10 Ways In Which The Tribunal's Working Can Be Improved
The author is enthused by the impending training programme for the Hon'ble Members of the Tribunal on "International Taxation and Transfer Pricing". It is a step in the right direction he says and adds that the time is opportune for all stake-holders to contribute their thoughts on how to improve the functioning of the Tribunal. On his, part, the author cannot resist the temptation to list a few issues that need to be paid attention to for making the Tribunal's functioning even better than it is today
Income-tax Appellate Tribunal which was founded on 25th January, 1941 has completed its 72 years of existence, and it is for the first time President of ITAT, has taken initiative to hold a Residential Refresher Course for Hon'ble Members from 11th August to 20th August, 2012 at Maharashtra Judicial Academy & Indian Mediation Centre & Training Institute, Bhayandar. I am pleased to know that the Hon'ble Members will be discussing in details the law relating to International Taxation issues and Transfer Pricing. The Hon'ble Members will also be learning Yoga as well as spiritual knowledge by the guidance of experts in the field. For this innovative Residential Refresher Course contribution of Hon'ble President and Vice-Presidents deserves to be acknowledged. According to me, this should be the annual feature.
When members decide the issue before the Tribunal they are deciding on the fate of the assessee. One wrong decision against the assessee may ruin his life and relegate him to the position of pauper. Whereas, if the decision is against the Government, it may affect the coffers of the Government only to an extent of a drop in an ocean. Hence, the Tribunal has greater responsibility towards the assessees
The Residential Refresher Course like this gives an opportunity to Hon'ble Members to know each other in a better way which will help to maintain very cordial atmosphere and work as one family. Last year at the Member's Annual Conference, the then President of ITAT Hon'ble Mr. R. V. Easwar gave me an honour of addressing the members at the Inaugural session of the conference. On behalf of the Bar, I have raised certain issues for betterment of law and better administration of justice. Hon'ble Law Minister Mr. Salman Khurshid who was present on the occasion assured us that he will look into the suggestions made by us (Refer AIFTP Journal September, 2012 issue, P. No. 8). As the Journal of AIFTP is read by most of the Members of ITAT and also most of them are regular viewers of www.itatonline.org, inspired me to write this editorial on the theme of "Thought of the Bar for Better Administration of Justice".
The purpose of this editorial is to put forward some thoughts for better administration of justice by the Tribunal. The Hon'ble Members when they attend Residential Refresher Course may, if they deem fit, discuss the following.
1. Gain the confidence of tax payers who are litigants before the Tribunal
Litigants before the Tribunal are of two categories; aggrieved assessee and the Government. But the objective in filing appeals is different for both categories. An assessee rings the bell of justice in the Tribunal only when the Assessing Officer levies the taxes or makes additions which are not in accordance with law, because he has to pay appeal fees, cost of litigation etc. Whereas the department in most of the cases files an appeal because of fear of audit, lack of accountability and assuming the appeal is dismissed no question is asked why appeal was filed. When members decide the issue before the Tribunal they are deciding on the fate of the assessee. One wrong decision against the assessee may ruin his life and relegate him to the position of pauper. Whereas, if the decision is against the Government, it may affect the coffers of the Government only to an extent of a drop in an ocean. Hence, the Tribunal has greater responsibility towards the assessees, who ring the bell of justice before the Hon'ble Tribunal, because on facts, the Tribunal is final fact finding authority.
