Overhaul the tax dispute resolution mechanisms

Inadequate Progress

By: Tanika Chandna

A smooth and effective mechanism for resolving disputes underpins a strong administration of the tax system. The potency of such a mechanism lies in the minimising disputes. Direct Tax Dispute Resolution Scheme was launched under Central Board of Direct Taxes in June 2016 to reduce a large number of tax dispute cases and to bring down unnecessary cases. Yet as per the report published by New Indian Express,

By availing this scheme, the applicant could lessen the penalty levied on account of the penalty order. Under this scheme if the tax exceeds Rs.10 lakh, the individual should pay a minimum of 25% of the penalty that is levied.

For a speedy disposal of cases, the Central Board of Direct taxes (CBDT) had asked the Commissioner of Income Tax (Appeal) to provide data of all the appeals pending before them as on February 2016 by October, 2016 on its portal.

As per I-T department data, there were 73,402 appeals with tax effect above Rs 10 lakh and 1,85,858 appeals with tax effect below Rs 10 lakh which are pending before CIT (Appeal) as on February 2016. Thus, 2,59,260 appellants were eligible for the benefit of this scheme.

The scheme which was due to end in December 2016 was extended till January 2017 because of the the lukewarm response that it received. By the end of the scheme, mere 1200 crores were recovered.

The Public Accounts Committee in 2017, expressed its concern over the pendency of tax cases and recommended the withdrawal of cases which were pending for more than fifteen years involving tax evasion of less than Rs. 5 lakh. It noted that eleven cases which involved Rs. 1.82 lakh were pending for over thirty years and observed that the implementation of Prosecution Management Module (PMM) will effectively monitor the prosecution process.  However, no further data has been released by the Central Board of Excise and Custom regarding the cases under PMM.

Thereafter, no updated data could be found about the pendency. Election Promises Tracker believes that the onus of putting the governance data in public domain lies squarely on the government.

Since no evidence could be traced highlighting any improvement in the pendency of the cases, the performance of the government against this promise is considered “Inadequate”

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