{"id":512,"date":"2011-07-24T06:33:56","date_gmt":"2011-07-24T06:33:56","guid":{"rendered":"http:\/\/www.itatonline.org\/blog\/?p=512"},"modified":"2011-07-24T06:33:56","modified_gmt":"2011-07-24T06:33:56","slug":"10-easy-steps-to-nirvana-of-sulabh-nyay-satvar-nyay","status":"publish","type":"post","link":"https:\/\/itatonline.org\/blog\/10-easy-steps-to-nirvana-of-sulabh-nyay-satvar-nyay\/","title":{"rendered":"10 Easy Steps to Nirvana of &quot;Sulabh Nyay Satvar Nyay&quot;"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.itatonline.org\/blog\/wp-content\/uploads\/2011\/07\/argued_matter.png\" alt=\"\" title=\"\" width=\"332\" height=\"180\" class=\"alignleft size-full wp-image-515\" srcset=\"https:\/\/itatonline.org\/blog\/wp-content\/uploads\/2011\/07\/argued_matter.png 332w, https:\/\/itatonline.org\/blog\/wp-content\/uploads\/2011\/07\/argued_matter-300x162.png 300w\" sizes=\"auto, (max-width: 332px) 100vw, 332px\" \/><\/p>\n<p align=\"left\"><strong>The author trains his guns again on the proposed National Tax Tribunal and  makes out a compelling case on why it should never be implemented. Instead, a different  approach is required to solve the problems of delay and cost in justice  delivery says the author. The ten-point agenda formulated by the author will,  if implemented in true earnest, deliver us the Nirvana of &#8220;Sulabh Nyay Satvar  Nyay&#8221; (<em>Simple justice, Speedy justice<\/em>) assures the author<\/strong><\/p>\n<\/p>\n<p>The Constitution of India is the Supreme Law of the Land. One  of the most important provisions of the Constitution of India is Article 265,  which provides that <strong>&ldquo;No tax shall be levied or collected except by authority  of law&rdquo;<\/strong>.<\/p>\n<p>  In the year 1998-99, the total pendency of tax appeals before  the Income Tax Appellate Tribunal were 3,00,597 it took six to seven years to  hear the appeal before the Tribunal, and in High Courts the matters were heard  after 10 to 15 years. Shri Palkhivala in his article <strong>&ldquo;The Maddening  Instability of Income Tax Law&rdquo;<\/strong> (Income Tax Review &ndash; August-Sept, 1996 P. 57  has stated as under &ldquo;<em>A telling example of the total absence of a sense of  time in our tax administration is afforded by Supreme Court&rsquo;s decision rendered  last November in the case of <em>Sutlej Cotton Mills Ltd. vs. CIT (1990) 2 SCALE  931. <\/em>It was a case under Business Profits Tax, 1947. The accounting period  was 1946-47. The amount involved was paltry sum of a few lakhs of rupees. The  High Court&rsquo;s order was rendered in 1965. The Supreme Court sent the matter back  to the Income Tax Appellate Tribunal to re- hear the appeal 44 years after the  close of the accounting period. Is there any other civilized country where a  tax payer would not know the quantum of his liability for 44 years?<\/em>&rdquo;.\n<\/p>\n<p><!--more--><\/p>\n<div align=\"center\">\n<div class=\"\"><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-6440093791992877\";\n\/* judgements_adsense *\/\ngoogle_ad_slot = \"0133843924\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"https:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/div>\n<\/div>\n<div class=\"articlequote\">\n<p>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<\/p>\n<\/div>\n<p>There  is no mechanism even today in the tax administration to find out whether  effects to the orders of Supreme Court or High Courts are given if the matter  is decided in favour of the Department. It is heartening to note that as on  1-5-2011 there are only 55,564 appeals are pending before the Income Tax  Appellate Tribunal, in some of the places the matters are heard within six  months of filing of an appeal. Even in Mumbai, the Income Tax Appellate  Tribunal, which has pendency of only 16,984 appeals, the matters are heard now  within one year of filing of an appeal. For rendering the quick justice the  efforts of Hon&rsquo;ble Members of the Income Tax Appellate Tribunal and the  contribution of the President of Income Tax Appellate Tribunal deserves to be  appreciated, because, this is the only institution of our Country where  pendency has reduced, whereas in all other institutions the pendency of  litigation has increased.<\/p>\n<p>  It may be appreciated that litigants before the Tribunal and  Courts are of two categories; the aggrieved assessee and the Tax Department.  But the objective in filing appeal is different for both categories.<\/p>\n<p>  An assessee rings the bell of justice in the Tribunal and  Court only when the Assessing Officer levies taxes or makes additions which are  not in accordance with law. As appeals involve time and money, both of which he  can ill afford to squander, therefore, before doing so, he makes a careful cost  benefit analysis and elects to appeal only when the stakes are high and there  are chances of success. He is no academician and he does not derive any  pleasure in obtaining a judgment for the sake of publicity or for laying down a  legal precedent.<\/p>\n<p>  Whereas the tax official on the other hand, files an appeal,  in most of the cases not because he needs to do so, but mainly because of fear  of being questioned by superior or fear of audit and vigilance, hence, he  prefers to file an appeal though only question of fact is involved and same  would be dismissed. As there is no accountability, nobody will question him why  appeal was filed. This tendency was there in the past, it is there now and it  will continue also in future unless some provision of accountability is  introduced in the Income-tax Act.