Under the new provisions, the two parties can appeal before the commissioner, income-tax appeal (CITA), the first appellate body on tax matters. But they are not allowed to appeal before the income-tax appellate tribunal (ITAT), the second appellate forum.
The only recourse against a CIT (A ) order will be an authority for advance ruling and dispute resolution that is proposed to be set up once DTC becomes law. The authority’s orders cannot be challenged.
Though no precise data is available to determine the number of cases filed against the PSUs, tax professionals say at least 10% of all cases filed by tax authorities are against state-run firms. More than 25% of the revenue locked up in various stages of litigation could be in cases filed against PSUs, they say.
In the past, the Supreme Court had voiced concerns on such litigation, which according to it, was wasteful in many ways. A report published by the Law Commission in 1988 also had recommended measures to check the growing number of litigation by PSUs. The report had recommended the formation of a body that would monitor such disputes and end unnecessary litigation between PSUs and tax authorities.
The provisions proposed in the DTC are in tune with the general consensus on the need to put an end to such litigation in which everybody involved in it, except the lawyers arguing on either side, end up as losers.