CBDT Accepts That Grant Of “Incentives” To CsIT(A) For Passing “Quality Orders” Is Improper

The CBDT has issued Office Memorandum dated 9th May 2019 in which it has fairly decided to accept the verdict of the Bombay High Court in Chamber of Tax Consultants v. CBDT (2019) 263 Taxman 551 that the policy of grant of “incentives” to CsIT(A) for making enhancement and levying penalty transgresses the exercise of quasi-judicial powers & is wholly impermissible and invalid u/s 119. The Court held that “Incentives” have the propensity to influence the CsIT(A) and they will be tempted to pass an order in a particular manner so as to achieve a greater target of disposal. The CBDT has withdrawn the credit already granted to the CsIT(A)

F. No. 272/M-42/2018-ITJ
Government of India
Ministry of Finance
Department of Revenue
Central Boa rd of Direct Taxes
Judicial Section
New Delhi, 9th May 2019
OFFICE MEMORANDUM

Sub : Judgement of Bombay High Court In W.P No.3343 of 2018 and
PIL No.144 of 2018-

Incentivisation of CIT(A) In Central Action Plan 2018-19-reg

Reference: Board’s O.M of even No. dated 10 / 1/ 2018.
Kindly refer to above mentioned subject.

2. In this regard, I am directed to enclose judgement of Bombay High Court in W.P No.3343 of 2018 and PIL No.144 of 20 18 whereby the petitioners had challenged the relevant portion of CAP 2018-19 whereby incentives were provided to CsIT(A) for passing ‘quality orders’. As per Para 19 of the order, the court has held that “In our opinion, such policy is wholly impermissible and invalid. Any directives by the CBDT which gives additional incentive for an order that the Commissioner (Appeals) may pass having regard to its implication, necessarily transgresses in the Commissioner’s exercise of discretionary quasi-judicial powers.”

The Court has further set aside the relevant portion of CAP 2018-19 even for the past financial year.

3 . Accordingly, I am directed to convey that decision has been taken to accept the judgement and not challenge it further. It is therefore requested that the same may also be referred to newly formed CAP committee for formulating action plan for 2019•20.

4. This issues with the approval of Chairman CBDT.

Abhishek Gautam
DCIT (OSD) , ITJ- I , CBDT
CIT (IT&CT). CBDT
North Block

F.No.272 / M-42 /20 18-ITJ
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Judicial Section
All Pr. Chief Commissioners of Income Tax

Dated the 9th May,2019

Subject:

Judgement of Bombay High Court in W.P. No. 3343 of 2018 and
PIL No. 144 of 2018. –

Incentivisation of CIT(A) in Central Action Plan 2018•19 – reg.
Kindly refer to enclosed order of Hon’ble Bombay High Court dated
11.04.201 9 in W.P. No. 3343 of 2018 and PIL No. 144 of 2018.

Note may be taken of para 18 to para 24 of the said order. Hon’ble High Court, vide para 24 of the said order has set aside Action Items no.3 of chapter 1II of CAP 2018- 19 wherein incentive in the form of additional credits was provided to CsIT(A) for passing quality orders.

2 . It is further informed that in light of the same, additional credit if any allowed to CIT(A) on the basis of impugned portion of the CAP is hereby withdrawn.

3. This issues with the approval of Chairman CBDT.

Yours faithfully
Encl: As above
(Abishek Gautam)
DCIT(OSD)( ITJ -I)