<\/p>\n<p>  One of the reasons stated for  introduction of National Tax Tribunal in the year 2003 was huge pendency of  references in various High Courts, without making an attempt to find out what  was the reasons for huge pendency, though the 80% references were pending  before various High Courts were of the Tax Department. The constitutional  validity of the National Tax Tribunal was challenged and the matter is now  pending before the Apex Court. As the pendency has reduced before the Income  Tax Appellate Tribunal, there will be less number of appeals before various  High Courts. The Department has also come out with the <a href=\"https:\/\/itatonline.org\/archives\/index.php\/ito-vs-laxmi-jewel-pvt-ltd-itat-mumbai-cbdt-circular-on-monetary-limits-for-filing-appeals-applies-to-pending-appeals\">Circular No. 3\/2011 dt.  9th February, 2011<\/a> (2011) 332 ITR 1 (St) revising the monetary limit of filing  appeals, as per the Circular Department will not file an appeal to the High  Court if the tax effects are less than Rs.10,00,000\/-. Some of the Courts  have taken the view that the instruction will be applicable to all pending  appeals and references, therefore more than 50% of revenues appeals which are  pending before various High Courts will be dismissed only due to lesser tax  effect. Now this is the trend of tax litigation before the various Courts, it  is for the Government to decide whether they intend to pursue the establishing  of National Tax Tribunal by spending crores of tax payers money for  establishing and experimenting a new institution which may not serve any  purpose? \n  <\/p>\n<p>  I have made an attempt to put  forward my vision and road map for the tax litigation in India; which are as  under: <\/p>\n<h2>1. Accountability  in Tax Administration  <\/h2>\n<\/p>\n<p>  It has been found that on many occasions the additions are  made for name sake, knowing well that the additions will be deleted by the  Tribunal, because there is no accountability on the part of Assessing Officer  to explain such additions <strong>Dr. Raja J. Chelliah<\/strong> in his report suggested as under  (1992) 197 ITR 177 (St) (257) Para 5.9. <strong>&ldquo;<em>Ways must be found to hold the  officer accountable for kinds of assessments he makes under present procedure<\/em>&rdquo;<\/strong>.  He suggested that <strong>&ldquo;<em>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<\/em>&rdquo;<\/strong>. \n  <\/p>\n<p>  It is very unfortunate that the Government has accepted most  of the recommendations of <strong>Dr. Raja Chelliah<\/strong> which are favourable to department  and not implemented the recommendations which are favourable to the assessee.  Even the proposed <strong><a href=\"https:\/\/www.itatonline.org\/info\/index.php\/the-direct-tax-code-bill-2010\/\">Direct Taxes Code, 2010<\/a><\/strong> does not contain any provision on  accountability on the part of the tax administration. I am of the opinion that  if provision of accountability is introduced it may reduce unintended  litigation and will benefit the honest tax payers of the country. \n  <\/p>\n<h2>2. Income Tax  Department should have an independent National Tax Litigation Cell to monitor  the tax appeals before various High Courts and Apex Court <\/h2>\n<\/p>\n<p>  Though the 60% of Tax appeals before the Income Tax Appellate  Tribunal and 75% tax appeals before the High Courts are of the Income Tax  Department, the Income Tax Department does not have a centralized legal  department to monitor the cases pending before the Courts. There has to be  independent departmental legal cell which can decide which the appeals to be  filed are and can monitor various issues pending before various Courts.  Collegiums of legal cell can decide whether it is a fit case for filing an  appeal to High Court or Apex Court. <\/p>\n<h2> 3. Research Team to  monitor tax matters before various High Courts<\/h2>\n<\/p>\n<p>  The City like Mumbai should have  a well equipped library to assist the counsels who represent the matters before  the Court, and there has to be continuous research to monitor the tax  litigation before various Courts and Tribunal.<\/p>\n<h2>   4. Age limit of  members of ITAT may be increased from 62 to 65<\/h2>\n<\/p>\n<p>  Parliament Committee has  recommended to the Government to increase the age limit of Judges of High  Courts from 62 to 65 years, it is desired that the law may be passed at the  earliest. According to me, speedy justice is the need of hour for the  development of the nation. Experience of a Judge and his knowledge is an asset  of the nation. It is desired that the age limit of members of the ITAT may be  increased to 65 and their knowledge and experience may be utilized for speedy  disposal of tax matters.