The author is severely critical of the proposal of the Government to appoint Members of the Tribunal on contract basis for 5 years subject to renewal at the discretion of the Government. He warns that making the Members insecure about their position in the Tribunal will undermine the independence and judicial functioning of the Tribunal. He implores all stake holders to strongly oppose the Government’s move.

1. The Income Tax Appellate Tribunal is in existence since 1941. Over the years it has served as role model for other similar institutions. The members are selected by a high powered selection committee chaired by Senior Judge of Supreme Court. There is complete transparency in the process of appointment. It is because of this high tradition that we have witnessed many talented professionals joining the institution and many have been elevated to the High Courts. The present system of appointment of members of ITAT till the superannuation is working very satisfactorily and there is absolutely no need to amend the service rules for appointment of members of ITAT. Earlier there was a move to appoint retired members of ITAT on ad-hoc, contract basis for two years. All the Tax Bar Associations have strongly opposed the move, which was then dropped.

2. It has been given to understand that, there is a move to amend the service rule for appointment of Members and Government is proposing to appoint Members of the Income Tax Appellate Tribunal on contract basis for five years and thereafter, their tenure will be renewed every five years at the discretion of Government.

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The author argues that the Bar must not just complain about faults in the judicial process but must play a proactive role in bringing about reforms. He makes a fervent plea that we should follow the Ten Commandments and promises that we can then restore the Tribunal to its’ past pristine glory.

The role of the Bar in the administration of justice is no less than that of the Bench. It has been therefore, rightly said that only a good Bar makes for a good Bench. Hence, the Bar should evolve healthy conventions in order to maintain the institution’s prestige and honour. Hon’ble Mr. Justice M. Srinivasan in Dayal Sons vs. CIT (1998) 231 ITR 569 (571) (H.P.) has stated that “The profession of an advocate is a very noble profession and he is entrusted with a duty to be performed in the Court. He is not only an agent of the client in one sense but also an officer of the Court. He has got threefold duties; one towards the Client; another towards Court and the third towards the opposing Counsel”.

Hon’ble Mr. Justice V. R. Krishna Iyer in the landmark decision of Bar Council of Maharashtra vs. M. V. Dhabolkar AIR 1976 SC 242 (251) held that “law is no trade briefs no merchandise and so the leaven of commercial competition or procurement should not vulgarise the legal profession”. The Income-tax Appellate Tribunal is even today considered as one of the finest institutions of our country when compared with other institutions and the Tax Bar is recognized as one of the best Bars of our country. This has been made possible due to continuous education, ethics and values followed by the stalwarts of the Tax Bar such as Shri R. J. Kolah, Shri N. A. Palkhivala, Shri S. P. Mehta and many others. We have great responsibility to preserve the honour, dignity and purity of the institution before which we practice. Let us work together, hand-in-hand and see that the Tribunal retain its glory as one of the finest institutions in this country and as model for other institutions to follow. We, therefore, make an appeal to our readers to consider the following suggestions:–

1. The ITAT Bar Association and AIFTP has adopted a model code of ethics which may be followed by all the members who practice before the Tribunal. Visit www.itatonline.org or see AIFTP Journal Vol. 2 No. 3 Page No. 47 of July-September, 2001 issue.

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The author laments that while a heinous crime like terrorism is being fought spiritedly with commandos and bullets, not much is being done about corruption. He warns that corruption is a cancer which is slowly corroding the roots of our society and urges that it is our duty to fight corruption with the same spirit with which we fight terrorism.

1. Honorable Shri Justice R.C. Lahoti, former Chief Justice of India, while addressing the National Tax Conference of the Federation at Indore on 7-9-2002 (AIFTP Journal, Sept., 2002 P. 7) has stated as under:

“Corruption is a cancer eating in to the roots of the society. It is difficult to fight against corruption because the chances of success are bleak; but this is no reason for despondency. Nobody is born corrupt; it is the vitiated atmosphere in the society and the system of governance which converts the clean in to corrupt. An honest person resists corruption but allurements and temptations at times prevail upon him and once corrupt, even an honest person prefers and finds it convenient to stay corrupt. The seeds of corruption are sown in the mind of the man and the cure, if any, lies in eradicating the seeds of corruption from his mind. An honest revenue official says “The honest are hounded; they are humiliated; they are ignored; they are manipulated; they are used, they are punished; they became the laughing stock in society and their families; even their very honesty is suspected. In spite of that, there are many honest officers in the department who remain honest against all adversities. They are special species; they have to be preserved and protected.”

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The author warns of a serious conflict of interest in permitting serving Commissioner (Appeals) to argue appeals on behalf of the Department before the ITAT. He argues that no person can be a judge and a lawyer at the same time.

The Hon’ble Apex Court in Anil Rai vs. State of Bihar (2001) 7 SCC 318 has observed that justice should not only be done, but also should appear to have been done.

It has been observed that in Income Tax Appellate Tribunal, Mumbai, very often the Commissioner of Income Tax (Appeals) who has to adjudicate the appeals filed against the order passed by the Assessing Officer has been deputed to argue the matters before the Appellate Tribunal. It means in the morning he has to defend an issue on behalf of the department and afternoon when he functions as an appellate authority, he has to decide the same issue as an independent quasi-judicial authority. Can he do justice to the assessee as an independent quasi-judicial authority? By deputing the quasi-judicial authority to represent the matters before the Income Tax Appellate Tribunal the purpose of appointing the quasi judicial authority has been lost, howso ever impartial he may be. His function as a departmental representative has grave impact on his judicial function as an appellate authority. It may also be appreciated that when an officer represent the matter before the Income Tax Appellate Tribunal he has to defend the matter on behalf of the department, he has no authority to concede though personally he may of the opinion that the department has no case. Whereas when a lawyer represents the matter he has to assist the Court to arrive at a correct decision and he may withdraw certain grounds whereas such a power is not with the officers of the tax department when they represent the matter before the Income Tax Appellate Tribunal.

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The author passionately calls the Tribunal a “Temple of Justice” and the Bench and the Bar its’ “Trustees”. He gives out the clarion call that the onus is on the Bench and the Bar to preserve the dignity, sanctity and purity of this Temple

1. The Tribunal is the final fact finding authority and if it wrongly decides the matter the assessee is virtually left with no remedy. An appeal to High Court can be only on substantial question of law. Litigants before the Tribunal are of two categories, the aggrieved assessee and the Government. But the objective of filing appeal is different for both categories. An assessee rings the bell of justice before the Tribunal, only when the Assessing Officer makes additions which are not in accordance with law or facts. Appeals before the Tribunal involve, time and money, both of which he can ill afford to squander. Before doing so he makes a careful cost benefit analysis and elects to appeal only when the stakes are high and there is reasonable chance of success. Assessee is not an academician and does not derive any pleasure in obtaining a judgment for the sake of publicity or for laying down a legal precedent. The Government through different functionaries, on the other hand, files appeals, in most of the cases mainly out of fear of being questioned by superiors as to why appeal was not filed. Secondly, the Government does not have to pay any appeal fees. Thirdly assuming the appeal is dismissed there is no accountability of the officers to explain as to why such appeal frivolous are being filed. Considering the above scenario, the Members of the Tribunal have a greater responsibility. While hearing the appeals they are not merely adjudicating on the issues before them but they are invariably deciding on the fortune of the assessee. Whereas, 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 only to an extent of a drop in an ocean. Hence, the Tribunal Members have greater responsibility to the citizen.

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The author makes the radical suggestion that the retirement age of judges may be increased …. but wait …. there’s a catch! …. He wants their right to practice before the lower courts to be taken away! Any takers for this suggestion?

1. At present the judges of the Apex court retire at the age of 65, whereas the judges of High Courts and the members of the ITAT retire at the age of 62. Most of the judges of the Apex Court even after retirement render service to the nation by chairing various forums, like Authority for Advance Rulings till the age of 68. Similarly the judges of the High Courts also serve as chairman, president or members of various quasi-judicial forums, like, Administrative Tribunals, Customs Excise and Service Tax Appellate Tribunal, SEBI Tribunal, etc., where the age limit is 65. When the judges can render service as chairman of various forums and render the Judicial service which they were rendering earlier on the bench there is no reason why the age limit should not be raised. If the Government can retain the services of judges for another three years, it will be a great service to the nation and the pendency of cases before High Courts will reduce.

2. In India many professionals join the judiciary with the intention of serving the nation and not with the intention of getting a permanent job in the Government. A fresh law graduate when he joins a multinational gets much more than a sitting judge of High Court, who may have put in more than 20 years of practice in law. Experience of a judge and his knowledge is an asset to the justice delivery system; hence it is in the interest of the nation to raise the age limit of judges.

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The author lashes out at the tax department for stonewalling the sincere efforts of the Court to reduce the arrears of tax matters by seeking repeated adjournments. He points out the problem areas and also outlines practical suggestions to help the department overcome its perennial drawbacks.

City of Mumbai contributes 40% of Direct Taxes revenue to Government of India. Also more than 40% of tax litigation is from the city of Mumbai. Significantly more than 70% appeals and references pending before the Bombay High Court are from the Revenue. It is on record that more than 4,000 tax appeals were filed late necessitating condonation of delay first before the matter can be taken up for hearing. To reduce the pendency of notices of motions filed by the tax department the Hon’ble Chief Justice of Bombay High Court allotted the work to eight tax benches. Tax Bar is of the considered view that by end of August at least all the notices of motions may be disposed of. More than 2,000 Tax appeals were pending for admission since 2002. To reduce the pendency, all tax appeals have been allotted to four tax benches. Tax Bar has made representation to the Hon’ble Chief Justice to have only one tax Bench dedicated to direct taxes and one tax bench for other taxes. Hon’ble Chief Justice has agreed with the view of the Tax Bar and constituted a tax bench only for hearing tax appeals and references and it is working very satisfactorily and is able to dispose large number of tax appeals and references. However, the Bar is of the considered view that instead of having four tax benches, if all pending notices of motion, tax appeals are transferred to one tax bench which is hearing the tax appeals and references, the disposal will accelerate and it will also help the tax administration to improve co-ordination and effective representation. This will prevent the embarrassing situation of different Benches taking different view in respect of identical issue.

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