This Editorial covers the remainder of what the previous
one couldn’t due to limitations of space. In September we had covered tax
overreach, accountability, creating grounds for taxpayers and stoppage of target-setting.
Here are more points on detailing the Taxpayer’s Charter (TC) to honour the
honest taxpayer:
Scrutiny: The time between notice, commencement of actual
proceedings and closure must be three to five months. Today, assessment happens
in the last few months before time-barring. This is as unfair to an ITO who has
to read, study, understand and form an opinion, as it is to a taxpayer /
professional.
Time as the essence: Outer time limit at the CIT(A) level is
specified as one year and six months for fact-based appeals. Non-response by an
ITO / assessee to a CIT(A)’s call for information and response time trails
should be mentioned in orders and non-response by the A.O. cannot be a reason
for stretching dispute resolution. At the ITAT level, the time limit
should generally be fixed up to three years, and two years for matters of fact.
Remand of cases should be monitored, statistics of the number of matters
remanded and the average time taken should be reported in public domain.
Structure of orders: Orders should carry the dates of submissions and
hearings, brief nature and number of submissions and questions raised from both
sides. Additions / SCNs should state clearly, where possible, whether the
issues are predominantly about law or fact so that further dispute resolution
can be placed in the right bucket. Just as the assessee makes a statement at
the end of an ITR, the ITO should declare that the assessment order, demand,
etc. are in accordance with the Taxpayer’s Charter and the provisions of law.
Data: A.Y.-wise statistics, including drill-down up to
Commissionerate level, is made available in the public domain. This should
include the number of orders passed at each level, the number and value of
demands raised, how many appealed, appealed by assessee or Department [in case
of CIT(A) onwards], did the matter contain an issue of law or fact or
indeterminate, ageing of each appeal at each level, determination in favour of
Department or assessee, and amount demanded vs. amount determined at each level
of dispute resolution. Such data must be published regularly. A periodic
jurisdiction-wise transparent reporting will show us what is happening.
Reservation in tax system: It is outrageous that
agricultural income without any limit goes ‘tax-free’. As reported by the CAG,
in A.Y. 2017-18, Rs. 500 crores of agricultural income went tax-free without
adequate verification based in 1527 / 6778 cases. This is inequitable,
unreasonable and disrespectful to honest taxpayers. Section 10(1) is a conduit
for evasion, misuse and laundering (refer TARC Report in 2014).
Data obesity: Today ITR seeks so many details of the assessee
which the assessee has already given elsewhere. When companies have filed data
on the MCA, GST or customs portals, why ask for it, then send mismatch notices,
and trigger some action based on incomparable data points? Recent example of
ISIN in ITR (A.Y. 2021): Can an honest taxpayer not share his DP ID, CAS ID,
etc., and ITD can thereafter fetch data from the Stock Exchanges to match it? Let’s
have one nation, one Government!
Other issues include: Sharpening selection of cases (1% of
taxpayers make up 50% of demands), consider cost incurred by the taxpayer in cost
of collection vs. collected, accounting of revenue collected (disputed
amounts collected should be treated as an advance), rewriting ITA in plain
English and giving due attention to what the taxpayer gets after a lifetime
of paying taxes when 98% others don’t. While an Honest Taxpayer is not
defined, if his rights and services are enumerated, it will be a stronger,
meaningful and praiseworthy start.
Raman
Jokhakar
Editor
