Dr. K. Shivaram, Senior Advocate, has pointed out that the Ordinance defeats the decision of the Supreme Court in Madras Bar Association vs. UOI which inter alia held that advocates with experience of at least 10 years are eligible for appointment as Judicial Members in the ITAT. He has also pointed out that the terms of the Ordinance are such that many Advocates or Chartered Accountant will not be inclined to apply for the post of Members of the ITAT. This will have a detrimental effect on the ITAT. The Ld Advocate has suggested that the entire issue may be reconsidered by the Govt
The Hon’ble Income tax Appellate Tribunal (ITAT) which has completed 80 years of its existence has 63 benches at 29locationsacross the Country. Out of its sanctioned capacity of 126 members. On July, 06, 2018 an advertisement was issued by the Central Government seeking appointment of 21 Judicial Members and 16 Accountant Members. Accordingly, the search cum selection committee made its recommendations in November 2019.
Thereafter, the Central Government notified the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and Other Conditions of Service of Members) Rules, 2020 (2020 Rules). The said rules were challenged on Constitutional Grounds. One of the grounds of challenge was the criterion of 25 years of experience for being eligible to become a member in Seven Tribunals in India.
The Hon’ble Supreme Court in the case of Madras Bar Association v. UOI &Anr 2020 SCC OnLine SC 962 passed an order dated November 27, 2020 directing the Union of India to appoint Judicial Members and Accountant Members to the Hon’ble ITAT within a period of 3 months. It was further held inter alia, that the 2020 Rules shall be amended to make advocates with an experience of at least 10 years eligible for appointment as judicial members in the Tribunals.
The period of 3 months expired on February 27, 2021.
As on date, the Hon’ble ITAT consists of only 77 Members, i.e., 40 Judicial Members and 37 Accountant Members. Therefore, 49 positions are vacant. By the end of the calendar year 2021 the vacancy will rise to 54 positions. As of January 2021, the pendency before the Hon’ble ITAT is 78,754 appeals.
Therefore, with a view to fill the vacancy in the Hon’ble ITAT and thereby improve the efficiency of the Tribunal, the All-India Federation of tax Practitioners (AIFTP) filed an intervenor application dated March 08, 2021 with a humble prayer to appoint the Honourable Members of the ITAT as per the Direction of the Honourable Supreme Court datedNovember 27, 2020 at the earliest.
The Ministry of Law and Justice issued The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 (2021 Ordinance) on April 04, 2021.
Chapter XI of the 2021 Ordinance seeks to amend section 185 of the Finance Act, 2017 which pertains to appointment, etc of Chairperson and Members of the Tribunal.
It is proposed inter alia that a person who has not completed the age of fifty years shall not be eligible for appointment as a Chairperson or a Member.
This indirectly, defeats the decision of the Hon’ble Supreme Court in the case of Madras Bar Association (Supra) which inter alia observed that advocates with an experience of at least 10 years eligible for appointment as judicial members in the Tribunals.
With virtual certainty it can be anticipated that there will be a second round of litigation and challenge to the Constitutional validity of the 2021 Ordinance.
When all the existing members of the ITAT attain superannuation after 15 years , the eligible members will be only on tenure basis. The formalities and procedure usually take 2-3 years. One may be appointed as a member of the ITAT only at the age of 53 or 55.The issue for consideration how many lawyers or Chartered Accountant will apply for the post of members, when they are not sure what will be status after four years.
As per the present policy the members appointed will not be allowed to be posted in the place where they are practicing [Ajay Gandhi v. B. Singh(2004) 265 ITR 451 (SC)]. Around the age of 55 a member may be posted in a place which will keep them away from their families.
Similarly, as per the Rule 13E of the provisions of Rule 13E of Members (Recruitment and Conditions of Service) Rules, 1963.once you are appointed you cannot practice before the ITAT anywhere in India after retirement or on leaving the service [ N.K.Bajpai v. UOI (2012) (278) E.L.T 3 (SC)(CA.No. 2850 of 2012 dated March 15, 2012 www.itatonline.org / P.C. Jain v. UOI 2009 (236) E.L.T. 737 (Delhi)(HC) itatonline.org/ Nanubhai D.Desai v.ACIT (2014) 149 ITD 16 (SB) (Ahd)(Trib)]
A professional will be required to leave their well-established lucrative practice in order to join the Bench. Assuming a minimum term of 4 years,it may be very difficult for a member to once again establish his or her practice.
We are of the opinion that those who are concerned with the functioning and future of Income Tax Appellate Tribunal must come together and make an appeal to the Honourable Prime Minster of India, urging him to reconsider the provision in respect of appointment of members of the ITAT. Considering the nature of judicial work, the members have to perform while deciding complicated issues on facts and law in revenue matters, especially being a final fact-finding authority, the issue of appointment of members and the proposed Scheme of Faceless Tribunal need to be relooked at. There is no glory in reinventing the wheel. We must strive to preserve the greatness and glory of this fine institution.