CBDT devises special plan to dispose of 300,000 pending cases

The pending cases choked Rs 6.11 lakh crore revenue to tax department

Faced with "mounting" litigation that has "choked" the revenue stream, the CBDT has formulated an action plan to dispose of about 3 lakh cases, bearing Rs 6.11 lakh crore revenue, that are pending before its appeals commissioners across the country.

The Central Board of Direct Taxes (CBDT), that frames policies for the Income Tax Department, has now directed the I-T appeals commissioners to dispose of 500 cases per annum and priortise them where either the demand is less than Rs 10 lakh or over Rs 50 crore.

The Board has expressed serious concerns over the "rising" cases of litigation in the department, which it said has "assumed grave proportions".

It added that "mounting litigation" has choked the revenue stream and is leading to wastage of scarce resources.

According to official data, as of April 1, a total of 2,90,227 cases are pending before the department's first appellate authority--Commissioner of Income Tax (CIT)(appeals) --involving an amount of Rs 6.11 lakh crore.

Out of this, demands amounting to Rs 1.18 lakh crore have been stayed by the Income Tax Appellate Tribunal (ITAT) or other courts.

The I-T Department has a multi-tier appellate mechanism for a taxpayer, who has been issued a tax demand notice, can go in for appeal.

The first appeal body is the office of the CIT (appeals) followed by the ITAT, the high courts and the Supreme Court.

"Such high volume of litigation has not only resulted in a huge quantum of revenue being unrealisable, but 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," the CBDT said in the central action plan (CAP), accessed by PTI, for 2017-18 fiscal.

The CAP, issued recently, acts as the guiding light for the department to conduct tasks like that of tax collection and delivery of taxpayer services during a given financial year and aims to achieve an "effective tax administration, progressive tax policy and improved tax compliance".

It said in order to meet the "core objectives" of budget collection, reduction in outstanding demand and litigation management, a "two-pronged strategy" shall be adopted with proportionate focus on optimising disposal in terms of numbers and on maximising disposal of appeals involving high quantum of demand.

As per the strategy, each CIT (appeals) has been asked to dispose of a minimum of 500 appeals during the year, as per this ratio:

At number one is the disposal of "at least 30 per cent of appeals that involve demand of Rs 10 lakh and above and 100 per cent of appeals pending as on April 1, that involve demand of Rs 50 crore and above.

The second part is disposal of at least 70 per cent of appeals that involve demand of less than Rs 10 lakh," the CAP said.

The above targets, it said, once realised will result in an "aggregate disposal of about 1,63,000 appeals, which is expected to significantly reduce the pendency at the end of the year as compared to the pendency as on April 1, as well as unlock demand of about Rs 4.5 lakh crore."

The CAP illustrated the break up of the pending demand appeals with the CIT (appeals), which, it added, has been "increasing over the years."

The analysis showed that out of the 2,90,227 appeals pending as on April 1, about 28 per cent are appeals filed before March 31, 2015.

A total of 1,92,403 appeals pending as on April 1, (almost 67 per cent of the total pendency) involve demand of less than Rs 10 lakh including more than 1 lakh appeals where the demand involved is less than Rs 2 lakh.

As per the I-T database, 1,390 appeals pending as on April 1, involve demand of Rs 50 crore each, representing aggregate demand of Rs 4.26 lakh crore (about 70 per cent of the total).