2. Patient hearings
Most of the members are giving patient hearings to the assessee as well as department. Most of the members are following the practice of reading the order of the Assessing Officer, the Commissioner (Appeals) along with the representative and then ask for the propositions. If they have any doubt, ask clarifications. This is very good method and desired to be followed by all the members. Many times when judgment is referred the assessee may have read his own way, the department may have read in a different way, similarly the members might have understood in different way. One of our very senior professional Mr. M. L. Bhakta shared his experience which has happened in Apex Court before the then Chief Justice of India, Justice J. C. Shah, The Hon'ble Judge told Mr. Kolah "we have read the judgement and Mr. Desai has also read the judgement. There is no need for you to read it again. Mr. Kolah replied firmly "My Lords, Your Lordships have read the judgement in your way and my learned friend has read it in the way it suits him. Your Lordships will now read the judgement with me in my way". The Judges quietly allowed Mr. Kolah to read the judgement and advance his arguments in support thereof. Ultimately, the Judges decided the appeal in favour of the assessee." Source: AIFTP Journal August, 2003, P. No. 49. This showed the open mind of the Hon'ble Judges of Apex Court.
It is desired that the matters must be heard to the satisfaction of both the parties with open mind.
3. Speaking and reasoned orders
The Tribunal is the final fact finding authority. Assessee or revenue can file an appeal before the High Court only on substantial questions of law. When an appeal is heard by the Court the order of Tribunal is read first. If the order does not contain the reasons, the Court may set aside the order only on the ground that the order is not a reasoned speaking order. When the High court had reference jurisdiction, the Tribunal used to draft statement of facts, which contained all the facts and questions of law which has to be answered by High Court. Now the jurisdiction of High Court is appellate. If all the facts and reasons are narrated in the order, it will help the Courts to decide the issue, without any difficulty. I must say that the former president Late Shri T. V. Rajagopal Rao used to pass very detailed reasoned order, one may also refer judgment of Justice V. C. Daga in Abdulgafar A. Nadiadwala v. ACIT (2004) 267 ITR 488 (Bom.)(High Court). Speaking order is the soul of justice delivery system and one always remembers a judge by his qualitative judgments.
4. Relying on Judicial decisions in the order without giving an opportunity to other side
By and large most of the members don't refer to case laws, which were not referred at the time of hearing; however, few members refer to and rely upon the judgments in the order without giving an opportunity to the parties to deal with the same. It is desired that when a new case law is relied an opportunity must be given to the parties. In one of the matter Hon'ble Member relied on the judgment which was decided by the Supreme Court after the hearing was concluded by the Tribunal. The High Court has set aside the said order. Relying on the case laws without giving an opportunity to the parties is against the principle of natural justice. It is desired that if after hearing while dictating the order if any judgment is noticed by the Hon'ble Bench and if the Hon'ble Members desire to refer and rely on the same, an opportunity must be given to the parties concerned.
5. General Law
Income-tax Act refers to 98 other Central Acts and to decide some of the issues the knowledge of State law is also very important. It is desired that in the Refresher Course like this some of the provisions of general law may be discussed, which include principle of interpretation of taxing statute, binding precedent, principles of natural justice, etc.
6. Elevation to High Court
According to me there are no such restrictions in the Judgment that members cannot be posted at all in the State where he was practicing earlier. If Collegiums' of the ITAT is of the opinion that the members cannot be posted at all to the State from where he has been selected at any time thereafter, with due respect that may not be correct interpretation
It is an undisputed fact that there are good number of members who deserve to be elevated to the High Court Recent paper reports says there are 263 vacancies in various High Courts. Bar has always desired that there has to be a designated tax bench in all the High Courts. As per the present procedure the collegiums of Judges has to select the new Judges. When a member from the Bar Joins the Bench, he is always posted outside his State. Due to this factor the collegiums of High Court may not have any opportunity to know the capacity and integrity of members from that particular State. It is worth considering that the Tribunal as an institution must evolve a system in a transparent manner wherein the collegiums of High Court is made aware that, if High Court desires to appoint the judges who are expert in the field of taxation these are the names and collegiums by their own method can select the best person available in the field. This is one of the issue possibly the members can collectively decide and put forward their view to the ministry concerned and thereafter a process can be evolved. This will also help the good professional to join the Bench; otherwise in the years to come many good professionals may not join the Bench. According to me, the collegiums of the ITAT considering the knowledge and integrity of members may prepare the list of members who deserve to be elevated and may forward to the Chief Justice of respective High Courts through Ministry of Law. The process and mechanisms can be evolved in consultation with the committee which appoints the members of the Tribunal. If the proposal is sent to the Hon'ble Chief Justice of India, the issue can be discussed in the annual conference of Chief Justices of High Courts.
