Hon’ble Shri. S. K. Ray, Member (A&J), CBDT, has addressed a letter dated 03.07.2015 in which he has expressed his dismay at the fact that despite several instructions on the subject, necessary due diligence and caution is not being exercised while granting authorization for filing of appeals. He has referred to several decisions where courts have taken an adverse view against the Department. He has also referred to a “shocking incident” in a “sensitive search case” where he says the “apathy of the Department Officers is evident”. He has warned that Courts are taking a “stern and inclement view” of the Department’s actions in litigation matters. He further points out that litigation not only entails financial costs but also tarnishes the image of the Department and strains its resources. He has stated that it is imperative that the available resources are optimally utilised to obtain maximum benefit out of litigation.
GOVERNMENT OF INDIA
CENTRAL BOARD OF DIRECT TAXES
S.K. RAY
Member (A&J), CBDT
Tel: 011-23094683
Fax: 011-23092591
Email: Subratk.ray@nic.inD.O.No.279/M-88/2014-ITJ
3rd July, 2015
Dear
Subject; Filing of Appeals on merits- Observations of Courts – reg,
Reference the earlier D.O. dated 19th September, 2014 on the above subject.
2. It has been noted that despite several instructions on the subject, necessary due diligence and caution is not being exercised while granting authorization for filing of appeals. Several court decisions have been noted where courts have taken an adverse view against the Department. A few such decisions are:
(i) ITAT, Mumbai in the case of M/s Prescon Builders Pvt. Ltd. has stated that the very fact that the AO filed the appeals without even verifying the year, which was mentioned in the ground of appeal, also indicated that the appeals were filed in a routine manner which causes lot of inconvenience to the tax payers and such a practice should be deprecated.
(ii) High Court, Mumbai, in the case of CIT-2 Vs. State Bank of India, Financial Reporting, Compliance & Taxation Department .noted that where the Revenue has accepted the order by not preferring any Appeal against the earlier order, the Revenue should not challenge the subsequent order on the same issue. In case an appeal is preferred from the subsequent order, then the Memo of appeal must indicate the reasons as to why an appeal is being preferred in the later case when no appeal was preferred against the earlier order of the Tribunal which has merely been followed in the later case. The absence of this being indicative of non-application of mind, does undoubtedly give an opportunity to the Revenue to arbitrarily pick and choose the orders of the Tribunal which they would challenge in the Appeal before the Court.
(iii) ITAT, Mumbai in the case of Sh. S. Ganesh has stated that the act of disregard and disobedience of the orders of the higher judicial authorities in hierarchy amounts to the gross abuse of process of law and is an act which tends to lower down the authority of the higher courts. In this case an appeal was filed on an issue settled by the ITAT in its earlier decision in the same case.
2.1 The apathy of the Department Officers is evident in another shocking incident where in a sensitive search case, appeal was filed by the Department in High Court. The Registry pointed out certain defects in filing of appeal and the Court granted time to remove the defects. This relates to the year 2009. From 2009 till 2014, no follow-up action was taken and the case was dismissed due to default on part of the Department in curing procedural defects. The Department filed a MA praying for restoration of the main appeal and subsequently a Review Petition which were dismissed by the Court. When the matter travelled to the Supreme Court, the Apex Court has taken a serious view and directed that Department ascertain and fix responsibility of the individual/ (s) guilty of inaction and for taking appropriate action against them for such inaction. This default was compounded by the fact that the SLP was filed after a delay of 240 days.
2.2 Needless to say that the Courts are taking a stern and inclement view as far as Department’s actions in litigation matters is concerned.
3. Further, besides financial costs, litigation also entails tarnishing the image of the Department and straining its resources. The significance of filing appeal and pursuing litigation only in deserving cases cannot be over-emphasized, more so in the backdrop of the fact that Department is facing shortage of officers at all levels. It is imperative that the available resources are optimally utilised to obtain maximum benefit out of litigation.
4. This must be brought to the attention of all concerned for compliance.
With regards,
Yours sincerely,
(S.K. Ray)
I am sure that you would have forwarded the contents of the string to the CBDT .I am sure that the CBDT does read itatonline.If that is possible even after the comment not response comes from them . The high court and the supreme court act on newspaper reports .in all their correspondence there is a line if you don’t reply with in 2 weeks blah blah and they do not care to respond
The instances pointed out by Member, CBDT in para 2 and 2.1 of his letter require to be taken to their logical conclusion and suitable action taken against the defaulting officers under the disciplinary rules so that a message,loud and clear, goes out to all that judicial indiscipline will not be tolerated under any circumstances by the ITD and concerned will be held accountable. The Member, CBDT has not mentioned what steps under the disciplinary rules have been taken by CBDT where Hon. Courts including Supreme Court has passed severe strictures. If this is not brought out in public domain, the letter now issued and earlier also on filing appeals on merits and not in routine manner will hardly have any impact in ITD. However, the effort by Member, CBDT to place the problematic facts in public domain is appreciable .
As rightly said in one of the comments it is CBDT itself is first set right. Second one is to bring in accountability. If the instructions are not followed and it comes to light immediately it should get carried to to the concerned officers annual confidential report besides the immediate superior who is expected to supervise also should face action.
