TaxTMI 
TaxTMI 
2019 (4) TMI 1489
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....inancial year 2018­2019. We shall take a detail note of the relevant provisions contained in this plan later. For the moment we may note that this plan contains various provisions made by CBDT setting out targets of tax collection, disposal of cases by income tax authorities and for awarding points for such disposals. The grievances of the Petitioners relate to two areas of this plan. Petitioner's first grievance is in respect of time line set and the directions to the Commissioner (Appeals) for deciding appeals within such time. According to Petitioners such targets and time limits would put unnatural pressure on the Commissioner to decide the cases in a hasty manner, which has every possibility of denying a fair hearing to the assessee. Second area of the Petitioners' grievance is with respect to allocation of units for disposal of what has been referred to as "quality orders". The Petitioners would point out that these quality orders are those which result in favour of the department. According to Petitioners granting more weightage to such orders, would have the possibility of influencing the outcome of the Appeals before the Appellate authorities. 3. The Petitio....
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....ER-III LITIGATION MANAGEMENT "The rising litigation with the taxpayers and the quantum of revenue locked up in appeals is a matter of serious concern that requires attention." - Vision 2020 Litigation is not only a cost on the credibility of a tax administration system but also an indicator of the robustness and fairness of a system of taxation. Litigation has been rising over the years and has now assumed grave proportions, as is evident from the following data: No. of appeals pending with CsIT (A) as on 01.04.2017 3,28,173 No. of appeals disposed of by CsIT (A) during FY 2017-18 1,23,480 No. of appeals pending with CsIT (A) as on 01.04.2018 3,21,843 Demand involved in appeals with CsIT (A) as on 01.04.2018 Rs.6.38 lakh crore Demand stayed by ITAT/Courts as on 01.04.2018 Rs.87,035 crore Such high volume of litigation has resulted in rendering a huge amount of tax as uncollectible. Besides, it is a major impediment towards creating an environment of tax certainty for the taxpayers. It also involves infructuous costs on account of efforts to realize taxes blocked in these appeals. The substantial progress made last ye....
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....hin each PCCIT region. Hence the targets for disposal are being set at the level of PCCIT regions, and at micro level there shall be norms for disposal of appeals by individual CITs(A). In order to ensure optimum distribution of work and maximum disposals, the PCCIT/CCITs may redistribute the cases in such a manner as to attain/exceed the targeted disposals. The allocations of pending appeals may also be reviewed periodically to ensure that each CIT(A) delivers results in accordance with the norms laid down hereunder. Further, the PCCITs/CCITs shall endeavor to ensure disposal of older appeals on priority, particularly appeals that have been pending for more than 5 years. 3.2 Accordingly, the targets and norms for FY 2018-19 in respect of disposal of appeals pending with CsIT (A) in each PCCIT Region are set out as under: A. Each PCCIT Region shall ensure: a. Disposal of at least 25% of appeals that involve demand of Rs. 10 lakhs or more in categories A2, and A3 and 100% of appeals pending as on 01.04.2018 that involve demand of Rs. 50 crore and above (category A1); b. Disposal of at least 90% of appeals that involve demand of less than Rs. 2 lak....
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....o be varied by the PCCIT concerned in respect of CITs (A) within his jurisdiction, having regard to the number and categories of appeals pending for disposal with the CITs(A), so as to attain maximum output and optimum work allocation. However, each PCCIT Region as a whole must achieve the targets of disposal of 25% of appeals involving demand exceeding Rs. 10 lakhs and above, 90% of appeals involving demand less than Rs. 2 lakhs and 70% overall in Category B appeals. 3.6. The above targets should cumulatively result in a significant increase in disposal of appeals with CITs(A) and substantially reduce the pending appeals carried forward, as well as unlock the demand locked therein of about Rs. 4.5 lakh crore. ACTION ITEMS: (1) Category A appeals involving demand above Rs. 50 Crore and pending as on 01.04.2018 shall be disposed of by 31.12.2018. (2) The priority for disposal of appeals in different Categories shall be as under: (i) Higher priority shall be given to appeals involving demand of less than Rs. 2 lakhs and filed up to 31.03.2018 (Category B3). There shall be no inter-se priority within the Category. (ii) The next pri....
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...., (b) order has been strengthened, in the opinion of the CCIT, or (c) penalty u/s 271(1) I has been levied by the CIT(A). (ii) The concerned CCIT shall examine any such appellate orders referred to him by the CIT(A), decide whether any of the cases reported deserve the additional credit and convey the same through a DO letter to the CIT(A), which can be relied upon while claiming the credit at the year end. 6. From the above noted portion of the plan it can be seen that in order to achieve certain disposal targets of pending Appeals before the CIT Appeals, CBDT has made detail provisions for expeditious disposal of such Appeals. Part 3 of Chapter III pertains to incentive for quality orders and provides that additional credit of 2 units shall be allowed for each quality appellate order passed. Such term quality cases or quality orders has also been defined in the said part. 7. In the background of such facts on 22/03/2019, we had on the question of higher weightage for "quality orders" made following observations; "5. With respect to the Petitioners' second part of the challenge, we are of the opinion that the CBDT should reconsider the sam....
