CBDT Vows To Reduce Pending Tax Litigation In CIT(A), ITAT & Courts On War Footing

The CBDT has released the “Central Action Plan for 2017-18” in which it has inter alia dealt with the issue of “litigation management’.

The CBDT has pointed out that the rising litigation has now assumed grave proportions, as is evident from the following data:

No. of appeals pending with CsIT (A) as on 01.04.2016 2,59,718

No. of appeals disposed of by CsIT (A) during FY 2016-17 1,17,945

No. of appeals pending with CsIT (A) as on 01.04.2017 2,90,227

Demand involved in appeals with CsIT (A) as on 01.04.2017 Rs.6.11 lakh crore

Demand stayed by ITAT/Courts as on 01.04.2017 Rs.1.18 lakh crore

It is explained that such high volume of litigation has not only resulted in a huge quantum of revenue being unrealizable, but has also become a major constraint in achieving the policy objective of providing tax certainty to the taxpayers. Concerted action is therefore required to bring down the quantum of litigation and unblock the revenue involved.

TARGETS FOR CIT (APPEALS)

The CBDT has specified targets for disposal of appeals by CsIT (A) during FY2017-18 as under:

Each CIT (A) shall dispose of a minimum number of 500 appeals or earn 700 units during the year, which must include disposal in ratios as below:

a. Disposal of at least 30% of appeals that involve demand of Rs.10 lakhs and above, and 100% of appeals pending as on 01.04.2017 that involve demand of Rs.50 crore and above.

b. Disposal of at least 70% of appeals that involve demand of less than Rs.10 lakhs.

The priority for disposal of appeals in different Categories has also been set out as under:

(i) Higher priority shall be given to disposal of appeals involving demand of Rs.10 lakhs and above (Category A), irrespective of the year in which the appeals are filed. There shall be no inter-se priority within the Category, except that appeals involving demand of Rs.50 crore and above shall be disposed of by 31.12.2017. Different sub-categories shall earn 1, 2 or 3 units respectively as indicated in Table 4 above.

(ii) The next priority shall be given to appeals involving demand of less than Rs.10 lakhs and filed up to 31.03.2017 (Category B). There shall be no inter-se priority within the Category.

(iii) Lowest priority shall be given to appeals involving demand of less than Rs.10 lakhs and filed during the current FY 2017-18 (Category C). Such appeals can be disposed of, with approval of the CCIT concerned, if there is inadequate number of appeals of Category A or B pending with him. The CIT (A) may also dispose of any such appeal on priority, if so directed by the PCCIT/CCIT concerned.

(iv) Appeals of the same assessee relating to different years involving substantially similar issue(s) or inter related issue(s) may be disposed of irrespective of the Category to which they belong, if one of the appeals falls for priority disposal. In respect of group search & seizure cases, the CIT (A) may dispose of appeals of group cases irrespective of the category to which they belong if one of the appeals falls for priority disposal.

(v) Cases set aside and restored to the CIT (A) by Courts/ITAT may be disposed of on priority, but shall not earn any extra units.

(vi) Appeals involving transfer pricing issues shall earn 1 unit in addition to the normal number of units specified against the relevant category in Table 4.

(vii) Appeals in cases where returned losses have been reduced or converted into income in assessment will be entitled to normal units specified in Table 4, on the basis of notional tax on the amount of disputed additions

APPEALS WITH ITAT/COURTS

Every CCIT has been directed to identify 20 top litigation cases of assesses in his Region where important issues are pending at one or more appellate levels in ITAT/HC/SC as also with CIT(A), based on:-

• Importance of issues
• Revenue potential
• Recurring nature of the issue

After identification, the cases with common or similar issue(s) shall be bunched. Where there are common or similar issues in cases across CCIT regions within a Pr. CCIT region, the bunching shall be done at the level of Pr. CCIT.

The Pr. CCIT or CCIT has been directed to nominate a resource person (of the level of PCIT/CIT) or form a team (headed by a PCIT/CIT) for each case or bunch of cases. Where cases involve issues relating to international taxation and/or transfer pricing, officers from International Taxation and/or Transfer Pricing charges may be involved.

The resource person or the team (as the case may be) shall devise the strategy required to deal effectively and efficiently with the case(s) and appeals lying at different levels. They shall prepare written briefs and submissions and shall assist CIT (DR)/Department Counsel on real time basis in proper representation before ITAT/HC/SC, including being present at hearings to the extent possible. They shall also make required efforts for early fixation of cases, vacation of stay orders and such other matters.

Targets

The CBDT has laid down specific targets are laid down in this regard: