FM Sitharaman asks IT dept to analyse lost court cases to draw lessons

Union finance minister Nirmala Sitharaman has asked the income tax department to "analyse" court cases the taxman lost over the last decade in order to draw lessons and ensure litigation disputes are eliminated, official sources said on Monday.

The minister has also asked the department to prepare a list of "expert" tax law advocates so that they can represent the I-T department or the revenue side effectively at judicial forums, including in insolvency cases before the National Company Law Tribunal (NCLT), the sources said.

The decisions were taken during a meeting of the top brass of the tax department and its administrative authority, the Central Board of Direct Taxes (CBDT), held in Delhi last month.

The principal chief commissioners and directors-general of the I-T department apart from the CBDT chairman, members and officers were part of the meeting, they said.

The sources told PTI that Sitharaman directed the CBDT to "audit" the cases won or lost by the department at various high courts and the Supreme Court over the last 10 years. She especially mentioned "analysing" the ones lost (by the revenue side) so that lessons can be learnt from them, corrective action be taken and litigation between the taxpayer and the taxman is minimised, according to the sources.

She also sought an "analysis" of the duration of the cases pending at these two forums of higher judiciary along with the time taken to dispose these litigations, they said.

The Modi government, since taking charge in 2014, has brought in a number of measures to reduce litigation in the I-T department after it was found that it was among those government departments with a huge pile up of legal disputes.

Only this month, the I-T department had hiked the minimum threshold of appeals by the department at various tribunals, high courts and the Supreme Court. This move came after Sitharaman, in her July Budget speech, declared this policy decision.

The CBDT, while increasing these thresholds, had said an appeal should not be filed merely because the tax effect in a case exceeds the prescribed monetary limits and instead should be decided on merit of the case.

"The officers concerned shall keep in mind the overall objective of reducing unnecessary litigation and providing certainty to taxpayers on their income tax assessments while taking a decision regarding filing an appeal," the CBDT had said in a circular.

Sitharaman, during the meeting with the top I-T brass in August, also asked the board to prepare a list of advocates who were "experts" in direct tax laws after it was stated in the meeting that the lawyers assigned to the I-T department by the ministry of law and justice for representing the department before the NCLT were "not upto the mark".

It was also discussed to hike the fee that is paid to special legal counsels of the department as it was found that their current remuneration was "low".

The minister also approved a proposal of the department to have the name of the assessing officer printed in the faceless assessment orders issued by the department after it was flagged that having no name was leading to "lack of ownership" of the document and "demotivation" among the officials.

The FM approved that the faceless assessment orders of the I-T department will now bear the name of the assessing officer at the end of the document, the sources said.

Tax officials manning the faceless assessment regime also flagged to the FM that the jurisdictional assessment officers (JAOs) and Faceless Assessment Officers (FAOs) should be merged in order to streamline the work of the department and also lessen the workload on the former.

The JAOs, as the name suggests, look after routine tax work in their assigned jurisdiction while the FAOs only deal with faceless assessment cases.

It was also stated by an officer of the department, the sources said, that the digitisation of I-T documents should have been completed before the faceless assessment scheme was launched in 2019-20.

The faceless assessment of I-T scheme was launched by the Modi government with an aim to eliminate instances of high handedness and corruption as the assessee (taxpayer) and the assessor (taxman) will not come face-to-face and tax processes could be completed over the Internet with the taxpayer not required to go to an I-T office.

Some officials of the tax department also urged the FM to have a "positive" name for the faceless assessment scheme that reflects the technology strides made by the department in dealing with taxpayers matters, as faceless (chehra viheen in Hindi) had "negative" connotations, the sources said.