7. Appointment of Members of ITAT as members of Authority for Advance Rulings
The Authority for Advance Rulings has to decide very intricate issues of DTAA and International Taxation. By their experience and knowledge the members of the ITAT are most competent to be appointed as members of Authority for Advance Rulings. However, as on today the technical members are appointed from revenue department. Members of the ITAT through their President and Ministry of Law may formulate the system where in some of the members may be considered as a candidate for authority for Advance Rulings. It may be possible that when litigation increases country may need more benches of Authority for Advance Rulings. Hon'ble Members may discuss on this subject and forward their suggestions to the Ministry of Law for their consideration.
8. Independency of the Institution
The ITAT Bar Association Mumbai is very much concerned with the independency of the Income–tax Appellate Tribunal. Income–tax Appellate Tribunal Bar Association has made representation to the Hon'ble Law Minister to confirm the post of President, appointment of senior Vice- President and Vice–Presidents at the earliest and continuously pursuing the same with the Hon'ble Law Minister. It is very essential that for better administration of justice and independency of the Institution confirmation of the President must be done at the earliest. It is the Income–tax Appellate Tribunal Bar Association, Mumbai which has filed the PIL when there was great threat of interference by the executive in the administration of justice. It is the Bar which has moved and drafted the minutes and which was incorporated in the Judgment of Ajay Gandhi v. UOI (2004) 265 ITR 451 (SC). According to my understanding, the Bar is of the firm opinion that any person, who is appointed from the Bar should not be given initial posting at the same place where he was practicing. It was not the view of the Bar that he cannot be posted in the State where he was practicing earlier any time thereafter. My reading of the Judgment is a member may be posted near to his place when a person is about to retire. One may have to consider the present scenario due to change of law, wherein the Members are not allowed to practice before the ITAT after their retirement. According to me there are no such restrictions in the Judgment that members cannot be posted at all in the State where he was practicing earlier. If Collegiums' of the ITAT is of the opinion that the members cannot be posted at all to the State from where he has been selected at any time thereafter, with due respect that may not be correct interpretation. To be safer, the ITAT through Ministry of Law may move petition before the Apex Court and get the clarification from the Apex Court. This is one of the issues which the Hon'ble Members may discuss together and reach a conclusion which will benefit the Institution.
9. References
Many new members have joined the Tribunal. We desire that all of them should excel and should become ideal members. This is possible by one's willingness to learn and improve. I make an appeal to new members to read the following articles which will help them to perform better as members.
My "IDEAL Tribunal Member" by Mr. S. E. Dastur, Sr. Advocate (Golden Jubilee Souvenir of Income-tax Appellate Tribunal 1841-1991 (1993) P. 162)
The Art of Writing of Judgements by Mr. M. A. Bakshi, Vice President, ITAT (AIFTP Journal April, 2008 P. No. 4)
Conduct On and Off the Bench by Mr. P. P. Parikh, Vice President, ITAT (AIFTP Journal April, 2008 P. No. 15)
Effective Dispensation of Justice by Mr. R. V. Easwar, Vice President, ITAT (AIFTP Journal June, 2012 P. No. 5)
(Note – There are many very good speeches and articles written by the Hon'ble Members who are serving as Members, hence, no reference is made to their speeches and articles)
10. Paper reports
Continuous reports and allegations which are published in various papers about ITAT have shaken the confidence of the assessees in this institution. One must appreciate that some of the reports may be wrong or may not have been presented in right perspective. However, the ITAT being a Judicial forum cannot give any press release or give any explanation. We desire that the Hon'ble Members must discharge their duties without fear and favour whatever may be the allegations, Bar and the Bench must collectively work to restore the glory of Tribunal which has deteriorated due to recent incidents.