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....e Tax (Appeals) is one of the key priority areas of the CBDT. A two pronged strategy has been detailed in the CAP for respect of disposal of appeals filed with CIT(A),. having proportionate focus on optimizing disposal in terms of numbers and on maximizing disposal of appeals involving high quantum of demand. (i) As per Central Action Plan (CAP) for the FY 2018­19, the Department has laid out targets and norms for disposal of appeals pending with CsIT (A) in each PCCIT Region. CITs(A) in each PCCIT charge shall be expected to dispose of a minimum of 550 appeals, inter alia involving a). Disposal of at least 25% of appeals that involving tax effect of Rs. 10 lakhs or more b). 100% of appeals pending as on 01.04.2018 that involve tax effect of Rs. 50 crores and above c). Disposal of at least 90% of appeals that involve tax effect of less than Rs. 2 lakhs and disposal of at least 70% of appeals that involve tax effect of less than Rs. 10 lakhs inclusive of appeals with demand less than Rs. 2 lakhs. (b) With respect to recommendation of Hon'ble court to reconsider the incentivization provided to CsIT(A) for quality orders, it is submitted that the additional w....
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....ives have the scope of influencing the outcome of Appeal on merits; (iv) Learned Counsel submitted that there can be no additional weightage to the orders, based on the contents or the subject matter. He submitted that these directives issued by CBDT transgress the exercise of quasi judicial functions by the statutory appellate authorities, which is impermissible. In this respect our attention was drawn to section 119 of the Act, which contains a provision that any instructions or providing directions the CBDT may issue in exercise of such powers, shall not be so as to require any income-tax authority to pass an order in a particular manner. 10. In support of his contentions learned Counsel relied on following decisions; In case of P.K. Ghosh, IAS & Anr. Vs. J.G. Rajput, reported in (1995) 6 Supreme Court Cases 744, in which it was observed as under; "10. A basic postulate of the rule of law is that 'justice should not only be done but it must also be seen to be done.' If there be a basis which cannot be treated as unreasonable for a litigant to except that his matter should not be heard by a particular Judge and there is no compelling necessity, suc....
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....part of the challenge to additional weightage for quality orders, Counsel pointed out that the CBDT has reconsidered the issue and decided not to implement the same henceforth. With respect to the orders already passed, in any case, no harm or damage would be done to the Petitioners or any of the assesses in allowing such provisions to be effected. 13. Having heard learned Counsel for the parties and having perused documents on record, we may first consider the Petitioners' challenge to the first part of the circular. We have reproduced the relevant portion of the circular at length. Perusal of this portion would show that the CBDT has set out broad targets for revenue collection projected over the different regions. Internal distribution between the regions has been carried out on scientific basis. For any organization, setting of goals and targets is neither impermissible nor unknown. Only because certain targets for tax collection are set out, would not render the policy arbitrary or unreasonable. In the context of the disposal norms to be met by the appellate Commissioner also, we do not think that it is impermissible for any organization to set out certain output norms ....
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.... be achieved, having regards to the number and categories of Appeals pending before such Commissioner, so as to attain maximum output and optimum work allocation. The policy also makes certain general prescriptions such as giving the higher priority to Appeals involving demand of less than Rs. 2 lakhs and filed upto 31/03/2018. Next priority would be given to disposal of Appeals involving demand of Rs. 10 lakhs and above irrespective of the year of filing and the lowest priority would be given to Appeals filed during the financial year 2018­2019 involving tax effect of less than Rs. 10 lakhs. 16. We do not think that these guidelines in any manner breach the reasonableness or can be stated to be arbitrary or illegal. These guidelines are for general directives and prescriptions to on one hand enable the revenue to collect taxes which are otherwise due and on the other hand to assess the work output of the Appellate Commissioners which in any organization is of considerable importance. We also do not think that the guidelines have undertone of giving priority to the issues which concern the revenue more than the assessees. As noted the directives include giving priority to ol....
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....rectives that certain class or kinds of Appeals must be decided before a particular date, nor there is any negative implication of a particular Commissioner (Appeals) not being able to do so. The guidelines of the CBDT in this respect therefore must be seen as directory and not mandatory. 18. Coming to the Petitioners' second limb of the grievance, we may recall the policy provided for incentive for quality orders. This clause states that with a view to encourage quality work by Commissioner (Appeals) additional credit of 2 units shall be allowed for each quality appellate order passed. Ofcourse subject to CCIT upon examination of the order finds of deserving higher weightage. The term quality cases is explained as those including cases where ­ (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCID, and (c) penalty under section 271(1) has been levied by the CIT (A). 19. All these contingencies necessarily point to circumstances where the order passed by the Commissioner (Appeals) is in favour of the revenue. For example this policy refers to the enhancement made by the Commissioner or a case where the ....