The Bombay High Court has asked the Central Board of Direct Taxes ( CBDT ) to reconsider its recent action plan to incentivize the Commissioner of Income Tax (Appeals) to enhance assessments and levy penalty.
The petitioners, Chamber of Tax Consultants approached the High Court challenging the direction in the Central Action Plan of offering incentives to CIT(A).
The central action plan contains Chapter 3 pertaining to litigation management. This Chapter provides the target for Appeals to be disposed of by the Appellate Commissioner in an expeditious manner. The clauses contained in this Chapter lay down targets and norms to be achieved within a certain time.
They challenged the directions issued by the CBDT for disposal of a certain number of Appeals of specified categories within the specified time. According to the Petitioners, these time limits are artificially applied, are contrary to the statutory provisions and also have the effect of making hurried orders by the Appellate Commissioner.
Justice Sarang V Kotwal and Justice Akil Kureshi observed that “From the action plan, it is not clear as to the utility of the norms set which the CIT(A) has to achieve. If the purpose of the setting of norms is to evaluate the performance of the CIT(A) there would be all the more reason why the above-quoted portion of the action plan be reconsidered by the CBDT.”
The bench expressed a primafacie opinion that the target set by the CBDT for disposal of the Appeals within the time frame provided, are directory and not mandatory.
“Prima Facie, we also feel that it may not be impermissible for the CBDT to prioritize the disposal of the Appeals and to set the goals for disposal of the certain number of such Appeals by the Appellate Commissioner,” the bench said.
It was further observed that “the CBDT should reconsider the same. From the action plan, it is not clear as to the utility of the norms set which the Commissioner has to achieve. If the purpose of the setting of norms is to evaluate the performance of the Commissioner, there would be all the more reason why the above-quoted portion of the action plan is reconsidered by the CBDT.”
“On the next date of hearing, the learned Counsel for the Respondent would apprise us about the utility of the norms that the Commissioner would need to achieve and the outcome of the CBDT’s deliberations on our recommendation for reconsideration,” the bench said.
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