A petition has been recently filed before the Delhi High Court, by the All India Tax Practitioners, an association representing tax advisors, against the Government’s decision to incentivize commissioners of income tax (appeals) for tax rulings in favor of the department.
Earlier this month, the Central Board of Direct Taxes (CBDT) had linked the appraisals of commissioners of income tax practitioners (appeals) to the number of rulings they make in favor of the tax department.
The companies were not satisfied with the decision and the experts have told the government that this will skew decisions and lead to greater litigation and so-called tax terrorism. The government has rejected the contention. The commissioner of income tax (appeals), or CIT(A), is the first court of appeal in a tax dispute.
Before the High Court, the petitioner association submitted that the CBDT guidelines amount to interference in the impartial dispensation of justice and could potentially lead to a conflict of interest. The court has issued notices and the matter will be first heard on March 16, 2019.
According to the action plan, the appraisals will depend on “enhancing the assessment. strengthening the stand of the assessing officer or levying penalty”. according to the Central Action Plan (CAP) of the Central Board of Direct Taxes (CBDT) that ET has seen. Commissioners also have to meet annual targets, as per the action plan.
The government said the new metrics wouldn’t affect rulings as appraisals were dependent on other factors as well.
