Promoting tax terrorism

Sep 04 2014, 00:52 IST
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SummaryCBDT panel of I-T officials to decide on fresh retrospective amendment cases is a bad idea, it should have included outside experts.

The Central Board of Direct Taxes (CBDT) has set up the committee, announced in the Budget, to take the final call on the new cases to be taken up under the 2012 retrospective amendments related to indirect transfers. The so-called high-level committee will include joint secretary (FT&TR-I), joint secretary (TPL-I) and commissioner of income-tax (ITA), with the director (FT&TR-I) as its secretary.

And what will this panel do? Lets look at what the income tax

(I-T) department has outlined before we get into what it actually means for the industry and the uncertain atmosphere that has followed the introduction of the retrospective amendments primarily brought to tackle the Vodafone case after the Supreme Court ruling against the income tax department.

It is another matter that many feel the loss probably had more to do with I-T department's poor preparation than with other aspects, but that is part of history now and it is better to focus on the questions about the mandate of the new committee.

Here is what the CBDT says: “Henceforth, in all fresh cases where income on account of retrospective amendments to the provisions related to indirect transfer is considered to accrue or arise before April 1, 2012, the Assessing Officer shall be required to seek prior approval of any proposed action in this regard from the Committee. The Committee shall, after providing an opportunity to the taxpayer, issue appropriate directions to the Assessing Officer in a time-bound manner. The Committee would be required to submit periodic reports to the CBDT. The CBDT may intervene in the working/deliberations of the Committee, as and when required.”

In sum, what a junior income tax official (read assessing officer) will do in a particular case will be decided by a panel of his seniors—that's all of it. Ask the CBDT officials in private and they will tell you how different the view of two I-T officials could be in a particular case if there is revenue involved.

It is next to impossible for an

I-T official to decide/suggest not to take up a case or forego revenue. If that would have been possible, the tax demands to the tune of more than R4 lakh crore would not have been under dispute and under litigation before various courts and appellate authorities, despite the poor track record of the I-T department in winning cases.

That being the case, it is not difficult to infer whether

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