The Standing Committee on Finance of the Parliament, while examining the DTC Bill, 2010, has made suggestions on the accountability of the Income Tax Assessing Officers (AOs for short).
This pertained to the decisions taken by them, which are not sustained by the appellate authorities, though this issue does not emanate from the DTC Bill. The Committee feels that this matter must be addressed in the DTC.
The Committee's observations are: “The aspect of accountability of assessing officers was not present in the existing tax administration of the Country.
A negative fallout of the absence of accountability was that more often than not over-zealous assessing officers made exaggerated assessments and raised additional demands without sufficient grounds. This has been the major reason for complaints of harassment and unwarranted tax litigation.
The Committee had commented on this aspect in their recent report on the Demands for Grants (2011-12) of the Department of Revenue. The Committee, therefore, desire that this lingering issue is appropriately addressed in the Code.
With a view to enforcing accountability of the Department, the unreasonable tax demands raised and adjudicated, if finally quashed at higher levels, should be adversely reflected in the career dossier of the concerned officials. Proper disciplinary action should be taken against such officials responsible for irrational assessments”.
ACCOUNTABILITY ISSUE
These observations, though fundamentally sound, raise administrative issues concerning implementation. In this context, it also needs to be taken note that the functions of the A.O. are of a quasi-judicial nature i.e. involving adjudication.
A quasi-judicial act requires that a decision is to be given not arbitrarily or in the mere discretion of the authority, but according to the facts and circumstances of the case.
This shall be determined upon an enquiry held by the authority, after giving an opportunity to the party (to be affected) of being heard and whenever necessary leading evidence in support of his contentions (see Avadhesh Pratap Singh v. U.P. State, AIR 1952 All 63, 69 Constitution of India, Art.226).
Secondly, no appeal is provided against an AO's order, who has to balance the interest of revenue and the assessee and is expected to act in the interest of revenue. There can be two views in regard to issues before the A.O. and he has to take balanced decision, keeping in view the interest of the Exchequer.
In the case of other civil judicial quasi-judicial authorities, there is no such requirement. If a taxpayer is un-satisfied about the A.O.'s decision, he can appeal against such an order.
The I.T. Act provides four tiers of appeal where many a times different views are taken in different appellate forums. The AO's order may be confirmed by the CIT (A), whose order can be reversed by the Income Tax Appellate Tribunal. Similar deletions/confirmations are possible at the High Court and Supreme Court's levels.
The issue is as to at what stage ‘finality' can be said to have been reached, which normally could be said to have reached after Supreme Court's decisions and an adverse entry in the AP's dossier can be made only after that.
It takes 10 to 15 years for a case to get determined at the apex court's stage. Should the entry to be made wait till then? In the meantime, the officer may get two-three promotions.
ADMINISTRATIVE SOLUTIONS
There cannot be a solution to the problem through legal provisions in the Code. The remedy has to be of an administrative nature. Some suggestions in this regard are:
Whether action against the AO should be taken or not should be determined where the officer himself suggests acceptance of the appellate order and not going in for further appeals.
Decision should be taken by the higher authority (CIT/DI/DG(L)), whether the addition made is justified or not at the time of giving administrative sanction for further appeals. If an appeal is preferred against the AO's order to the next appellate forum, no action should be thought of against the AO as his decision can be said to have been ratified by the next higher authority.
The next issue is as to why accountability concept should be confined to the AOs level only. Cryptic, non-speaking and legally unsustainable orders are passed at other levels also namely by CITs(A), CITs, DGs, CCITs and CBDT. Why accountability at their levels should also not be fixed.
The suggestion, though conceptually sound, is difficult to implement. Hence, legislative provision on this matter in the DTC is not feasible.
(The author is a former chairman of CBDT. blfeedback@thehindu.co.in )