Over Rs 12,000 crore in tax demands was locked on account of disputes, pending resolution at various courts, as on June 30, 2010, Parliament was informed on Friday. While cases involving tax demand of about Rs 7,635 crore are pending in Income Tax Appellate Tribunal (ITAT), around Rs 3,849 crore is locked up in cases with High Courts, Finance Minister Pranab Mukherjee told the Lok Sabha in a written reply.
Besides, disputed matters over tax liability of about Rs 550 crore are lying with the Supreme Court, he said.
There are 4,739 cases pending in the Supreme Court, 21,568 disputes lying with High Courts and 17,522 matters with ITAT, Mukherjee said.
Recently, the Finance Minister had called the Income Tax Department as the biggest litigant and asked it to re-examine the way it handles tax disputes.
“One area of concern is litigation with taxpayers. The Department is filing appeals in a routine manner, without careful thought and examination leading to the Department earning the dubious distinction of being the biggest litigant in the Government of India,” Mukherjee had said.
Later, the Central Board of Direct Taxes (CBDT) set up a committee to monitor and minimise litigations and asked its officials to look into the merits of cases before moving court.
“We have to monitor and minimise the litigation. Don’t go in for frivolous litigations,” CBDT Chairman SSN Moorthy had said.
In reply to another question, Minister of state for Finance S S Palanimanickam said processing of returns and issuance of refund is a continuous process in the income tax department.
Normally, after processing the returns, the refund generated is issued in due course, he said.
He said delays may be caused at times due to wrong quoting of PAN by assesses while filing tax returns, illegible recording of addresses, non-reporting of new addresses and incorrect particulars about bank accounts.
In another reply, Palanimanickam said complaints of tax evasion, including those related to the real estate sector, are received by CBDT and various field formations of the income tax department.
However, no instance of involvement of any income tax official in complaints related to tax evasion in the real estate sector has come to the notice of the government, he said.
Decades ago, some of the more literate audit officers with no ego used to raise objections on issues like “over pitched assessments”, “excess interest levied”, “delayed refunds”, etc. In 2003, a senior officer in the IT deptt. was confronted with a tax payer’s agonies when the latter happened to tell him the reasons for huge tax demands against him:the CAG’s audit team called him on phone in the night and told him that there were serious mistakes in his assessments of income tax and if he paid Rs 7 lakhs then they will not “raise any objection”. The factory of this young entrepreneur had already been closed, he was not able to engage even a CA and he had no money even to pay regular usual and customary bribes to the various authorities. So he could not pay to the CAG officers. And shortly thereafter, he took a job as there was no chance of reviving the business. The “objection” was raised on his “refusal” to pay to the CAG audit party, several years’ assessments were made with huge additions by a very reluctant and apologetic AO who admitted that the law and the facts did not warrant the illegal action but he was helpless and had to protect his job since CAG’s interpretation of law was supreme, even overriding Supreme Court.
This is just by way of a footnote to the CAG’s report under reference.