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Govt to simplify tax administration

New Delhi: The valedictory session of platinum jubilee celebrations of the Income Tax Appellate Tribunal (ITAT) here in New Delhi today witnessed addresses from the Union Minister of Finance, Corporate Affairs and Information and Broadcasting Arun Jaitley and the Union Minister of Law & Justice DV Sadananda Gowda.

In his valedictory address, Jaitley emphasised the need for a simpler tax regime for hassle-free working. He said laws must be simple to avoid the possibility of excessive litigation even if you have a large number of population and assessees.

On this occasion of the platinum jubilee, he remembered the diamond jubilee celebrations of the ITAT held in 2001 when he was the law minister. He stated that the ITAT was an important forum for the reason that it was the first opportunity that an assessee got outside the structure of the Income Tax Department to agitate its case.

The tax tribunal comprises experts from two different branches — one with a judicially trained mind, which is keen to interpret the law, and the other having experience in taxation, Jaitley informed. He stated that this tribunal, set up in 1941, had become the mother of all tribunals and, if we look back at the last 75 years, it is this tribunal that has stood the test of time. He also stated that outstanding judgments of the ITAT were published in various journals and were referred to as good precedent.

The minister said that the government was looking into the recommendations of Parthasarathi Shome committee with a view to simplify tax administration.

“The Shome Committee report has given several recommendations, which we are at a very advanced stage of looking into. It has suggested certain reforms in tax administration.”

— Arun Jaitley

 

Jaitley said that a committee has been set up under Justice RV Easwar to simplify the Income Tax Act. The finance minister talked of several steps being taken by his ministry in the area of I-T. He said, in any case where the tax is up to Rs 10 lakhs, one need not go to the tribunal; if it is less than Rs 20 lakh, one need not go to a High Court. So the number of appeals is being restricted.

Jaitley highlighted the importance of information technology (IT), saying that IT had a very important role now in tax assessments. More and more returns are now online, the queries are being addressed online, answers can come online thus helping people in eliminating corruption. The tax refunds have gone online, too. The minister said that to adhere to the judgments, the assessment of the officials in the tax departments had to be linked to the quality of their performance and not to the targets. That is one of instructions being issued.

Referring to the last year’s Budget proposal of reducing from 30 to 25% over 4 years along with removal of tax exemptions, Jaitley said it would make the tax system cleaner and simpler and will ensure that “oppressive taxmen does not hover over us”.

The minister said, once a simpler tax system came into place, there would be lesser appeals and further efforts would be made to bring down arrears. “I do hope that with all these changes, and improved performance in the tribunal for which you are endeavoring, the arrears will be low, our tax buoyancies will be higher and the harassment to the assessee would probably be least,” he said.

The Union Minister for Law & Justice, Shri D.V. Sadananda Gowda addressing at the valedictory session of the Platinum Jubilee Celebrations of Income Tax Appellate Tribunal, in New Delhi on January 25, 2016.
Union Minister for Law & Justice DV Sadananda Gowda and Union Finance Minister Arun Jaitley addressing the valedictory session of the platinum jubilee celebrations of Income Tax Appellate Tribunal in New Delhi on 25 January

In his address, Union Law & Justice Minister DV Sadananda Gowda said the concept of tribunals had been borrowed from the French system of the Droit Administratif, which referred to a system of administrative courts that ran parallel to the civil courts. The intention behind this system was to ease the civil courts from administrative matters while laying separate standards for administrative disputes.

The modern Indian republic was born as a welfare state and, thus, the burden on the government to provide a host of welfare services to the people was immense. The vast number of welfare legislations coupled with the right to judicial review was believed to burden the civil courts with more matters than they would be able to handle. Thus, various tribunals for income tax matters, railway rates, labour matters and company courts were given statutory legitimacy to function parallel to ordinary civil courts.

In India, the adjudication of administrative disputes has been commented by the judiciary through various cases placed before it over a period of time. As of now, we understand that a complete adaptation of Driot Administratif is not possible in this country because judicial review of tribunals’ orders cannot fully be removed, judicial review being an integral part of the Constitution.

While the matter seems to be put to rest with Supreme Court’s 1997 famous decision in L Chandra Kumar’s case, the debate has not ended yet and much remains to be debated in the context of working, independence and efficacy of the tribunals. There have been many success stories of the tribunals; yet there have been instances of delays and favouritism as well. This despite the fact that the courts have consistently held that these bodies must maintain procedural safeguards while arriving at their decisions and observe principles of natural justice, Gowda added.

Referring to his previous day address on the criticism of the “tribunalisation” of justice from some quarters, the law minister said that increasing tribunalisation had been criticised as an encroachment on the judiciary’s independence and contrary to the constitutional scheme of the separation of powers between judiciary and the executive. The other concern has been that, though they were supposed to address the issue of delays and pendency in the existing judicial system, they seem to be bogged down with the same problems. Further, it is alleged that the tribunals lack independence and are no better than the administrative arm of the ministries.

Gowda said the tribunals were here to stay as they played an important role in the sphere of the adjudication of disputes. Tribunals function differently from courts, from the manner of appointment to the procedure followed. The tribunals do not have to follow the uniform procedure as laid down under the Civil Procedure Code and under the Indian Evidence Act, but they have to follow the principles of natural justice. Nevertheless, they seek to achieve the same objective as that of the courts — impart and deliver justice.

Gowda was of the view that within the four walls of judicial review, the tribunals carried a great responsibility of not only resolving disputes but also exhibiting higher standards of performance as mostly the tribunals have been reviewing or overseeing appeals from the actions of the administration.

If the litmus test is that whether the institution is maintaining consistency of fairness and judiciousness, apart from rendering speedy justice, Gowda said he thought that ITAT had passed with distinction. The working of the institution depended on the reputation which it builds up over a period of time, and ITAT had lived up to the expectations, Gowda added.

The law minister said we must recognise the intrinsic link between the simpler tax dispute resolution mechanism and the effect it had on the overall economic growth of a country. A good tax administration that includes an efficient and prompt tax dispute resolution mechanism plays a major role in the growth of a globalised economy, either in general terms or in specific sectors like improving or attracting foreign investment.

Gowda said that ITAT must constantly evaluate its internal procedures to look for the avenues for improvements. Whether it is digitisation of documents or setting up of e-courts, the ITAT must find new ways and means to speed up disposal, for time bound justice. There is an immediate need for taking up reforms like Pre-trial hearing, so popular in developed countries.

The law minister expressed hope that the 3 technical sessions in the last one-and-a-half day would be enlightening and extremely helpful to the participants and deliberations here have been able to stimulate the thought process in your minds. He said he was looking for new and innovative ideas out of stimulated and ignited minds.

The other speakers addressing the valedictory session were PK Malhotra, Secretary Department of Legal Affairs, DD Sood, Chairman ITAT and D Mammohan, Vice-Chairman, ITAT.

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