Let us 'care' for Indian Income Tax Department's new slogan 'Let us Share'!

YESTERDAY was a red-letter day for the Indian Income Tax Department. It was an important day from the taxpayers’ angle as well. If the Netizens are thinking in terms of any tax relief, then they need to take a close look at the concept of relief. A fiscal relief is certainly a welcome news even for taxmen in their capacity as taxpayers. But it is common knowledge that that is something which belongs to political domain and the discretions associated with that. Income Tax Department is a tax collection as well as tax laws enforcement machinery. Though most taxpayers know that it is a vital function of the State but they rarely welcome Revenue officials peeping into their potli of income. Larger the potli, greater would be the aversion and contempt for the taxman, studiously analysing and re-assessing their income running into multiple digits! Quite often, even smart taxpayers, assisted by a battery of ‘number plumber’ find it bewildering – how do the taxmen manage to see through their laboriously ‘bandaged’ expenditure figures and ‘expensively doctored’ income to arrive at one of the possibly correct figures. True, it is a difficult puzzle for most. But it is no longer!

Switching over to a new leaf of transparency in their working, the CBDT has come out with a compilation of various techniques, IT-enabled tools and best practices followed internally by the Department in their day to day revenue collection work. And it is aptly titled as ‘Let us Share’ – not only with the departmental officers but also taxpayers! A drastic paradigm shift in the direct taxes institutional thinking, indeed! This compilation in the form of a hard copy running into 258 pages, was formally released by the MoS(R), Mr S. S. Palanimanikkam, who welcomed the path-reaking initiative to share the internal work with the public. He termed it as a step in tune with the objectives of Right to Information Act and the greater objective of open governance.

For most taxpayers, internal working of a tax department whether Central or State-run, is an enigma. True, media does report about the good as well as the bad practices and also critically analyse them for the taxpayers’ benefits but no Government Department on its own comes out with an official version of their working mannerism. Here is a change in attitude and practice. The CBDT has consciously decided to partner with its audiences – the taxpayers – by sharing its good practices and judicial decisions which will help not only to its field officers but also taxpayers in improving their compliance with the tax laws and also in countering misinformation palmed off to them in the form of tax advisory.

This compilation has dedicated chapters on taxpayers’ services like electronic filing of IT returns, Tax Information Network, Refund Banker Scheme and Branding of Taxpayer Services (TPS) – a pilot project being incubated in Pune Commissionerate. It shares information about the tools used by its Investigation wing. One of them is the Integrated Taxpayer Profiling System which efficiently picks up information linking related parties or concerns of a Business Group and process them into actionable intelligence. Without any inhibition, the CBDT shares the step-by-step working of this tool which produces nemesis for thousands of tax evaders. One may wonder why to share such an information with tax evaders? A logical reason is perhaps to display the deterrence value of this tool. In other words, a message is loud and clear – if one makes an attempt to evade tax by resorting to circuitous route, one may not succeed as this tool simplifies the cobweb of information returned and intelligently establishes the nexus between multiple returns.With MNCs emerging as a prominent group of taxpayers, and given the growing volume of cross-border transactions, this compilation also highlights some of the landmark appellate orders and judicial decisions which will go a long way in educating taxpayers as well as aiding assessing officers in the field formations. In nut shell, the CBDT, its Members, particularly Mrs Saroj Bala, who incubated this idea in the initial days, and dozens of senior officers who supported and worked tirelessly for this project, do deserve kudos for sharing a lot in their maiden effort. We hopes the sapling of a democratic tradition being planted will be continuously nourished by the future Members of the CBDT so that a healthy exchange of ideas and the real benefit of partnership finally enriches the Revenue in terms of both more revenue as well as knowledge – a timeless revenue.

However, even a cursory glance at the compilation may reveal that adequate focus has not been given on the core competence of the department i.e. assessment. Over the years, its been has noticed that the best practices of assessment in the department have been miles away from the ‘best’. The actual quality of assessment can be judged through the prism of appellate and judicial orders. If an addition is made by the AO, not much effort is made to make it legally sustainable. And by the time such an assessment order reaches only a few inches away in the same corridor before a CIT(A), it is either deleted or routinely upheld. The first tough gateway comes in the form of the Tribunal which clearly points out the frailty of assessment practices in the Department in the form of dismissed cases. If the Investigation wing makes a tall claim of tall surrenders of undisclosed income, it should also ensure that additions, backed up by tangible evidence, are properly made, and penalty is also initiated. The two important yardsticks for such cases are first, the sustainability of penalty at higher judicial fora and successful execution of prosecution proceedings – a dismal corner for the Department, indeed. A simple diagnosis of the Department’s working is that it may have created a strong facade at periphery but its core is frail and flawed.

