The Income Tax Tribunal (ITAT) is the first independent forum where tax disputes are examined and where excesses of the state, if any, are remedied. In 2016, the Comptroller and Auditor general of India reported that 32,834 disputes were pending at the ITAT level, with Rs 1,35,984 crore of disputed amount.
Income Tax Tribunal | Draft 2017 ITAT rules
- The draft 2017 ITATrules seek to make the tribunal more time-efficient by limiting the number of times a hearing can be adjourned.
- The draft rules also include provisions to ensure that time-sensitive matters are dealt with swiftly: stay applications must be listed the same week they are filed and disposed of within a few days after hearing; and rectification petitions have to be heard within four weeks of filing.
- It also seeks to incorporate modern technology into the daily functioning of the ITATby allowing e-filing of appeals, communication of notices, pronouncements and adjournments via e-mail and text messages, and carrying out hearings through video-conferencing.
Income Tax Tribunal | Amendments
- Perhaps the biggest problem with the way ITAT benches currently function is the delay in timelines. This is a serious problem given that the ITAT is not the first level at which a tax dispute is raised. The proposals relating to adjournments stay applications and rectification petitions will go some way towards improving this situation. However, there are ambiguities in the draft rules regarding the sitting of the benches which could lead to the status quo continuing.
- The draft rules, despite providing a limit of five adjournments, permit benches nonetheless to accept more adjournments at their discretion without providing any criteria for this. Even when it comes to the timelines for rectification petitions, the current draft rule only includes a time frame for hearing the petition, not disposing it off.
- The rules also allow the ITAT to remand cases for adjudication as a whole to lower authorities, which high courts have previously held to cause severe prejudice to the parties, and urged against at all costs.
Income Tax Tribunal | Suggestions for improvement
- The rules should ensure that the present ambiguities are ironed out by specifying detailed timings for the ITAT and ways of enforcing them, providing more detail on the number of adjournments and reasons for these, providing a time frame for disposal of rectification petitions, and preventing benches from remanding cases entirely to lower authorities, or, in the alternative that they be exercised only in exceptional cases and with time limits.
- The committee has an opportunity to truly reimagine the ITAT by introducing the principles of case-flow management in the rules. Different kinds of cases currently take on an average the same duration of time to be disposed. An empirical study should be carried out to develop disposal timelines, and limit the number of cases listed per day (some benches have listed more than 100 cases per day) to minimize adjournments.
- An empirical study should be carried out to develop disposal timelines, and limit the number of cases listed per day (some benches have listed more than 100 cases per day) to minimize adjournments.
- The hearing process could also be streamlined by requiring the parties to engage in a pre-hearing meeting to determine a schedule for hearings.
- The ITAT should also consider publishing periodic reports about its functioning. This will provide a valuable resource for reinforcing trust in the institution by allowing for introspection within the institution and feedback from the public.
The redrafting of the rules provides an opportunity for the ITAT to demonstrate its ability to be one of the leading dispute-resolution forums in India and take the lead in introducing global best practices in the Indian judiciary. Whether they will take up this challenge remains to be seen.