Transparency missing in ITAT appointments

TAXING MATTERS

Finance Minister Jaswant Singh has expressed concern over the number of cases pending with the Income Tax Appellate Tribunal (ITAT), the second appellate authority under the scheme of income tax and other direct tax laws and the final fact-finding body for tax disputes in the country.

The finance minister has announced that additional benches of the tribunal will be set up for clearing the backlog of cases and provide relief to taxpayers.

To give effect to this announcement, the ministry of law issued the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Amendment Rules, 2003 vide Notification No. GSR-926 (E) dated 05.12.2003.

By this notification, four new rules, numbered 13A, 13B, 13C & 13D, have been inserted in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of service) Rules, 1963, to enable the government to appoint temporary members.

The president of the tribunal has been authorised to appoint as many temporary judicial and accountant members "as it may think fit".

Such appointments can be made through deputation or on such terms and conditions as may be specified in the contract of employment for a period not exceeding two years. The period may be extended for a further period not exceeding one year.

The persons, who can be so appointed, have to satisfy the conditions specified under sub-section (2) or (2A) of Section 252 of the I-T Act, 1961.

However, the proviso to Rule 13A stipulates that persons, who have retired as members of the tribunal (judicial or accountant) or who have retired and have held a post on a pay-scale of Rs 14,300-3-400-18,000 or higher under the central or a state government company or a corporation or body corporate, etc, shall be eligible for appointment as accountant or judicial member on temporary basis.

"The pay of the persons appointed shall be Rs 22,400 per month (fixed). The other conditions of service, including allowances, shall be the same as applicable in the case of regular members of the tribunal.

In the case of retirees, the pension payable shall be deducted while working out the emoluments to be paid.

Such persons can be discharged from the office any time without assigning any reasons.

The foregoing account relating to amendments made is indicative of the unsatisfactory drafting and unbridled power to the president of the tribunal for appointing temporary members.

It is said that the process of appointments has already started on a "pick and choose" basis and some individuals have been listed for appointment not on the basis of any set criterion.

The notification is also deficient as it does not prescribe any age-limit for the persons to be appointed (which could be even 70 years or above), no common service conditions (Rule 13 A says that the conditions of service will be mentioned in the contract of employment, which could be different for different appointees depending on the fancies of the President) and no requirement of being bound by any code of conduct while working as a temporary member.

Such a situation can hardly be conducive for selection of persons and dispensation of justice to the taxpayers coming for appeals before the tribunal.

Members of the tribunal occupy an important position, more so when the tribunal is the last fact-finding authority against whose findings no further appeal is possible.

It is true that for the appointments to be made, being of a temporary and ad hoc in nature, no elaborate recruitment procedure may be necessary. But, there are certain basic requirements which need to be complied with while appointing people in such important offices.

It need not be totally left to the discretion of only one person "" the resident of the tribunal "" more so when for appointment as regular members, an interview board headed by a Supreme Court Judge does the selections.

For a government, which swears by transparency in functioning, it is imperative that some norms should be followed in making appointments even on a temporary basis.

Some guidelines should be laid down by the government to determine the eligibility of the persons who can be considered for appointment.

Merely saying that "a retiree from the government service is eligible", is not good. Some age-limit should also be put in place.

Moreover, the selection should be made not by a single person but by a committee, comprising at least three members, one of whom should be a person from outside the government.

All this is necessary to ensure impartiality and fairness in selecting persons who would be performing important appellate functions.

As the saying goes, "justice should not only be done but seem to have been done also", the appointments for these positions should be done in a transparent manner and not by private placements.