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
good note indeed, indeed timely.
there would be errors sometimes in ITAT judgements as it is indeed a last fact finding set up, see for example in jayalalitha case in karnataka, the spl ct headed by D’Cunha made a double jeopardy when he handed 100 crores fine as also 4 year sentence in the case, criminal jurisprudence is very clear double jeopardy is unacceptable as it is said why crimes increase?, just because some one promotes by paying the bribes that means both need to be punished duly not very bad way but by judicious way that way the purpose of criminal jurisprudence is reformation in the criminal if found so by the court or tribunal…the idea is you have to bring back the criminal sans crime by reforming him, so as to ensure people is not polluted is the purpose.
then when she approached SC the hon ct reverted her to high court and that court could do right justice while granting her relevant bail.
then the spl bench of high court rightly decided on question of law, but public prosecutor worked on arithmetical errors at a later day but not attacked on the question of law aspect, that way the hon ct rightly decided the matter quashing the trial ct proceedings.
again see karnataka govt AG wanted to work on the so called fact of arithmetical error, that way we see even people at AG level really do not correctly understand law and its implications in appeals.
that way errors occur in ITAT too, but correcting the members of ITAT is not a sin of H Cs OR or SC. ONE HAS to view the facts rightly with right perspective.
Err is human but repent is divine,
i would agree bar shd ensure being the bar represents as officers of courts tribunal, they are duty bound to act rightly before tribunal not just mislead the tribunal.
any such misleading leads to miscarriage of justice. here you have the taxpayers (kamadenu to govt) and their interests need to be correctly appreciated, as revenue failed to properly handle the matter that only resulted the litigation as perceptions on facts and laws were tangential.
if revenue failed to convince the tax payer on an issue it is a clear issue of failure of natural justice,
that only resulted that only moves the matter to tribunal after CAT(A) or directly.
in some cases taxpayer could directly move before HC, there is no need to pass all gates but one short circuit.
here the tribunal has a good reputation of good judgements that way, the tribunals mostly settle issues.
yea, it might get into errors that is no sin to down grade the tribunal as it is there since 1940s doing a good job invariably.
i congratulate tribunal celebrating platinum jublee of 75 years now.
i have to add for such good job the FM shd make any matter successfully decided either or the benefit of taxpayer or revenue if not appealed against the govt apportion some 10% of revenue saved either way be credited for tribunals’ infrastructure besides the govt’s normal allocations that way tribunals need be encouraged to effectively function.
similarly, advocates who properly assisted the tribunal need be commended by government, besides commending the tribunal members who decided the issues. that encouragement would go a long way for the tribunals better growth.
i would recommend that very able members by their performance need be allowed to continue till they reach 65 and when all members get 65 as right age of retirement then exceptional members age could be raised to 67 or so. besides make exceptional members names be taken by high court collegium for appreciation and it coud recommend to S C collegium to consider these exceptional members of tribunal be appointed as a high court judges.
there is no need of NJAC idea that is full of flaws that is being considered by hon S C constitutional bench, might the Act suffer same fate of NTT recently suffered.
we need impartial judiciary for judicial decisions that are required for required for judicial governance for best possible interests of citizens of india. there need not be any political colr in judiciary, is my view!
Integrity quotient in ITAT is today very low. Reasons are not far to seek. Practicing professionals are more responsible than the institution. Hon’ble President being a retired judge with his rich experience can stop the rot. There is a sea change in last 10-15 years & more so in last 5 years. Members with integrity can be counted on finger tips.
Its sad. Nepotism in all departments is condemnable. But what can you do ? The democratic principals, when not followed in true sense, are bound to create chaos. Rules are bent. Sensible observations of great jurists are countered. By those who reach law making abode by the sheer power of money,goons and swords. Pray and have courage, my dear countrymen.
The problem is not only with Tax Tribunals. All pervading corruption and nepotism have made deep in roads into our judicial system. Judicial system had become rich man’s play ground. They can buy lawyers, judges and courts. Unfortunately our judicial system has fallen prey to all this. The bad times have started with the introduction of COMMITTED JUDICIARY and politician recommending appointment of High Court Judges. I just tell you one live and burning example at Visakhapatnam. In three days three judges removed and three were appointed. I hear all the at the instance influential leaders of ruling party. More unfortunately is the AP High Court did not speak out boldly; probably they also fear politicians. There lighter side “to become a judge you need not know the law; it will suffice if you know the law minister”.
SIR all this due to prevailing corruption some of members of bar also involve which is known regards
Opposite Mehta Sadan,
Dear Mr. Shivaram
When will you stop giving sermons and finding faults with the Tribunal and its Members. Has ur, so called custodian of ethics and honesty, Bar Assosciation never found a single member of the Tribunal worth praise? Have ur Bar ever praised or honoured any member of the Tribunal? Look within yourselves also. Why the professional carrying on profession for the last 50 or more years should be honoured by ‘The ITAT’? What is their contribution to the Institution or the Tax payers- except minting money at the cost of reputation of the Tribunal and Its Honourable Members. You have always been crying for the corruption in the Tribunal or in the Income Tax Department, what about you own Bar members? Have you dared ever to write a single word against them. Hope, this will help in awakening your conscience