The author pays rich tribute to the Tribunal for its exemplary functioning in the role of dispensing justice. However, this is not the time for the Tribunal to rest on its laurels, exhorts the author, and warns that there are several challenges ahead. To meet the challenges, the author has formulated an agenda for the Bar & the Bench to implement. If implemented in true earnest, the Tribunal will become the best judicial institution in the Country assures the author
The Income Tax Appellate Tribunal which was established on 25-1-1941 had 3 Benches in the year 1941, where as today, it has 63 Benches, in 25 Cities. As on today pendency before the Income tax Appellate Tribunal is only 53,650 appeals. This is one of the Tribunal of our Country which decides the matters within a year of filing of appeal. In Mumbai, only 15,320 appeals are pending. The logo of the Tribunal conveys the message that the Motto of the Income Tax Appellate Tribunal is “Sulab Nyay and Satvar Nyay”.
I desire to express my appreciation of the order of the Appellate Tribunal dated 17-8-1943 which is to be commended for clearness of articulation and lucidity of expression: Justice Manohar Lall in Khan Bahadur M. Haibur Rahman vs. CIT (1945) 13 ITR 189 (Pat), 194
The Frank Committee was setup in England in 1957 to examine the working of administrative Tribunals in that Country. It produced a historical report in which it enunciated the following as criteria of good administrative Tribunals i.e. (i) Cheapness, (ii) Easy Accessibility, (iii) Freedom from Technicalities, (iv) Expedition and (v) An expert knowledge of the particular subject. The successful completion of 70 years of Income Tax Appellate Tribunal is an ample evidence of its commendable performance and fulfillment of its objectives and it fulfilled all five criteria of The Frank Committee.
The Income Tax appellate Tribunal every year disposes more than 40,000 to 50,000 appeals. In the year 2004-05 it had disposed 78,901 appeals. As of today the Income Tax Appellate Tribunal is considered as “Role model” to other Tribunals to follow. Then Law Minster Shri H. R. Gokhale while introducing Article 323-B, by 42nd Amendment to the Constitution of India on 1-11-1976 stated as under:- “I have got the example of the Income Tax Appellate Tribunal. We have Judicial Members, we have Accountant Members. The Tribunal is functioning extremely well and even those people who have gone before the Income Tax Appellate Tribunal have told me and have spoken on the public platform that the Income Tax Appellate Tribunal as it constituted today, is the best example to show how the tribunal if properly constituted, can create a confidence. I can say that the Income Tax Appellate Tribunal’s decisions are rarely interfered with by the High Courts and the Supreme Court because the quality of their work has been found to be sufficiently good as to inspire confidence”.
115th report of law commission while examining the necessity and expediency of setting up a “National Tax Court” vis-à-vis a Tribunal under Article 323B in 2.29 thereof complimented the working of the Tribunal in the following words;
“There is near unanimity of opinion that income Tax Appellate Tribunal has immensely justified its existence and largely vindicated the trust reposed in it. It has, therefore, to be retained with its regional jurisdiction. It would be the fact finding authority”.
Direct Tax Laws committee in its Interim Report, December 1977, observed as under ‘‘There has been a general appreciation of the functioning of the Tribunal both on the part of the public at large and the Government”.
In the year 1981, on completion of four decade of the Income Tax Appellate Tribunal, then Prime Minster of India Mrs. Indira Gandhi in a message stated as under “Income Tax Appellate Tribunal, with its branches spread all over the country, has an important role. It has to preserve the interests of revenues to the State, to prevent harassment to the tax payers and to render better services and quicker justice to the citizen and the State alike”.
Then Chief justice of India Hon’ble Mr. Justice Y. V. Chandrachud in a message stated that “Income Tax Appellate Tribunal is a model administer Tribunal whose illustrious example and commendable performance may well be emulated by similar other tribunals in different disciplines. There is uniform praise of the manner in which the Tribunal functions and I suppose it is one of the few quasi-legal institutions which is not plagued by the problem of arrears.”
