Original Income-Tax Act, 1961 was well drafted by learned officials in Finance Ministry and it was capable of meeting the expectation of the Govt. in all future events, except requiring amendments for events and changes taking place in this 21st Century. India Central Budget 2017 has made the Income-Tax law still more complicated. One side Income-Tax Deptt. says that only assesses e-mail address should be provided to enable them to file returns voluntarily. On the other hand, CBDT amending Income-Tax law in such a way that compliance of return filing should be given by approaching more than one Tax Professional with their Digital Signature Certificates, who are considered as Super Specialist in Income-Tax law. Cause & effect of complicated Income-Tax law is as under:-

(1) It has become very difficult for Tax Professionals to follow-up the amendments made to Income-Tax law in every budget to support voluntary compliance.

(2) Deptt. officials are using the complicated Income-Tax law as tool for harassment in the course of assessment proceedings

(3) On looking at amendment made in every budget, it is evident that there is no correlation between intent and action of Central Board of Direct Taxes

(4) Scrutiny assessments are concluded by assessing officers keeping in mind that some additions has to be made, if not higher officers will doubt about their work.

(5) Slogan of Income-Tax Deptt. “Simplification of Income-Tax law and Citizen Charter” published in the wall post of Income-Tax Deptt. are only guise.

Canons of Good Tax System:-

The characteristics or qualities of good tax system have been described below as canons of taxation. Taxes should be collected by the Govt. like plucking flower without affecting the whole flowering plant.

(1) Canon of equality and equity

Taxation must ensure justice & the burden of tax must be distributed equally based on the ability of tax payer.

(2) Canon of Certainty

Tax payable by person should be certain and not arbitrary-Presumptive taxation not permissible.

(3) Canon of Economy

Complex & ever changing nature of tax law in India require highly trained personnel involving high administrative cost and inordinate delay in assessment and collection of taxes

(4) Canon of Convenience

Tax should be collected in convenient manner. There should be simple process of payment of tax when it is deducted at source. In India TDS payment is not convenient for the reason that middle man interference is required to appropriate the tax to particular PAN A/c

Ex:- Only in case of TDS on property sale is convenient for the reason tax deducted is directly appropriated to respective PAN A/c

(5) Canon of Elasticity

Taxation should elastic, more revenue automatically fetched when income of person rises, ie, it should have built-in flexibility.

(6) Canon of Productivity

Tax must yield sufficient revenue collection & should not adversely affect economic production.

(7) Canon of Simplicity

Tax law should be simple & should not go beyond the understanding of layman. This is what lacking in Indian Income-Tax law.

(8) Canon of Diversity

In multiple tax system, tax payer will not be burdened with high incidence of tax in aggregate. This may not be in vogue due to implementation of GST in India. Very purpose of GST is to have single Indirect Tax System in India.

(9) Canon of Expediency

Levying tax on agricultural income lacks social, political or administrative expediency in India & hence Govt. of India cannot tax agricultural income

———————

B.S.K.RAOB.S.K.RAO, Tax Advocate, BDKRAO, Beside SBI, Tilak Nagar, Shimoga-577201, Karnataka State

Mo.No. : 9035089036

E-Mail : raoshimoga@gmail.com

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25 responses to “Indian Income-Tax Law Does Not Meet The Norms Of Good Tax System Having Different Canons!”

  1. Adv.BSKRAO says:

    *MODI GOVT. IS BACK ON TRACK*

    Actually, Mr.Modi was fooled by bureaucrats in his Govt. now Modi realised it. Free hands given by Modi ji was misused by beraucrats. This is the reason for drop in GDP. Because these bureaucrats complicated everything. I am happy now bureaucrats are now hearing plea of voters of Mr.Modi. The fact is evident from decision of Finance Ministry to simply GST taken in latest meeting. Hence, I am of the opinion that Modi Govt is coming back to right track for growth of India.

  2. Adv.BSKRAO says:

    *Hon’ble PM Mr.Modi Ji

    Against the allegation of mandatory CA Certificates in Income-Tax Act, CBDT introduced penalty U/s 271J Rs.10,000/- on Chartered Accountants for furnishing incorrect Certificates/Reports in Finance Act, 2017. This action of CBDT is only an eye wash against the allegation made. In reality, now fees for signing Tax Audit Certificate increased by Rs.10,000/- & it has become extra cost burden to the Tax Payer. Problem of approaching two tax professionals & searching empty slot of CA signature during due date for giving compliance, not yet solved by CBDT. Rather Tax Audit Certificate Form No.3CD revised and complicated by CBDT. Recently, on the directions of ICAI, President of Shimoga CA Association gave specific instructions to CAs not to sign for related tax professionals. This intent of ICAI is evident from Page No.4 & 5 of ICAI letter Dt.29.01.2013 addressed to CBDT enclosed to this grievance.*

  3. BSKRAO says:

    Against the allegation on mandatory CA Certificates in Income-Tax Act, CBDT introduced penalty U/s 271J Rs.10,000/- on Chartered Accountants for furnishing incorrect Certificates/Reports in Finance Act, 2017. This action of CBDT is only an eye wash against the allegation made. In reality, now fees for signing Tax Audit Certificate increased by Rs.10,000/- & it has become one more cost burden to the Tax Payer. Problem of approaching two tax professionals and searching empty slots of CA Signature for giving compliance, not yet solved by CBDT. Rather Tax Audit Certificate Form No.3CD revised and complicated by CBDT. Recently, on the instructions of ICAI, President of Shimoga CA Association gave specific instructions to CAs not to sign for related tax professionals. This intent of ICAI is evident from Page No.4 & 5 of ICAI letter Dt.29.01.2013 addressed to CBDT enclosed to this grievance.

