{"id":519,"date":"2011-07-27T10:12:09","date_gmt":"2011-07-27T10:12:09","guid":{"rendered":"http:\/\/www.itatonline.org\/blog\/?p=519"},"modified":"2011-07-27T15:30:18","modified_gmt":"2011-07-27T15:30:18","slug":"taxaholics-the-week-that-was-1","status":"publish","type":"post","link":"https:\/\/itatonline.org\/blog\/taxaholics-the-week-that-was-1\/","title":{"rendered":"Taxaholic&#8217;s The Week That Was &#8211; 1"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.itatonline.org\/blog\/wp-content\/uploads\/2011\/04\/CA_Vellalapatti_Swaminathan.jpg\" alt=\"\" title=\"\" width=\"100\" height=\"100\" class=\"alignleft size-full wp-image-437\" \/><\/p>\n<p><strong>Get up to speed with the latest developments in the World of Tax. This week, the author wonders whether it is time to write an obituary for the DRP. Also another body-blow on the reopening front should shake the Babus of Aaykar Bhavan out of their reverie.  And yes, don&#8217;t forget to tighten your seat belt because the CBDT Chairman&#8217;s missive on recovery might just prompt the AO to demand that you pay up that long outstanding arrear<\/strong><\/p>\n<h2>Fasten Your Seat Belts &ndash; Its&rsquo; Recovery Time<\/h2>\n<\/p>\n<p>The CBDT normally goes into &ldquo;<em>recovery &amp; collection<\/em>&rdquo;  mode in March when they have to report the figures of tax collection to the  mandarins of South Block. So, the <a href=\"https:\/\/www.itatonline.org\/info\/index.php\/cbdts-tax-arrears-recovery-strategy-for-ay-2011-12\/\">Chairman&rsquo;s  letter of 25th July<\/a> telling his juniors that &ldquo;<em>focus<\/em>&rdquo; on &ldquo;<em>concerted  efforts in certain categories may expedite cash collection<\/em>&rdquo; came as a bit  of a surprise. However, it seems just to be more a case of <em>saber-rattling<\/em> rather than anything serious. The Chairman&rsquo;s tone  seemed quite casual. There was no sense of urgency in it. No words to shake the  Babus of Aaykar Bhavan out of their reverie. His use of the words &ldquo;<em>I suggest<\/em>&rdquo;  was significant. Also, the suggestions appear to have been casually made. The  Chairman said &ldquo;<em>more than 20,000 crores have been stayed by courts\/ITAT<\/em>&rdquo;  and that &ldquo;<em>counsels should be advised to get the stay vacated<\/em>&rdquo; by  bringing &ldquo;<em>the direction of the Supreme Court in the <\/em><strong><em>Vodafone<\/em><\/strong><em> case<\/em>&rdquo; to the notice of the concerned  authority. Well, all that one can say politely and with humility is that a  tutorial on the working of the Tribunal and the Courts may be in order!  Meanwhile the ground reality is that assessees continue to enjoy unlimited stay  from the Tribunal despite the clear legislative intent to the contrary. This is  thanks to the blunders of the department (see <strong><a href=\"https:\/\/www.itatonline.org\/blog\/index.php\/dear-department-thank-you-for-giving-us-infinite-stay-of-demand\/\" title=\"Permanent Link to Dear Department, Thank You For Giving Us Infinite Stay Of Demand\">Dear  Department, Thank You For Giving Us Infinite Stay Of Demand<\/a><\/strong>). Mr.  Chairman, can you do something to rectify this please?<\/p>\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>a common tendency amongst the AOs is to sign the s. 148 notice on the very last or penultimate day of the limitation period. Having signed it, the notice leisurely makes its way to the dispatch department where the Chaprassi will take it one fine day to the Post Office for onward dispatch to the assessee<\/p>\n<\/div>\n<p>Another thing that should engage the attention of the  Learned Chairman is the directive by the Supreme Court in <strong><a href=\"https:\/\/itatonline.org\/archives\/index.php\/cce-vs-doaba-steel-rolling-mills-supreme-court-cbdt-directed-to-formulate-uniform-policy-with-strict-parameters-on-appeal-filing\/\" title=\"Permanent Link to CCE vs. Doaba Steel Rolling Mills (Supreme Court)\">CCE  vs. Doaba Steel Rolling Mills<\/a><\/strong> that a uniform policy should be  formulated to regulate appeal-filing. If appeals are filed in the case of one  assessee and not in the case of another, there is a case for <em>allegations of mala fides<\/em> on the part of  the concerned officers observed the Court. <\/p>\n<\/p>\n<p>To its credit, the department has put together some sort  of comprehensive guidelines to cure the malaise of delayed filing of appeals.  