Mr. Justice S. Ranganathan, then Judge of Delhi High Court, in his article “The Income Tax Appellate Tribunal – A Survey” on the subject of “Appreciation and Criticism” stated that “Tribunal from its inception, enjoyed, immense popularity and received unstained praise, however, no organization can be perfect. In particular, in the case of an institution discharging such important functions in a complicated branch of law, some difficulties and drawbacks were likely to develop with passage of time. There was thus need for an objective assessment of the Tribunal’s work after the first few years of its existence, even if it should involve a frank and forthright criticism of its functioning. Often it is criticism rather than praise that provides an occasion for discussion and debate and encourages corrective action to cure deficiencies and shortcomings and set the institution on the right path”.
Shri N. A. Palkhivala in his article “Forty years of the Income Tax Appellate Tribunal” stated that “The 25th day of January, 1941, which was the date on which the Income Tax Appellate Tribunal was first constituted, was one of the milestones in the history of our fiscal law and administration. During the 40 Years that the Tribunal has been in existence, it has won golden opinions on all sides. The consensus of opinion among tax payers, lawyer’s accountants and the litigating public is that the Tribunal has done an excellent job of public service”.
According to me, if the Income Tax Appellate Tribunal is able to retain the status and glory as one of the finest institution of our country even after 70 years of its existence, it is mainly because of the members who administer justice and the Bar which makes representation before the Tribunal. The Bench, the Bar and Departmental Representatives are the Trustees of institution which is temple of justice in taxation matters. On 25-1-2016, Income Tax Appellate Tribunal will be celebrating 75 years of its existence, I thought of sharing my “vision” for debate and consideration for another five years.
(a) Role of the Bar
With regard to some of the about other Member’s, criticism made by the law commission still hold good that “the determination of complicated questions of fact and law is done in a perfunctory manner”. They often do not record the arguments advanced on behalf of the parties, with the result that if the case is taken to the High Court the High Court always finds difficulty in understanding the Order of Tribunal
1. The Tax Bar especially ITAT Bar Association Mumbai, has played a proactive role for preserving the independency of the Tribunal. There has to be continuous efforts to strengthen the independence of the justice delivery system of the Income Tax Appellate Tribunal. If there is any direct or indirect interference by the executives in the judicial functioning of the Income Tax Appellate Tribunal, the tax Bar has to strongly oppose the same, because before the Income Tax Appellate Tribunal, the Income Tax department is always either the petitioner or the respondent. Some of the provisions of the Direct Taxes Code Bill, 2010, will have far reaching consequences and will affect the judicial functioning of the Income Tax Appellate Tribunal.
2. It is heartening to hear from all concerned that for 70th last years, the Income Tax Appellate Tribunal was one of the finest institution of our country. If that is so, why the Government in the Direct Taxes Code Bill 2010, is proposing to appoint the retired Chief Justice to head the Institution. How it will help to improve the institution? The ITAT Bar Association, All India Federation of Tax Practitioners, many other professional organizations, Associations and Eminent Professionals who represented before this prestigious institution for more than 50 years and seen the functioning of Income Tax Appellate Tribunal very closely has strongly oppose the move of the Government for appointing the retired Chief Justice as President of Income Tax Appellate Tribunal. It is the responsibility of the Tax Bar to convince the Government that “All is Well” we don’t need an outsider to head the institution, which is otherwise functioning satisfactorily for the last more than 70 years. Making an uncalled for experiment may affect the functioning of this great institution irretrievably.
3. The standing Committee appointed by the Government has approved the retirement age of the judges of high Courts from 62 to 65 Years. At the member’s conference held at Mumbai on 4-11-2006, then Hon’ble Law Minister Shri H. R. Bharadwaj made an announcement that he is proposing to increase the age limit of Members from 62 to 65, however, nothing has moved thereafter. Experience and knowledge of members is an asset which can be fully utilized by the Government. As the retired members are not allowed to practice before the Tribunal it is appropriate that the retirement age of members be increased from 62 to 65. Bar has to convince the Government the necessity of increasing the age limit of members.