Besides legal matters what effects tax payer is discrepancy in most of the tax cases about demand outstanding. They upload when there is demand bout they do not do the same when any rectification is effected thereby defying CBDT instructions. All such officers should made to face action o’s getting deprived of increment promotion and like punishment. It will go a long way in improving image. Another area of concern is collecting demand without Stay even in case a where issue is decided in favour of tax payer in an earlier year. This the officer states as per instructions of Board which the Board to be culprit. Better Board amends it’s instructions before a court find fault with it
Yes I fully endorse Mr K Vasanth.Appeals are filed in violation of boards instructions left right and center . Even in cases where the demand is nil appeals are filed .Perhaps it is one way of saving their back.The information of all appeals reaches the highest authority and it is indeed very easy to spot the erring officials . It is amazing that the Board does not take action on erring officials.With regard to judicial orders it is sad that effect is not given in many cases .It is strange that Commissioners are of the opinion that even after an appeal authority grants relief the assessee is shown that he is in arrears of tax !!!!!!! ( if the dept takes the order on appeal to the next higher level).It has become a style to make huge additions and that allows the dept to take it on further appeal(courtesy boards instructions) and the asessee has to bear the brunt of the departments wrong decision
FOLLOWING PRINCIPAL SHOULD IMMEDIATELY INTRODUCE TO CARRY THE TRUST, STATUS AND PRESTIGE OF CBDT :
1) CHARITY BEGINS AT HOME
2) INTRODUCE ACCOUNTABILITY FOR EACH AND EVERY PUBLIC SERVANT(INCLUDING IRS) WORKING IN THE DEPARTMENT
3) ARRANGEMENT OF GROSS PUNISHMENT TO EACH AND EVERY PUBLIC SERVANT OF THE DEPT.
SIR,
ONE MEMBER EXPRESSING DISSATISFACTION OVER THE FUNCTIONING OF ITS OFFICES AND OFFICERS IS REALLY SHOWS THE STATE OF FUNCTIONING OF THE DEPARTMENT TO THE NATION.LET THE CBDT START FUNCTIONING PROPERLY THEN OTHER OFFICERS WILL FOLLOW THE LEADER.100’S OF LETTERS ADDRESSED TO CBDT IS NOT ANSWERED BY THE CBDT ITSELF. EARLIER I HAD RAISED THIS EVEN WITH THE PMO OFFICE TO SCRAP THE CBDT ITSELF.THE OFFICERS WILL NOT EVEN FALLOW THE JURISDICTIONAL HIGH COURT ORDERS AND EVEN THE CBDT NOTIFICATIONS AND CIRCULARS.TAKE THE EXAMPLE OF THE CPC WORKING STYLE. WITH ALL THESE THE LETTER IS REALLY A GOOD MOVE, BUT WHO SHOULD TIE BELL TO THE CAT?
Your concern about the reputation of the Department, being spoiled at the hands of subordinates, is appreciable, but what about the working of the Board itself. A petition addressed to Hon’ble Chair-person on 13th April, 2015 followed by three reminders has not been even acknowledged, what to say of the action on it.(pending with Director-IT-II). Pl. first write another such letter to the Hon’ble Chair-person and to set own house in order, so that reputation of the Board is not lowered-in the eyes of the Public.
The Board does not respond to any letters. Your letter of 15 April 2015 will take at least 12 years for a response The grievance petition filed before the board in 2003 still has not been redressed that is despite constant reminders.the least that the Board can do is to generate a letter acknowledging receipt of a letter like they do in other departments
To share own independent random thoughts:
This is an attempt by the chief, a clarion call, to its as-ever unrelenting subordinates, to wake-up; not for the first time though ?!
‘Bitten once, but twice shy,- is an age old saying, to symbolize the normally expected human instinct of sensitivity. But here is an ominous instance of having been ‘bitten again and again’ , also remedy applied, but with no lasting effect – not even once shy, so to say.
To dilate:
No mention is noted to have been made, unwittingly or otherwise, of not-so-obvious other viewpoints; e.g.:
(A) “straining ITS resources” – meaning both time and energy of not only the Revenue but of taxpayers as well;
and in the ultimate analysis, the whole brunt of the burden comes to be borne by / falls on the shoulders of taxpayers, and theirs only;
(B)in turn, strains the resources of the adjudicating authorities / judicial, quasi judicial as well; and
(C) in the result, causes inexplicable but avoidable delay in disposal, mounting pendency of cases, and in no less measure impacting and impairing the quality of justice itself.
In short, what has remained to be realized is the fundamental truth staring in the face- that Quantity and Quality are bad bed-mates, the former having an adversarial impact on the latter, if were in inverse proportion.
Left open to the righteous minded tax experts in field practice to ‘EDIT’ !
< May have more to add
Who will save the officers for not filing appeal ?
It is not the perogative of the officer to file appeals . he does so at the instance of the CIT>the officer is safe
CBDT might be dismayed with the functioning of the department but the fault lies at their end. They do not have any regard for the way things are. They are talking about resources v litigation has it ever tried to address the issues. Eg sec 14A look at the amount of litigation around it, has CBDT ever tried to come out with FAQ to address the issues which can guide the department and the assessee like FAQ around FBT?? it is a useless body i am surprised that have been awarded by the PM for something which is not part of their charter document