True, the Department has over the years adopted many IT-enabled tools for providing efficient taxpayers’ services and also to tackle tax evasion. The graph of revenue collection has also soared vertically in the recent years. And such a feat has been achieved by pegging lowest tax collections cost in the world. But  it cannot be treated as a virtue! Why? Here is a simple example. The Department has recently bought laptops in bulk and given them down to the level of ITOs. But the officers have not been provided data card to connect to important websites which strive to update their knowledge with latest information and incisive commentaries about policy decisions as well as judicial pronouncements – enrichment of their knowledge bank to make assessment and adjudication orders reflect the latest judicial thinking by higher fora. By not providing data cards, the Department has indeed saved a few crores but this saving also means – these laptops are like a sheath without a sword!

This compilation also talks about the best practices in human resource development. The lesser said is perhaps the better comment to make in this context. Though the CBDT is the first to obtain the sanction for a dedicated HR Directorate but its HR is truly in a disarray because of a funnier and unpractical Transfer Policy. There are hundreds of families which stand divided or split into two households. There are thousands of officers whose personal welfare index has nosedived to a historic low!

However, many of the Netizens who were present at the ceremony, may have noticed that the MoS(R) had paused and departed from his structured speech to throw a ray of hope to the officers when he hinted that if there is a need for any amendment in the Transfer Policy, the Board may like to get it done before his Govt gets busy with the parliamentary polls. Here is a golden opportunity for both the Revenue Boards to iron out the most widely experienced irritants in the Transfer Policy, and it can be done within a week if a proper homework is done and discussed with the MoS(R). In place of zoning out the country, the Boards need to have simple policy in terms of barring transfer only between Delhi and Mumbai. Other metros which cannot be bracketed with these two should be unshackled from Station A category and offered as a choice for the one who is due to move out from Delhi and Mumbai. Similarly, deputation should not be discouraged at all. It is not only against the spirit of DoP&T norms but also the basics of training and the need for exposure to the overall working of the Government.

Similarly, a little more focus on training of officers to upgrade their skills is required. For greenhorns, a structured training module offered by NADT is fine but for mid-career officials, training at work-stations would be a more efficacious module. Then, the Board needs to prepare internal database of its human resources identified for crucial assignments like Directorate of Transfer Pricing and Tribunal. Posting everybody by turn is not helping the cause of the Revenue. It needs to identify officers who have acumen and skills better suited to defend Revenue before the Tribunal and to handle TP or international taxation complex cases. These officers also need to be given exposure to best practices overseas and a part of fund be earmarked for their training overseas rather than getting into saving drive.

Let’s hope a new beginning made by the CBDT is cherished and enviously guarded by the future Board Members and senior officers in the field formations who need to practise transparency in their working and provide relief to taxpayers by offering them the services they deserve. The organisers of similar events in future also need to look beyond the Indian Chartered Accountants Institute for a feedback to their working and have a better attitude towards its diverse audiences. A look at the brochure published for the event revealed that the organisers had narrowed their choice for feedback to only CAs and their institute. For a dynamic organisation like Income Tax, there are many more stake-holders in public domain which should have been approached for feedback to their initiative. One of them could have been the Tribunal itself. The Department does need to partner with the Tribunal which exists only for the Department and its patrons – the taxpayers. It would have been certainly a pleasant and healthy gesture if the Board would have invited a few Tribunal Members (many of them are from the Department itself) for the event like it did to the group of retired officers. Ultimately, transparency boils down to earning the ‘revenue of goodwill’ which comes not only from CAs and ICAI’s former office-bearers but also from other stake-holders. Let’s hope the Income Tax Department would in future prefer rotating its eyeballs 360 degree like its taxpayer profiling tool to acknowledge the diverse character of its audiences and walk into the space of future with the same ‘diversity tag’ which is a hall mark of Indian democracy.