<\/p>\n<div align=\"center\">\n<div class=\"\"><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-6440093791992877\";\n\/* judgements_adsense *\/\ngoogle_ad_slot = \"0133843924\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"https:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/div>\n<\/div>\n<div class=\"articlequoteleft\">\n<p>It is also very unfortunate that the assessees are also not very serious about the tax litigation; they send only the accountant and junior staff to assist in the matter. It is desired that the directors and partners must attend the proceedings, and then only they will be able to understand the importance of tax litigation and better tax management<\/p>\n<\/div>\n<h2>  5. Permanent Tax  Bench in all High Courts<\/h2>\n<\/p>\n<p>  There has to be a dedicated tax  bench in all the High Courts for speedy disposal of tax matters. In Mumbai  there is a permanent tax bench to decide only tax matters, which has helped to  reduce the pendency of tax litigation. There are always shortage of tax judges  it is desired that some of the deserving members of the Income Tax Appellate  Tribunal may be elevated to the High Court, which will help to have a dedicated  tax bench at all the High Courts. <\/p>\n<h2>6. Supreme Court  Benches in three Zones<\/h2>\n<\/p>\n<p>  In the year 2000, the Parliament  Committee has made an appeal to Union Government to pursue the Supreme Court to  set up Benches in three distant regions however there seems to be no political  will to set up the Benches of the Supreme Court. More than 50% of tax  litigations which are pending before the Supreme Court is from State of  Maharashtra considering the cost of litigation, it is desired that Supreme  Court may constitute benches at least in three distant regions. It is beyond  reach of common citizens to approach the Apex Court. Till such time regional  benches are set up the admission before Apex Court may be heard by e-Court, by  linking to various High Courts and one may argue the before Apex Court sitting  at Mumbai High Court.<\/p>\n<p>  This can be tried as optional at the beginning and if it is  successful it can be extended to other courts as well. This will benefit the  nation and will help to reduce substantial the cost of litigation before the  Apex Court. <\/p>\n<h2>  7. Amendment in Tax  Law &ndash; Appeal to Income Tax Appellate Tribunal<\/h2>\n<\/p>\n<p>  One of the suggestions made by  the Professional organizations is all the orders must be made appealable. This  will save time and amount to be spent only to decide whether orders are  appealable or not. There are number of orders passed by the Commissioner of  Income Tax for which no appeal is provided. The only remedy available to the  assessee is to approach High Court in its writ jurisdiction. A simple amendment  in the Income-tax Act may be made stating that all orders of Commissioner of  Income Tax are made appealable to Tribunal for example, Order under sections  264, 273A, waiver of interests charged under sections 234A, 234B, and 234C,  order under section 179, etc. This will save substantial time of Court and the  assessee will get the justice from the Tribunal within six months of filing an  appeal. Income Tax being Central Act there may be certain issues which may be  affecting large number of assessees. If an application is made by the assessee  and the department, a direct appeal can be made by the Income Tax Appellate  Tribunal in appropriate case. Section 257 of the Income Tax may be suitably  amended to enable the assessees as well as the department to approach directly  to the Apex Court. This will help to reduce the pendency of tax litigation in  all Courts and the finality may be attained on some of the important issues  within one year of the order of the Tribunal. Similar provision may be  introduced in the proposed Direct Taxes Code, 2010 as well. <\/p>\n<h2>   8. Development of  Tax Bar<\/h2>\n<\/p>\n<p>  Income-tax Act, 1961, refers to 98  Central Acts and many State legislations, however, in law colleges the tax is  an optional subject. It is desired that the Direct and Indirect Taxation may be  made compulsory subjects in all law colleges. This will help to develop the  future tax bar of our country. At present, not even 2% of lawyers are  practising on taxation. To develop the Tax Bar the ITAT Bar Association in  association with AIFTP and Government Law College has started National Tax Moot  Court Competition and Research paper in the taxation in the year 2003; where in  every year more than 100 young professionals are participating in the  competition. It is desired that all professional organizations must organize  some educational programme for development of Tax Bar. Earlier tax litigations were  on cash credits, low withdrawal, GP addition, penalty, etc. and tax involved  was very less whereas, now the emerging tax litigations are on International  Taxation and Corporate Law, tax issues on restructuring, joint venture, TDS,  etc., and stakes are very high, India needs better equipped Legal tax  Practitioners to make better representation before the Tribunal and Courts. It  is only possible by continuous education and training. To develop the tax  litigation practice one needs to attend the Courts and Tribunal sitting at  office, one cannot get the deserved training which one may need when arguing  the matter. It is the duty and responsibility of the senior members of the Tax  Bar to train the young practitioners to develop the tax Bar. <\/p>\n<h2>9. Separate Court  for Economic Offences<\/h2>\n<\/p>\n<p>  The Hon&rsquo;ble Finance Minister in the Finance Bill, 2010 has  proposed <strong>&ldquo;National Mission for Delivery of Justice and Legal Reforms&rdquo;<\/strong>.  