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MUMBAI: All India Tax Practitioners, an association representing tax advisors, have dragged the tax department to court over incentivising commissioners of income tax (appeals)— who act as quasi judges in a tax dispute— for passing orders favouring the tax department.
A writ petition was filed in Delhi High Court challenging Central Board of Direct Taxes (CBDT) policy to incentivise CIT (appeals) for passing orders favouring tax department.
ET had on November 3 reported that the government has linked the appraisals of CIT (appeals) to the number of rulings they make in favour of the tax department.
This has spooked companies and tax experts who have told the government that this will skew decisions and lead to greater litigation and so-called tax terrorism.
The government has rejected the contention.
The commissioner of income tax (appeals), or CIT(A), is the first court of appeal in a tax dispute.
The petitioner claimed that CBDT guidelines amount to interference in impartial dispensation of justice and could potentially lead to conflict of interest.
The court has issued notices and the matter will be first heard on March 16, 2019.
The CBDT made the changes in its action plan recently.
According to the action plan the appraisals will depend on “enhancing the assessment, strengthening the stand of the assessing officer or levying penalty”, according to the Central Action Plan (CAP) of Central Board of Direct Taxes (CBDT) that ET has seen.
Commissioners also have to meet annual targets, as per the action plan.
The government said the new metrics wouldn’t affect rulings as appraisals were dependent on other factors as well.
“Additional weightage to the disposal of appeals is provided in situations where the CIT(A) has to spend more time and make extra efforts for such appeals, thereby making disposal of such appeals a more strenuous/rigorous exercise compared to an appeal where no such action is required to be taken by the CIT(A),” a CBDT spokesperson told ET in an email.
Legal experts said the new measures raise questions about possible conflict of interest.
