Nagpur: Chartered accountants and tax practitioners in the city have flayed the Central Board of Direct Taxes (CBDT) for its latest circular on disposal of appeals. The document, which deals with clearing of pending appeals against orders by income tax department, also calls for incentivising the process for the
commissioner (appeal).
The concerned commissioners are the first level at which the appeals are heard. The incentive policy could encourage commissioners to issue verdicts against the assessee, with hopes of getting an award. Though an officer of the department itself, the commissioner is expected to be fair in dealing with the appeal. However, the incentive policy is bound to influence his judgement, say tax professionals.
Point 3 of the circular mentions the incentive for ‘quality orders’. It says, “With a view to encourage quality work by commissioner appeals, additional credit of two units shall be allowed for each quality appellate order. The commissioner may claim such credit by reporting such orders in their monthly letters to the concerned chief commissioner of income tax (CCIT).”
The criterion set for a ‘quality order’ clearly means those verdicts which will be in the favour of the department. According to the CBDT document, a quality order includes cases where enhancement has been made in the tax liability, and a penalty is levied. The third criterion is that the orders ‘strengthened’, in the opinion of the chief commissioner.
The concerned chief commissioner will examine if such orders deserve the incentive. The credits will finally be added to the ACR of the commissioner at the annual appraisal.
Chartered accountant Rajeev Damani said the commissioner appeals is expected to give a fair judgment after hearing both sides. The incentive scheme can easily prompt the officers to give orders which will only enhance the liability or lead to levying a penalty. There are chances that cases may not be decided on merit, and ruled in favour of the department to earn the additional credit.
In that case, even the assessee should be allowed to “incentivise” the officers to get a decision in their favour, said some tax consultants.
Kailash Jogani, a chartered accountant and former president of Nagpur Chamber of Commerce Limited (NCCL), said this order should be withdrawn. “This is a clear indication that the department wants the appeals to be decided in its favour so that revenue collection improves. It clearly tampers with the process of hearing an appeal, which has to be fair and just,” he said.