According to the Hon&rsquo;ble Finance Minister the object of mission is to help to  reduce the legal backlog in courts from an average of 15 years at present to 3  years by 2012. As regards the prosecution in tax matters are tried before the  Magistrate Court and it takes more than 25 years to decide. It is desired that  there has to be a separate Court which deals with economic offences and person  who has knowledge on tax and accounts may be appointed as the judge to decide  the matter, relating to prosecution. Unless the matters are decided within a  reasonable time the purpose of launching the prosecution will not have any  impact of tax evaders. <\/p>\n<h2> 10.Technology in Tax  Administration<\/h2>\n<\/p>\n<p>  Use of technology in tax  litigation can help to reduce the litigation. The Central Board of Direct taxes  can get the information from all the Zones, specifying what type of litigation  is filed before various High Courts. Unlike in Civil matters the tax department  is always as petitioner or respondent. The Board can get the information as  soon as the appeal is filed in various high Courts the issue involved in  appeal. Whenever the common issues are involved the grouping can be done. The  Honourable Bombay High Court in last three years has disposed large number of  matters by grouping the matters. If the issue involved which affects large  number of matters the CBDT may request the Apex court to decide the matter out  of turn hearing which will help to reduce the pendency in all the courts. <\/p>\n<p>  The World Bank Report 2007 on the  subject of <strong>&ldquo;Doing business in South Asia&rdquo;<\/strong> observed that Commercial  disputes before various Courts in India are among the most lengthy, costly and  complex in South Asia and globally- resulting in a rank of 173rd. <\/p>\n<p>  Proposed <a href=\"https:\/\/www.itatonline.org\/info\/index.php\/the-direct-tax-code-bill-2010\/\">Direct Taxes Code<\/a> if it  becomes Act in the present form, will make the settled law unsettled hence  there will be new litigation in the Direct Taxes for another 50 Years. \n  <\/p>\n<p>  It is also very unfortunate that  the assessees are also not very serious about the tax litigation; they send  only the accountant and junior staff to assist in the matter. It is desired  that the directors and partners must attend the proceedings, and then only they  will be able to understand the importance of tax litigation and better tax  management. Whenever any assessee adventures in to tax planning and business  restructuring, it is desired that the assessee should consult the tax litigation  practitioner, because he will be able to guide the assessee by his experience  whether such an adventurous tax planning will be accepted by the Courts or Tribunal  under the present scenario.\n  <\/p>\n<p>  Today, Tax Bar is considered as  one of the best Bars of our country, this is mainly because of continuous  education, value and ethics followed by the stalwarts of the Tax Bar, like Shri  <strong>R. J. Kolah<\/strong>, Shri <strong>N. A. Palkhivala<\/strong>, Shri <strong>S. P. Mehta<\/strong> and many more. I hope the  members of the Tax Bar will make a sincere attempt to preserve the value and  ethics followed by the stalwarts and senior members of the Tax Bar. Every  professional must play a proactive role and help the Government to prepare the  Road map for better tax law and tax administration for achieving the goal of speedy  justice, by sending suggestions objectively.<\/p>\n<p>   Jai hind<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.itatonline.org\/blog\/wp-content\/uploads\/2008\/12\/ksa_sign.gif\" alt=\"ksa_sign\" title=\"ksa_sign\" width=\"97\" height=\"41\" class=\"alignnone size-full wp-image-57\" \/><\/p>\n<p> Editor-in-Chief <\/p>\n<\/p>\n<p> Reproduced with permission from the AIFTP Journal, July 2011<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The author trains his guns again on the proposed National Tax Tribunal and  makes out a compelling case on why it should never be implemented. Instead, a different  approach is required to solve the problems of delay and cost in justice  delivery says the author. The ten-point agenda formulated by the author will,  if implemented in true earnest, deliver us the Nirvana of &#8220;Sulabh Nyay Satvar  Nyay&#8221; (<em>Simple justice, Speedy justice<\/em>) assures the author<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/blog\/10-easy-steps-to-nirvana-of-sulabh-nyay-satvar-nyay\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3,5],"tags":[],"class_list":["post-512","post","type-post","status-publish","format-standard","hentry","category-judiciary","category-legislation"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/posts\/512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/comments?post=512"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/posts\/512\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/media?parent=512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/categories?post=512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/tags?post=512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}