4. All India Federation of Tax Practitioners in association with ITAT Bar Association, Mumbai, has been organising since 2004. Nani Palkhivala Memorial National Tax Moot Court Competition to encourage young law students to join the tax profession to develop the future tax bar of our country. We are able to succeed to some extent to encourage young professionals to join the tax practice. This has encouraged the professionals of other parts of country to organise similar programs. Now, the tax moot court competition is held at Allahabad, Chennai and Rajasthan. We are sure in the years to come the professionals from different parts of the country will encourage the young professionals to join the tax profession.
5. On the eve of 71 years celebration of Income Tax Appellate Tribunal, the ITAT Bar Association Mumbai is proposing to encourage young lawyers and Chartered Accountants having less than 10 Years of practice by organising the seminar in association with AIFTP, on the theme of ‘’Art of Better Representation”. The Best speaker will be awarded and encouraged. This will help the Income Tax Appellate Tribunal to have better representation from the Tax Bar.
6. To encourage young law students to develop the skill of writing and research, in the year 2004 AIFTP and ITAT Bar Association Mumbai have started research paper on “International Taxation”. Every year, invitation is being sent to more than 100 law colleges to participate in the competition. Many law students are participating in the competition and the Best research paper is published in the AIFTP Journal, itatonline.org as well as in the Journal of IBFD. To encourage the tax professionals to develop the skill of writing and research the ITAT Bar association is proposing to conduct similar competition to the tax professionals. In our country, since very little research in the field of taxation is undertaken, this will help for the development of future tax bar as well as the tax administration.
7. We have many professionals who are people of integrity, knowledge, ability and achieved highest respect from the Bar, Bench and Tax Administration and they are practicing before the Income Tax Appellate Tribunal for more than 50 years. They are “Role model” to young professionals and we desire to recognize their services to the tax profession and in particular the shaping of the Tribunal. We also desire that their knowledge and experience be shared for the benefit of younger professionals some of the professionals who have completed more than 50 years practice before this institution and even now regularly appear before the Tribunal, are Past Presidents of ITAT Bar Association Shri Y. P. Trivedi, Shri S. E. Dastur, Past Presidents of AIFTP, Shri N. M. Ranka, Shri V. Ramachandran, Past President of ITAT Bar Association, Ahmedabad Shri K. H. Kaji, Past Presidents of Income Tax Bar Association Calcutta, Dr. Debi Prasad Pal and Shri R. N. Bajoria.
8. AIFTP and ITAT Bar Association have adopted the Code of Ethics to the members of the Profession who appear before the Tribunal, we desire that all the members may follow the same in letter as well as in spirit. We are also proposing to organise workshop on the subject of representation and ethics which will help the ITAT for better Justice delivery system. To update the development of case laws the itatonline.org is publishing important case laws and monthly digest from various tax journals. AIFTP publishes quarterly gist of important case laws from 32 journals. There is also proposal to develop E-library to help the tax professionals.
9. Quick disposal of appeals by the Income Tax Appellate Tribunal has immensely benefited the assessees as well as department. However, in some of the High Courts even old references are pending for disposal and appeals admitted in 2002 are also pending for final hearing. It is desired that all High Courts should have a designated tax bench to hear tax matters. The tax being a specialized subject the judges who have tax background are better equipped to hear the tax matters. It is worth mentioning that Hon’ble Shri Muhammad Munir, who was Member of the Income Tax Appellate Tribunal, was elevated as a Judge of High Court and retired as Chief Justice of Pakistan. When we are having such a tradition it is desired that few of the members of the ITAT who are well versed in law and whose integrity is beyond doubts are deserves to be elevated as Judges of High Court. Some of the senior members of the Bar can impress upon the Chief Justice of respective High Courts to consider deserving members for elevation to High Courts on merit.
10. The AIFTP has formed “ITAT Bar Association’s Co-ordination Committee” on 3-7-1998 for better co-ordination between the tax professionals who practice before the Tribunal. It also has a ethics committee headed by three eminent professionals. If any member has any valuable suggestion, it may be forwarded to the said committee.
(b) Role of the Bench
1. Members of Tribunal should maintain the age old reputation of balancing the scales of justice evenly and command confidence and respect of all concerned. viz; The assessee, members of tax profession and the tax administration.