The Guidelines, ambitiously called &ldquo;<a href=\"https:\/\/www.itatonline.org\/info\/index.php\/depts-guidelines-on-when-how-to-fileoppose-s-260a-appeals-in-high-court\/\"><strong>Zero  Delay Regime<\/strong><\/a>&rdquo; is a step in the right direction to bring some order to the  unholy mess that the department has now become. Of course, the top brass have  to show that their contribution is not restricted to framing guidelines but  effort is also taken to monitor compliance by the filed officers. <\/p>\n<\/p>\n<h2>Mr. AO Sir, When did you post that s. 148 notice?<\/h2>\n<\/p>\n<p>Did you know that the question whether a s. 148 notice has  been issued within time or not has to be determined &ndash; not by the date when the  AO signed the notice &ndash; but on the date on which he gave it to the Post Office  for dispatch to the assessee? <\/p>\n<\/p>\n<p>Well, a common tendency amongst the AOs is to sign the s.  148 notice on the very last or penultimate day of the limitation period. Having  signed it, the notice leisurely makes its way to the dispatch department where  the <em>Chaprassi<\/em> will take it one fine day to the Post Office for onward  dispatch to the assessee. <\/p>\n<\/p>\n<p>Well, this will be fatal to the department. The Gujarat  High Court has taken the view in <strong><a href=\"https:\/\/itatonline.org\/archives\/index.php\/kanubhai-m-patel-huf-vs-hiren-bhatt-gujarat-high-court-to-decide-whether-s-148-notice-is-issued-in-time-date-of-handing-over-by-ao-to-post-office-to-be-seen\/\" title=\"Permanent Link to Kanubhai M. Patel HUF vs. Hiren Bhatt (Gujarat High Court)\">Kanubhai  M. Patel HUF vs. Hiren Bhatt<\/a><\/strong> that the requirement in s. 149 that the  notice must be &ldquo;issued&rdquo; within the limitation period means that the notice must  have left the hands of the AO for onward dispatch to the assessee. And this  means that the AO should have delivered the notice to the Post Office on or  before the last date of limitation. A day late and the AO totally loses  jurisdiction to assess the escaped income!<\/p>\n<\/p>\n<p>Of course, there is a well known distinction between &ldquo;issue&rdquo; and  &ldquo;service&rdquo; of the notice. If the AO delivers the notice to the Post Office, he  has &ldquo;issued&rdquo; the notice even though the assessee may never receive the notice.  Still, the AO will have jurisdiction because s. 149 requires only the &ldquo;issue&rdquo;  of the notice and not its &ldquo;service&rdquo;. This was laid down by the Supreme Court in <strong>R. K. Upadhyaya<\/strong> 166 ITR 163 (SC). <\/p>\n<\/p>\n<h2>DRP &hellip; Time To Say Good Riddance?<\/h2>\n<\/p>\n<p>The Dispute Resolution Panel (DRP) is a peculiar creature.  Set up with the top brass of the department but cursed to be never able to give  relief to the assessees. Why? Because the decisions of the DRP, if favourable  to the assessee, are final and binding on the department. Which panel of  departmental officers will have the courage or the temperament or the attitude  or the whatever to bind the department forever with their decisions?<\/p>\n<\/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>Of course, as always the assessees are one-up on the department. Knowing the futility of going before the DRP, why do the assessees still throng the DRP? Because it gives them an additional 9 months of breathing time to worry about the demand that will inevitably result from the assessment order. And if the order of the DRP is \u201claconic\u201d, it becomes that much easier to get a stay on recovery of the demand from the Tribunal<\/p>\n<\/div>\n<p>Another aspect that is quite evident at the hearings of  the DRP is the clear sense of resentment that the members of the Panel  demonstrate at having to perform &ldquo;double-duty&rdquo;. One can&#8217;t blame the members of  the Panel for this. After all, they are top-brass of the department with  regular administrative responsibilities of running the department. To have to  forcibly sit on a Panel that everybody knows is futile must be quite frustrating!