I am confident that when Hon'ble Members complete their Refresher Course they will be much more knowledgeable and all will make a sincere attempt to preserve the honour and integrity of this mother Tribunal. On behalf of the Bar, I wish the Residential Refresher course all the success.
Readers may have some better ideas and thoughts for better administration of justice by the ITAT. They can forward the same to the AIFTP (aiftp@vsnl.com / aiftp@yahoo.co.in) which can be considered by the ITAT Bar Association's Co-ordination Committee for their consideration.
The author is enthused by the impending training programme for the Hon'ble Members of the Tribunal on "International Taxation and Transfer Pricing". It is a step in the right direction he says and adds that the time is opportune for all stake-holders to contribute their thoughts on how to improve the functioning of the Tribunal. On his, part, the author cannot resist the temptation to list a few issues that need to be paid attention to for making the Tribunal's functioning even better than it is today
Income-tax Appellate Tribunal which was founded on 25th January, 1941 has completed its 72 years of existence, and it is for the first time President of ITAT, has taken initiative to hold a Residential Refresher Course for Hon'ble Members from 11th August to 20th August, 2012 at Maharashtra Judicial Academy & Indian Mediation Centre & Training Institute, Bhayandar. I am pleased to know that the Hon'ble Members will be discussing in details the law relating to International Taxation issues and Transfer Pricing. The Hon'ble Members will also be learning Yoga as well as spiritual knowledge by the guidance of experts in the field. For this innovative Residential Refresher Course contribution of Hon'ble President and Vice-Presidents deserves to be acknowledged. According to me, this should be the annual feature.
When members decide the issue before the Tribunal they are deciding on the fate of the assessee. One wrong decision against the assessee may ruin his life and relegate him to the position of pauper. Whereas, if the decision is against the Government, it may affect the coffers of the Government only to an extent of a drop in an ocean. Hence, the Tribunal has greater responsibility towards the assessees
The Residential Refresher Course like this gives an opportunity to Hon'ble Members to know each other in a better way which will help to maintain very cordial atmosphere and work as one family. Last year at the Member's Annual Conference, the then President of ITAT Hon'ble Mr. R. V. Easwar gave me an honour of addressing the members at the Inaugural session of the conference. On behalf of the Bar, I have raised certain issues for betterment of law and better administration of justice. Hon'ble Law Minister Mr. Salman Khurshid who was present on the occasion assured us that he will look into the suggestions made by us (Refer AIFTP Journal September, 2012 issue, P. No. 8). As the Journal of AIFTP is read by most of the Members of ITAT and also most of them are regular viewers of www.itatonline.org, inspired me to write this editorial on the theme of "Thought of the Bar for Better Administration of Justice".
The purpose of this editorial is to put forward some thoughts for better administration of justice by the Tribunal. The Hon'ble Members when they attend Residential Refresher Course may, if they deem fit, discuss the following.
1. Gain the confidence of tax payers who are litigants before the Tribunal
Litigants before the Tribunal are of two categories; aggrieved assessee and the Government. But the objective in filing appeals is different for both categories. An assessee rings the bell of justice in the Tribunal only when the Assessing Officer levies the taxes or makes additions which are not in accordance with law, because he has to pay appeal fees, cost of litigation etc. Whereas the department in most of the cases files an appeal because of fear of audit, lack of accountability and assuming the appeal is dismissed no question is asked why appeal was filed. When members decide the issue before the Tribunal they are deciding on the fate of the assessee. One wrong decision against the assessee may ruin his life and relegate him to the position of pauper. Whereas, if the decision is against the Government, it may affect the coffers of the Government only to an extent of a drop in an ocean. Hence, the Tribunal has greater responsibility towards the assessees, who ring the bell of justice before the Hon'ble Tribunal, because on facts, the Tribunal is final fact finding authority.