2. Income Tax Appellate Tribunal being final fact finding authority, members of the Tribunal may have to bear in mind that in hearing the appeals, they are not merely adjudicating on the issues before them but they are invariably deciding on the fortune of the assessee. The situation today is that an appeal against a decision by the Tribunal may be finally heard by the High Courts after 8 to 10 years in view of the pendencies in the High Courts. The decision of Tribunal, assumes a degree of finality in so far as most assessees are concerned. Whereas, one wrong decision against an assessee may ruin his life and relegate him to the position of a pauper. However, a decision against the Government may affect the coffers of the Government to an extent of a drop in an ocean. Further, its decision also becomes a precedent to be followed in other cases. Hence, the Tribunal has greater responsibility towards the Citizen.
3. As the pendency has come down considerably before the Income Tax Appellate Tribunal, the assessee and the department may be heard patiently and in case of any doubt on the law or facts, clarification may be sought in the course of hearing. The tendency of referring to the judgments in the order which was neither cited nor referred in the course of hearing may be avoided. If any decision delivered after the hearing of cases and unreported judgments of Tribunal on which the members are desired to rely the matter may be posted for clarification and thereafter the order may be passed.
4. The Apex Court in Arundhati Ashok Walavalkar vs. State of Maharashtra the Judgment dt. 13-1-2011, observed that “If rule of law is to function effectively under the aegis of our democratic set up, Judges are expected to, and they must nurture an efficient and enlightened judiciary by presenting themselves as a role model. Needless to say, a Judge is constantly under public gaze and society expects higher standards of conduct and rectitude from a Judge. Judicial office being an office of public trust, the society is entitled to expect that a Judge must be a man of high integrity, honesty and ethical firmness by maintaining the most exacting standards of propriety in every action. Therefore, a judge’s official and personal conduct must be in tune with highest standard of propriety in every action”. The observation is equally applicable to members of Income Tax Appellate Tribunal.
5. Income Tax Appellate Tribunal is only quasi judicial institution which has adopted the code of conduct applicable to judges of Apex Court and High Courts, and the same may be followed by the members of the Income Tax Appellate Tribunal.
6. The drafting of orders requires skill and practice, Justice Manohar Lall J, of the Patna High Court in Khan Bahadur M. Haibur Rahman vs. CIT (1945) 13 ITR 189 at 194 observed as under:-
“I desire to express my appreciation of the order of the Appellate Tribunal dated 17-8-1943 which is to be commended for clearness of articulation and lucidity of expression”.
The Tyagi Committee in the year 1959 made the following suggestions “As far as possible, the Tribunal should give reasoned and detailed orders giving full facts and findings so that a clear picture of the issues involved, the arguments advanced and the conclusion arrived at would emerge. The difficulties experienced by the Department and the assessees would be reduced if greater attention is paid by the Tribunal to this aspect of the matter. This would also meet to a great extent the criticism leveled by the law commission. Once the Tribunal succeeds in inspiring confidence in the minds of the tax–paying public about its competence and impartiality by the manner in which it conducts itself, the tax payers will have much less occasion for seeking further judicial review of its orders”.
No doubt most of the members of the Tribunal meet the standard recommended by the Tyagi Committee. However, with regards to some of the about other member’s, criticism made by the law commission still hold good that “the determination of complicated questions of fact and law is done in a perfunctory manner”. They often do not record the arguments advanced on behalf of the parties, with the result that if the case is taken to the High Court the High Court always finds difficulty in understanding the Order of Tribunal. This is one of the area where the Bar and Bench has to work together.
7. The members of the Bar sharpen their knowledge of General law and development of International taxation attending seminars, workshops etc. It is desired that even for members of Income Tax Appellate Tribunal similar educational programme may be organised, which may be addressed by the, senior judges of the Tax Bench and eminent professionals.
8. The Income Tax Appellate Tribunal may review the working of its benches every year by developing internal mechanism as well as interacting with professionals of integrity.
