There is a need to reduce litigation so that the dept can devote time on assessment and collection, writes T N Pandey
The major litigant today in tax matters, in all appellate forums, is the Government. Government cases are proliferating almost at geometrical rates. The main reason is non application of mind in decision making, lack of accountability and a desire to play safe on the part of those who make assessments and authorise filing of appeals.
Other reasons for large appeals are: lIf the revenue involved is high, there is always an inclination to file the appeal even if the case on merits is weak. lHigh pitched assessments are made in many cases as rush work by the assessing officers disregarding the submissions made by taxpayers.
lAudit objections from C and A Gs audit parties have become a major cause for protracted litigations. Assessments are revised and huge demands are raised and no attempts are made to argue the issues raised with the audit parties. To safeguard the interest of revenue rectificatory actions are taken and protective assessments are made which ultimately get knocked down.
lReluctance and lack of interest on the part of higher authorities to train and guide the junior officers contributes in a big way to imperfect assessments against which the taxpayers are forced to file appeals. And if they succeed, the tax departments file appeals almost in a routine way.
lLack of clarity in regard to legal provisions, rules, notifications, court decisions and occasionally closed minds make the assessing officer take decisions in favour of tax department.
lWhen decisions from the apex court are received, no attempt is made to review the pending appeals in various appellate forums to withdraw these on the issues which were earlier against the tax departments but now get settled in favour of the taxpayers. The cases on such issues keep coming before the high courts and tribunal to be dismissed leading to considerable waste of time, money.
lOrders passed by the ITAT and the high courts are not implemented on time making the assessees to move the concerned appellate authorities for issuing orders for implementing their orders.
lWhen any order is passed by the Commissioner (Appeals) in favour of the assessee, the invariable reaction is to contest it before the ITAT even where the revenue involved is not substantial. As a consequence, no litigation is settled at the level of Commissioners (Appeals) leading to pendency of more than three lakh appeals before the Income-tax Tribunal.
lConcept of natural justice is generally flouted. For example, various high courts have held that refunds found due to an assessee cannot be adjusted against his other pending demands without giving the concerned taxpayer an hearing. Yet, this is being done with impunity.
The latest decision on this issue is from Calcutta High Court in the case of CIT vs. J K Industries Ltd (2000) 111 Taxman 369, where an order adjusting the refund against other demands without giving an intimation to the assessee has been held to be non-est. Another classic decision of this nature is from the Supreme Court in the case of C B Gautam vs. UOI.
lRefusing stay of demand/assessment proceedings even for cogent and justified reasons compel many taxpayers to file writ petition before the high courts.
lAt times, varying circulars are issued even by the apex tax bodies like the CBDT and CBEC. For example, as per circular NO 22/39/86 TRU dated September 5, 1986 containers in which raw materials are received are not subject to excise duty. This view was reiterated vide Circular No.449/15/98 dated March 23, 1998. However CBEC issued another circular No.470/36/99-CX dated July 19, 1999 by which field officials of the central excise department have been advised to make protective demands even in such cases. Such stands increase litigation.
If any significant improvement is intended for reducing litigation, the first step would be to simplify and rationalise the tax laws and procedures leaving little or no room for ambiguities and discretion. There should be programmes to train the officers who have to take decisions intensively, the concept of accountability should be pursued and those who take their work casually or leisurely, flout instructions and court decisions merrily and contribute to long winding litigation should be severely dealt with. Cases need not be reopened merely on the basis of audit objections. The procedure of advance rulings should be extended to residents also in regard to areas where litigation is found to be increasing.
Serious attention needs to be paid to reduce litigation so that the tax department can devote time to the more important work of assessment and collection. in many cases, in an arbitrary manner against the taxpayers where ultimately the assessees succeed, but in the process, considerable appellate work gets generated. These objections should be examined thoroughly and no reopening need be done as a protective measure if the audit