2. Patient hearings
Most of the members are giving patient hearings to the assessee as well as department. Most of the members are following the practice of reading the order of the Assessing Officer, the Commissioner (Appeals) along with the representative and then ask for the propositions. If they have any doubt, ask clarifications. This is very good method and desired to be followed by all the members. Many times when judgment is referred the assessee may have read his own way, the department may have read in a different way, similarly the members might have understood in different way. One of our very senior professional Mr. M. L. Bhakta shared his experience which has happened in Apex Court before the then Chief Justice of India, Justice J. C. Shah, The Hon'ble Judge told Mr. Kolah "we have read the judgement and Mr. Desai has also read the judgement. There is no need for you to read it again. Mr. Kolah replied firmly "My Lords, Your Lordships have read the judgement in your way and my learned friend has read it in the way it suits him. Your Lordships will now read the judgement with me in my way". The Judges quietly allowed Mr. Kolah to read the judgement and advance his arguments in support thereof. Ultimately, the Judges decided the appeal in favour of the assessee." Source: AIFTP Journal August, 2003, P. No. 49. This showed the open mind of the Hon'ble Judges of Apex Court.
It is desired that the matters must be heard to the satisfaction of both the parties with open mind.
3. Speaking and reasoned orders
The Tribunal is the final fact finding authority. Assessee or revenue can file an appeal before the High Court only on substantial questions of law. When an appeal is heard by the Court the order of Tribunal is read first. If the order does not contain the reasons, the Court may set aside the order only on the ground that the order is not a reasoned speaking order. When the High court had reference jurisdiction, the Tribunal used to draft statement of facts, which contained all the facts and questions of law which has to be answered by High Court. Now the jurisdiction of High Court is appellate. If all the facts and reasons are narrated in the order, it will help the Courts to decide the issue, without any difficulty. I must say that the former president Late Shri T. V. Rajagopal Rao used to pass very detailed reasoned order, one may also refer judgment of Justice V. C. Daga in Abdulgafar A. Nadiadwala v. ACIT (2004) 267 ITR 488 (Bom.)(High Court). Speaking order is the soul of justice delivery system and one always remembers a judge by his qualitative judgments.
4. Relying on Judicial decisions in the order without giving an opportunity to other side
By and large most of the members don't refer to case laws, which were not referred at the time of hearing; however, few members refer to and rely upon the judgments in the order without giving an opportunity to the parties to deal with the same. It is desired that when a new case law is relied an opportunity must be given to the parties. In one of the matter Hon'ble Member relied on the judgment which was decided by the Supreme Court after the hearing was concluded by the Tribunal. The High Court has set aside the said order. Relying on the case laws without giving an opportunity to the parties is against the principle of natural justice. It is desired that if after hearing while dictating the order if any judgment is noticed by the Hon'ble Bench and if the Hon'ble Members desire to refer and rely on the same, an opportunity must be given to the parties concerned.
5. General Law
Income-tax Act refers to 98 other Central Acts and to decide some of the issues the knowledge of State law is also very important. It is desired that in the Refresher Course like this some of the provisions of general law may be discussed, which include principle of interpretation of taxing statute, binding precedent, principles of natural justice, etc.