9. It is desired that in each court room may have two sets of ITRs and ITDs in case reference is made the same may be read and doubts if any may be clarified. In the High Courts and Apex court the judges read the judgments along with the counsel, which helps to understand finer ratio of judgment. Now a days many departmental representatives started using the laptop while representation before the Tribunal. In the years to come the professionals may also start using the lap top for better representation. It is for the consideration that even Income Tax Appellate Tribunal can have two computers at Each Court room, with specified program so that when reference to judgment is made the members can also read from their monitor. There has to be upgradation of infrastructural facilities and Technology for computerization of the Income Tax Appellate Tribunal for facilitating the assessees and the department to file the appeal by e-mail. In Mumbai, we may think of developing “E-Court” with modern technology and if it works well the same can be extended to other parts of the country. It is very essential that the head Quarter of Income Tax Appellate Tribunal should have video conference facilities linking with all 25 Cities where the Income Tax Appellate Tribunal has benches which will help for better administration.
10. When 1922 Act changed to 1961 Act, there were not many conceptual changes. However, when the Direct Taxes Code Bill 2010 becomes Act, the New Act will be completely different from the 1961 Act, the settled law with regards to taxation would also be rendered otiose. To decide the matters relating to Direct taxes Code Act, requires continuous study, amongst professionals, the members of the Income Tax Appellate Tribunal and Tax judges may also have to make a sincere attempt to learn the New Direct Taxes Code. This is possible by continuous educational program for members of Income Tax Appellate Tribunal & tax professionals.
(c) A partnership among equals
Administration of justice, whether in tax related matters or in any other field is a joint venture in which the lawyers and the judges / members of the Tribunal are equal participants. It is therefore a partnership of equals. The Tax Bar is recognized as one of the best Bar of our country. This has been made possible due to continuous education, ethics and values followed by the stalwarts of the tax bar who practiced before the tribunal such as Late Shri R. J. Kolah, Late Shri N. A. Palkhivala, Late Shri S. P. Mehta, Late Shri Nadirshah R. Mulla, Late Shri Tricumdas Dwarkadas, Late Shri Sukumar Bhattacharya and many more. We have great responsibility to preserve the same. I am associated with institution for 33 years and I found that the Income Tax Appellate Tribunal, Mumbai starts functioning sharp 10.30 a.m. There was no delay in any of the days. The same tradition is continued in all the Benches. If any Bench of the Tribunal is not adhering to the time schedule the members may bring to the notice of the President. There are ups and down in the life of an individual and any Institution is also bound to have ups and downs. The Income Tax Appellate Tribunal also had ups and downs. However, it is worth appreciating that most of the President’s contributed to the growth of the Institution.
It is worth appreciating that in the recent years the contribution of the Income Tax Appellate Tribunal for the development of International Taxation is recognized in India as well as Internationally. Bar, Tax Department and Administration of the Tribunal has to work together. Role of the Bench, Bar and the Department is that the assessee has to pay the tax what is rightfully due to Government neither less nor more. It is desired that on 25-1-2011 may be observed as “Foundation Day” of the Income Tax Appellate Tribunal, the representatives of the Bar from different parts of the country and the Commissioner concerned may interact with the respective vice-president of Zone or senior member in-charge and pledge for better justice delivery system. This healthy precedent may be followed every year. ITAT Bar Association Mumbai is proposing to discuss various administrative issues and is proposing to make an appeal to its members to follow the Rules and Regulations of Income Tax Appellate Tribunal which enable the Income Tax Appellate Tribunal to function efficiently without waste of precious time of Court. Let us work together, hand in hand and see that the Income Tax Appellate Tribunal retains its glory as one of the finest institution in this country and as a “role model” for other institutions to follow. When we celebrate Platinum Jubilee (75 years) in the year 2016, we all should feel proud that we are part of this mother Tribunal. I am very positive that we all will collectively work and pledge for Golden Era of the Income Tax Appellate Tribunal, and when we celebrate Platinum Jubilee (75 years) we will get much more recognition than what we got when we celebrated, 25 years, 40 years, 50 years and 60 Years.
If any of the reader has any objective suggestion for “better law procedure and administration of the ITAT” then they may e-mail their suggestion to manager(@)itatonline.org or aiftp(@)vsnl.com
Dr. K. Shivaram
Editor in Chief, AIFTP & President, ITAT Bar Association
Reproduced with permission from the AIFTP Journal, January 2011