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Care For The Taxpayers
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Recently, a communication from the CBDT inter alia stated that in area of parameters of performance of tax officials, achievement of the target revenue collection shall be given the highest weightage and will also be a major factor while considering future placements. The instructions contained in the communication carry the risk of miscarriage of justice and undue hardship to the taxpayers. The Gujarat High Court has issued a notice to the CBDT in a PIL challenging the CBDT's decision to link promotions and postings of officers with tax collection made by them.
Several writ petitions are filed as tax officials adopt coercive measures to collect tax. In matters relating to stay of demand, various circulars / instructions are issued by the CBDT. In the process of tax recovery, various circulars / instructions and judicial precedents which have a binding effect are disregarded by the tax officials.
The CBDT's communication dated 1 December 2009 clarified that in stay matters, Instruction No. 1914 dated 2 January 1993 holds the field which prescribes certain guidelines in relation thereto.
In Maheshwari Agro Industries v. UOI1 the Rajasthan High Court urged the CBDT to issue appropriate guidelines for grant of stay in spirit of the 1969 Instruction and to clarify its uniform application all over the country.
In KEC International Ltd. v. B.R. Balakrishnan2 the Bombay High Court observed that in a large number of matters, orders were being passed by the department only with the idea of effecting recovery before 31 March though such orders could have been passed earlier in detail and after recording proper reasons. The Court laid down parameters required to be followed by the tax officials when a stay application is made by the tax payer. Unfortunately, the guidelines are often breached by the tax officials.
Recently, in UTI Mutual Fund v. ITO & Ors3 the Bombay High Court again laid down guidelines to be borne in mind for effecting recovery, relying on the decision of KEC International.
In Lopamudra Misra v. ACIT4 the Orissa High Court held that the revenue authorities must act in a fair and legal manner in order to gain faith of the assessee and to create confidence in the tax payers' mind and for smooth administration of the law. In this case, the Assessing Officer informed the petitioner that in case the tax liability was not discharged, she would be charged with interest, penalty and prosecution. The Court observed that such an action on the Assessing Officer's part was not a healthy practice.
The CBDT should consider that decisions of the Assessing Officers may be reversed by appellate forums and hence a Master Circular may be issued in matters concerning stay of demand, keeping in view the interests of the taxpayer. This would avoid cases of unjustified recovery and will also help in creating an environment of trust, co-operation and genuinely contributing to the exchequer.
1. taxman.com 68 (Raj), 2. ITR 158 (Bom), 3. WPL No. 606 of 2012 (Bom) 4. WP(C) No. 2113 of 2011 (Orissa)
(The author Jayesh Desai is Manager in Deloitte Haskins & Sells)