS A SHAMEFUL SCENARIO.
The Writers and artistes who are supposed to be awarded ‘Padma’ awards and nominations to Rajya Sabha are to be done on the basis of their contribution for fighting those who are not following any social value. Instead the Gandhians who did / could not sympathise Shrmila Chanu who is fasting for 13 years are being awarded and rewarded. Similarly the Artistes.
Had they raised voice against these kind of Add-ministrators the country would have been different.
When the Govt. could not react / or whevenver re-acted it is only to supress (Anna Hajare , Arvind Kejriwal etc.etc.)
Raising voice in columns will draw !!! anybody attention among the “PUBLIC SERVANTS”.
Grow up mr Iyer!!!! If you have grudge against few officers,don’t put the entire Deppt. in the same basket??? What made you think of lodging a protest and for what !!! I read your articles on regular basis ,they smack negativity.My advice for you is to give a balanced view!!!!
I fully agree and appreciate the author’s views about award scheme to the I.T.Officers. A good number of A.Os are in the habit of making filthy additions which do not stand to any reason and fully ignoring the provisions of the IT Act.
The much harassed assessee seeks justice with the CIT(Appeals)/Tribunal etc., but the case never comes up for hearing even after years of waiting. In the meantime, the department takes coercive measures by attaching the Bank account(s) without caring about the assessee’s request for stay of demand. The department always refuses to stay collection of demand. This has been the case in respect of a number of honest and sincere assessees who file their Returns of income, duty bound. How about those persons who have assets worth crores of rupees and keep on building shoping complexes and palatial residential houses who never care about Income Tax Department. Some of them say, ‘what do you mean by Income tax Department?, I never heard about it’! The department is not bothered to bring to tax huge amount of Capital Gains in respect of sale of Plots/sites running into several crores of rupees. Why not the department insist on TDS at source at the time of Registration of Properties with the Sub-Registrar?
Award to the Assessing officer by the Government to increase revenue is like “bribe” by the taxpayer to reduce tax,interest,penalty or it is like awarding an “informant” for tracking down “Wanted Criminals”. Ironically the amount of award will be given out of taxpayers’ money only. What a great scheme indeed ! Pranavda thanks God you are out of “finance ministry”and active politics.
I am also of the same view. The areas of importance are being ignored, it seems the assessee’s are not a matter of concern.
मिस्टर अय्यर, लग रहा है बहुत सताये गए हो, दर्द टपक रहा है…
Does this mean presently officers are being paid for no “display of specific acts of exemplary devotion to duty”.its a shame that we have such officers who recommend such schemes.govt of India cant plan their budgets accurately and expects the taxpayer to be exact.
i think instead curtail their expenditure ,ask the officer to travel out of city ,watch their private week end trips and try to be on move to find new tax payers rather than be after the regular tax payers.
It is not fair in the interest of justice because to gain the scheme of reward several greedy officers take ilegal and arbitrary action against the assessee. Create big hasasment problem effect the business and also economy oof the contry. It would be batter to negociate with the professionals to generate the proper revenue.
I am in full agreement with the article. My recent experience show that the department is resorting not just violating the provisions of Income-tax law either by overlooking the same or giving a totally opposite view but is resorting even to contempt of Supreme Court in their zeal to raise more demand and collect the same by hook or crook. Now the aim is to fill the coffers of Central Government by left, right and Centre giving go by to all norms. As long as there is no accountability this type providing awards will only increase harrassment.
I am in full agreement with the author. He has suggested the stakeholders must object to the proposal. Now that Dr.Manmohan Singh is the FM there will be chances that the ‘cry’ of the taxpayers will be heard. I would like the author to start a signature campaign (web based) so that many can join the hands for opposing the proposal.
i fully agree with the author that an award scheme without a corresponding accountability to rein in officers who step out of line and breach the law will encourage assessing officers to go on a rampage. The professional bodies must unite and protest against such schemes which will only increase the harassment of the taxpayer.
That the IT officers are sadisst is well known. I recall the case of a conscentious citizen who filed his return declaring corrcet income and paying taxes. The IT oficer made so many additions unreasonably that the additional tax demand became more than the total income. The assessee was harassed, bank accounts attached and payments secured. It took him several years to get the refund of this unreasonable demand and in the mean time ruining his business altogether.
Such IT officers must be punished individually.