Procedure would be prescribed for filing of appeal by revenue when an identical question of law is pending before Court
By S. Krishnan
I. Introduction
There has always been a lengthy discussion in all meetings convened by successive Chief Justices of India about inordinate delay in attaining finality in taxation matters. The delay sometimes stretches beyond 10years. It has been the experience of Chartered Accountants and Advocates that the Assessing Officers do not agree to follow the decisions of (higher) judicial authorities unless the decision is rendered by a jurisdictional High Courts or the Supreme Court and this results in multiplicity of proceedings.
II. Initiative from the Supreme Court
There was a recent news wherein it was stated that the Supreme Court has constituted a Special Bench to hear taxation cases from March 9, 2015 in an attempt to deal with a backlog of more than 10,000 cases and it is expected that this move would find favour with assessees as well as Revenue who are otherwise worried about the slow progress of tax cases.
Though the exact quantum of disputed amounts locked up in these legal entanglements was not readily available, though it was stated in the newsreports that such tax cases account for nearly one fifth of all cases that are pending before the Supreme Court. This move made by the Hon'ble Supreme Court is a laudable one and it is submitted, with respect, that it is a step in the right direction as more than reducing pendency of cases it will result in expeditious and quick disposal of tax cases.
III. Initiative from the Government to avoid repetitive appeals
Section 158A of the Act provides that, during pendency of proceedings in case for an assessment year, an assessee can submit a claim before the Assessing Officer or any appellate authority that a question of law under consideration is identical with the question of law already pending in his own case before the High Court or Supreme Court for another assessment year. If the Assessing Officer or any appellate authority agrees to apply the final decision on the question of law in that earlier year to the present year, he will not agitate the same question of law once again for the present year before higher appellate authorities.
The Assessing Officer or any appellate authority before whom his case is pending can admit the claim of the assessee and as and when the decision on the question of law becomes final, they will apply the ratio of the decision of the High Court or Supreme Court for that earlier case to the relevant year's case also.
IV. Another positive steps by the Government to resolve tax disputes early
The Finance (No. 2) Act, 2009, inserted a new section 144C in the Income-tax Act with retrospective effect from 1-4-2009 titled "Reference to dispute resolution panel". In the Notes on Clauses to the Finance Bill the purpose and context of this provision was explained as under:
"The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view takes very long time with the existing appellate structure.
With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter-alia the Dispute Resolution Panel as an alternative dispute resolution mechanism."
The Explanatory notes to Finance (No.2) Act 2009 issued by the Board also gave the same reason for this amendment:
"45.1 The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained after long drawn litigation till Supreme Court. In order to address the concern of the multi-national companies and to provide mechanism for speedy disposal of their cases so as to attain finality, a new section 144C is inserted in the Income-tax Act to facilitate expeditious resolution of disputes."
V. Amendment proposed
The results achieved so far have been found to be satisfactory but there is no parallel provision for revenue for not filing the appeal for subsequent years. Department in appeal on a question of law, files a repetitive appeal year after until it is finally decided by the Supreme Court.
Accordingly, it is proposed to insert a new section 158AA to deal with the situation where any question of law arising in the case of an assessee for any assessment year is identical with a question of law arising in his case for another assessment year which is pending before the Supreme Court, in an appeal or in a special leave petition filed by the revenue. In that case, the Commissioner or Principal Commissioner may, instead of directing the Assessing Officer to appeal to the Appellate Tribunal, direct the Assessing Officer to make an application to the Appellate Tribunal in the prescribed form within sixty days from the date of receipt of order of the Commissioner (Appeals) stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the earlier case.
It is further proposed that the Commissioner or Principal Commissioner shall proceed only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case. However, in case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed.
It is also proposed to provide that where the order of the Commissioner (Appeals) is not in conformity with the final decision on the question of law in the other case, the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal against such order within sixty days from the date on which the order of the Supreme Court is communicated to the Commissioner or Principal Commissioner and save as otherwise provided in the said section 158AA, all other provisions of Part B of Chapter XX shall apply accordingly.
Regards
Prarthana Jalan
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