<\/p>\n<\/p>\n<p>This frustration shows in their orders. The orders show  that the DRP is in a hurry to get rid of the matter. No discussion, no  deliberation but a simple confirmation of the stand proposed by the AO puts an  end to the ritual of the proceedings. <\/p>\n<\/p>\n<p>This has got the DRP into trouble on a number of  occasions. The DRP suffered the ignominy of being told by the Tribunal in <strong><a href=\"https:\/\/itatonline.org\/archives\/index.php\/gap-international-sourcing-india-pvt-ltd-vs-dcit-itat-mumbai-drp-must-not-pass-laconic-orders-but-must-deal-with-assessee-objections\/\" title=\"Permanent Link: GAP International Sourcing India Pvt. Ltd vs. DCIT (ITAT Delhi)\">GAP  International Sourcing India Pvt. Ltd vs. DCIT<\/a><\/strong> 9 ITR 129 (Trib)(Delhi)  that it should not pass &ldquo;laconic&rdquo; orders. <\/p>\n<\/p>\n<p>In <strong><a href=\"https:\/\/itatonline.org\/archives\/index.php\/vodafone-essar-ltd-vs-dispute-resolution-panel-delhi-high-court-drp-must-give-cogent-and-germane-reasons-in-support-of-s-144c-directions\">Vodafone  Essar<\/a><\/strong>, the Delhi High Court could barely hide its irritation and it  used exaggerated&nbsp; politeness to &ldquo;remind&rdquo;  the DRP that it was a statutory body and had to live upto expectations and  could not pass &ldquo;perfunctory&rdquo; orders. <\/p>\n<\/p>\n<p>The unkindest cut came from the Uttaranchal High Court in <strong><a href=\"https:\/\/itatonline.org\/archives\/index.php\/hyundai-heavy-industries-ltd-vs-uoi-uttarakhand-high-court-jurisdictional-cit-should-not-be-part-of-drp-to-avoid-likelihood-of-bias\/\" title=\"Permanent Link to Hyundai Heavy Industries Ltd vs. UOI (Uttarakhand High Court)\">Hyundai  Heavy Industries Ltd vs. UOI<\/a><\/strong> which held that including the  jurisdictional CIT or DIT as a part of the panel was likely to lead to a  &ldquo;likelihood of bias&rdquo;. &ldquo;<em>Justice must not only be done but it must also be  seen to be done<\/em>&rdquo; declared the Court solemnly even as it directed the CBDT  not to include jurisdictional CITs and DITs as a part of the DRP. <\/p>\n<\/p>\n<p>Of course, as always the assessees are one-up on the  department. Knowing the futility of going before the DRP, why do the assessees  still throng the DRP? Because it gives them an additional 9 months of breathing  time to worry about the demand that will inevitably result from the assessment  order. And if the order of the DRP is &ldquo;laconic&rdquo;, it becomes that much easier to  get a stay on recovery of the demand from the Tribunal. And &quot;laconic&quot;  orders invariably get remanded to the DRP for passing fresh orders and all this  is a welcome respite from the likelihood of having to pay the demand. <\/p>\n<\/p>\n<p>All this raises is the inevitable question: Why continue  the charade of the DRP?<\/p>\n<\/p>\n<p>CA Vellalapatti Swaminathan Iyer<br \/>\nHyderabad<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Get up to speed with the latest developments in the World of Tax. This week, the author wonders whether it is time to write an obituary for the DRP. Also another body-blow on the reopening front should shake the Babus of Aaykar Bhavan out of their reverie.  And yes, don&#8217;t forget to tighten your seat belt because the CBDT Chairman&#8217;s missive on recovery might just prompt the AO to demand that you pay up that long outstanding arrear<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/blog\/taxaholics-the-week-that-was-1\/\">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],"tags":[],"class_list":["post-519","post","type-post","status-publish","format-standard","hentry","category-judiciary"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/posts\/519","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=519"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/posts\/519\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/media?parent=519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/categories?post=519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/blog\/wp-json\/wp\/v2\/tags?post=519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}