  4. BSKRAO says:

    *CIC/CBODT/A/2017/125020 HEARING DATE 22.08.2017 AT 12.15 PM*
    August 28, 2017

    From

    B.S.K.RAO,
    Auditor & Tax Advocate,
    BDKRAO, Beside SBI,
    Tilak Nagar, Shimoga-577201,
    Karnataka State.
    E-Mail : raoshimoga@gmail.com
    Mo No. : 0-9035089036

    To,

    Central Information Commission,
    Room No.329, 2nd Floor, August
    Kranti Bhavan, Bhikaji Cama Place,
    New Delhi-110066

    Hon’ble Sir,

    Sub : 2nd Appeal File No. CIC/CBODT/A/2017/125020 before Mr.Bimal Julka (IC) – Regarding
    Ref : In continuation of arguments made at the time of hearing on 22.08.2017 at 12.15 PM & my written submissions Dt.22.08.2017 sent to CIC copy marked to respondent vide Speed Post Ref.No.EK739776721IN Dt.22.08.2017 acknowledged on 25.08.2017
    -0-

    Respondent took time to file written submissions in the matter of my above appeal & sent a copy of written submissions vide letter F.No.225/293/2016-ITA.II Dt.23.08.2017. (See Exhibit-X). Before furnishing my arguments to the submissions made by the respondent, I would like to convey the fact before Hon’ble Information Commissioner that respondent has not touched any of the point raised in my RTI Application or Grounds of Appeal submitted. However, I here below furnish my arguments to the written submissions of the respondent, furnished in four paragraphs & marked as such by me.

    To Para No.1
    From this para it is evident that information is available with the CPIO & only because it is not readily available, respondent is denying to provide information sought.

    To Para No.2
    In the RTI Application, I have sought to provide statistical data relating to total of section wise wrong claims & amount involved in violation of provisions of Income-Tax law captured in each column No.16, 17, 21, 22, 26, 30 & 31 of Tax Audit Certificate-Form No.3CD separately uploaded to e-filing website of Income-Tax Deptt. in respect of return filed in Form No.ITR-4 & 5 for the Asst. Year 2014-15 & 2015-16

    1. Submissions made by the respondent in Para No.2 is not relevant to my RTI in question, but may confound or mislead the Hon’ble Information Commissioner. It was held by Hon’ble CIC in my own case bearing File No.CIC/RM/A/2013/000460 Dt.11.10.2013 that “information of statistical nature available with the Directorate of Income-Tax (Systems) should be provided to the appellant within three weeks from the date of receipt of the order” (See Exhibit-1)

    2. Here, I am not asking matching or mismatching data separately in the RTI Application Sir, Further, I do not understand what is this, being in Income-Tax Practice for the last three decades. My claim is only about actual statistical data uploaded in Form No.3CD to e-filing website of Income-Tax Deptt. that too not any individual data. I have sought only totals of Colum No.16, 17, 21, 22, 26, 30 & 31 of Form No.3CD uploaded to e-filing website of Income-Tax Deptt. This information can be collected just by pressing one button for each column in the computer system.

    To Para No.3
    The words used by the respondent in the submissions made in Para No.3 that data received is made available to the Assessing officers, clearly indicates that statistical data sought by me is available with the respondent CPIO and only question left to the decision Hon’ble Information Commissioner is about providing such data against my RTI Application.

    To Para No.4
    This para is not relevant to my RTI Application & furnished by the respondent with the main intent to mislead the Hon’ble Information Commissioner. Because, I have not sought or questioned about allowable or disallowable expenses in the return filed. I have sought totals of Colum No.16, 17, 21, 22, 26, 30 & 31 of Form No.3CD uploaded to e-filing website of Income-Tax Deptt. Further, I do not understand why CPIO is confounding the issue in my RTI Application

    *I once again reiterate before Hon’ble Information Commissioner that CPIO has admitted the fact in written submission that statistical data sought by me is available and now only question left before CIC is to decide about providing such data to me. If again CPIO denies to provide the information sought, I give option to CPIO to furnish reply to my RTI as under*:-

    “Statistical data relating to total of each section wise wrong claims and amount involved in violation of provisions of Income-Tax Act has not been captured in Column No.16,17,21,22,26,30 & 31 of Tax Audit Certificate-Form No.3CD uploaded to e-filing website of Income-Tax Deptt. in respect of return filed in Form No.ITR-4 & 5 for the Asst. Year 2014-15 & 2015-16”

    NOTE :- Some of the copies of statistical data provided by CPC, Bangalore about Tax Audit Report-Form No.3CD and return filed enclosed at the end, for the reference of Hon’ble Information Commissioner.

    With Respects,

    Yours faithfully,

    Copy With Respect to:-
    CPIO-DCIT(OST)(ITA-II),
    North Block,
    New Delhi-110001
    Tel No. 011-23095480

    Encl : –
    >Exhibit-X Written submission of Respondent
    >Exhibit-1 CIC Order No.CIC/RM/A/2013/000460 Dt.11.10.2013
    >Documents as mentioned in Note above

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