F No 279/Misc./M-84/2014-(ITJ)
Government of India
Ministry of Finance
Department of Revenue

Central Board of Direct Taxes

* * * * * * * * * * * * * * * * * *

New Delhi the 18th September. 2014

OFFICE MEMORANDUM

Sub: Committee to study the appellate orders to examine the filing of appeals by the Department before various forums- Inviting Suggestions reg.

CBDT has constituted a Committee to appraise the efficacy of existing dispute resolution forums of CsIT (A) & ITAT and to suggest steps to reduce litigation before these forums.

Officers are requested to send their inputs/ suggestions for improving quality of assessment orders, to strengthen the institution of CIT (A) and possible steps that can be taken to reduce litigation by the department before the ITAT to Member Secretary of the Committee through e­mail at membersecretaryahd@gmail.com.

(Priyanka Singh)

(OSD), ITJ, CBDT

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0 responses to “CBDT seeks inputs from officials to improve assessment order quality & to reduce litigation”

  1. Aloke Ghosh says:

    Mr Agarwal,
    You are very lucky to have such frank confession by the authority. I have experienced a very peculiar and different confession by the ITO. My client has fought till ITAT for a genuine claim for a particular year and ITAT has been kind enough to pass an order in favour of my client. But the assessing authority goes on selecting each and every subsequent period for scrutiny assessment and has also filed a Misc. application before ITAT against that order and the reason was also “Majburi”

  2. Sanjay Sharma says:

    Sir

    For limiting such kind of practice by AO’s it should be held by the ITAT or upper courts that in case the decision of the litigation goes in favour of the assessee then the assesses shall be eligible to claim interest @24% pa. and the govt shall pay only the interest as mentioned in the relevant act and the differential interest cost shall be born by such AO’s. In this manner it can reduce the no of litigation cases and to some extent it would also compel AO’s to perform their task with quality..

  3. Rajesh says:

    Yes, Mr. Ashok is right. AOs do not apply their mind and follow instructions of their senior who are directed to create paper liability to meet inflated Tax target.”In one of recent ITAT order, Hon.Bench has noted that AO did not apply their mind”.

    Assessee is harassed in various ways. Now a days few AOs, during the scrutiny proceedings. are issuing summons under section 131 for normal verification like interest on loans paid by assessee. parties are investigated on oath like criminals. All concerned parties are called at same time same day.They are not only inquired for affairs pertaining to assessee in scrutiny but also party’s other income and affairs are questioned and detailed information are called for such other transactions not pertaining to assessee in scrutiny. CBDT should call information on it and enquiry in to it.

    Officers make additions on unjustified grounds which subsequently in 2nd appeal (ITAT) are dismissed absolutely. Even after ITAT orders in various cases, officer still continue to make additions in similar type of cases and tell assessee to file appeals.

    after the additions made, harassment continues in form of recovery of taxes and penalty and assessee are forced to deposit / taxes. In 1st Appeal or 2nd Appeal (which takes at least 3-4 years), order comes in favour of assessee but Department pays only 6% interest on refund of taxes paid but interest charged on arrears is 15%. This huge difference in interest is another blow to the assessee.

    Example : For 08-09, AO reopens case and makes an addition of Rs.20 lacs without any base.

    Income tax : 6 Lacs

    Interst : 5 lacs

    penalty 6 lacs.

    Assessee up to 1st appeal is made to pay 25% of tax and interst (2.75 Lacs)

    Assessee up to 2nd appeal is made to pay 50% of tax and intaerst (2.75 lacs more) plus swoed of penalty also hangs on assessee if AO’s demand is not taken care of.

    The ITAT issues verdict in favour of assessee after 5 years. assessee will get app Rs. 1.3 Lac interest at 6% on refund. Assessee’s cost of funds at 15% (compounded) will be Rs.3.75 Lacs. Add to it legal costs of app 75K which makes it 4.5 lacs. A net loss of Rs.3.2 Lacs + mental stress and value of time wasted.

    So There should not be more than 3% difference in interest rate charged by department and paid by department otherwise assessee will be made vulnerable to officers’s mercy because assessee will have to bear huge loss on account of interest cost.

  4. CA Ashok Aggarwal says:

    Hi Readers,

    During assessment proceedings the official says, ” I have to make additions and you can file appeal against this order.” mazboori.

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