6. Elevation to High Court
According to me there are no such restrictions in the Judgment that members cannot be posted at all in the State where he was practicing earlier. If Collegiums' of the ITAT is of the opinion that the members cannot be posted at all to the State from where he has been selected at any time thereafter, with due respect that may not be correct interpretation
It is an undisputed fact that there are good number of members who deserve to be elevated to the High Court Recent paper reports says there are 263 vacancies in various High Courts. Bar has always desired that there has to be a designated tax bench in all the High Courts. As per the present procedure the collegiums of Judges has to select the new Judges. When a member from the Bar Joins the Bench, he is always posted outside his State. Due to this factor the collegiums of High Court may not have any opportunity to know the capacity and integrity of members from that particular State. It is worth considering that the Tribunal as an institution must evolve a system in a transparent manner wherein the collegiums of High Court is made aware that, if High Court desires to appoint the judges who are expert in the field of taxation these are the names and collegiums by their own method can select the best person available in the field. This is one of the issue possibly the members can collectively decide and put forward their view to the ministry concerned and thereafter a process can be evolved. This will also help the good professional to join the Bench; otherwise in the years to come many good professionals may not join the Bench. According to me, the collegiums of the ITAT considering the knowledge and integrity of members may prepare the list of members who deserve to be elevated and may forward to the Chief Justice of respective High Courts through Ministry of Law. The process and mechanisms can be evolved in consultation with the committee which appoints the members of the Tribunal. If the proposal is sent to the Hon'ble Chief Justice of India, the issue can be discussed in the annual conference of Chief Justices of High Courts.
7. Appointment of Members of ITAT as members of Authority for Advance Rulings
The Authority for Advance Rulings has to decide very intricate issues of DTAA and International Taxation. By their experience and knowledge the members of the ITAT are most competent to be appointed as members of Authority for Advance Rulings. However, as on today the technical members are appointed from revenue department. Members of the ITAT through their President and Ministry of Law may formulate the system where in some of the members may be considered as a candidate for authority for Advance Rulings. It may be possible that when litigation increases country may need more benches of Authority for Advance Rulings. Hon'ble Members may discuss on this subject and forward their suggestions to the Ministry of Law for their consideration.
8. Independency of the Institution
The ITAT Bar Association Mumbai is very much concerned with the independency of the Income–tax Appellate Tribunal. Income–tax Appellate Tribunal Bar Association has made representation to the Hon'ble Law Minister to confirm the post of President, appointment of senior Vice- President and Vice–Presidents at the earliest and continuously pursuing the same with the Hon'ble Law Minister. It is very essential that for better administration of justice and independency of the Institution confirmation of the President must be done at the earliest. It is the Income–tax Appellate Tribunal Bar Association, Mumbai which has filed the PIL when there was great threat of interference by the executive in the administration of justice. It is the Bar which has moved and drafted the minutes and which was incorporated in the Judgment of Ajay Gandhi v. UOI (2004) 265 ITR 451 (SC). According to my understanding, the Bar is of the firm opinion that any person, who is appointed from the Bar should not be given initial posting at the same place where he was practicing. It was not the view of the Bar that he cannot be posted in the State where he was practicing earlier any time thereafter. My reading of the Judgment is a member may be posted near to his place when a person is about to retire. One may have to consider the present scenario due to change of law, wherein the Members are not allowed to practice before the ITAT after their retirement. According to me there are no such restrictions in the Judgment that members cannot be posted at all in the State where he was practicing earlier. If Collegiums' of the ITAT is of the opinion that the members cannot be posted at all to the State from where he has been selected at any time thereafter, with due respect that may not be correct interpretation. To be safer, the ITAT through Ministry of Law may move petition before the Apex Court and get the clarification from the Apex Court. This is one of the issues which the Hon'ble Members may discuss together and reach a conclusion which will benefit the Institution.
9. References
Many new members have joined the Tribunal. We desire that all of them should excel and should become ideal members. This is possible by one's willingness to learn and improve. I make an appeal to new members to read the following articles which will help them to perform better as members.
My "IDEAL Tribunal Member" by Mr. S. E. Dastur, Sr. Advocate (Golden Jubilee Souvenir of Income-tax Appellate Tribunal 1841-1991 (1993) P. 162)
The Art of Writing of Judgements by Mr. M. A. Bakshi, Vice President, ITAT (AIFTP Journal April, 2008 P. No. 4)
Conduct On and Off the Bench by Mr. P. P. Parikh, Vice President, ITAT (AIFTP Journal April, 2008 P. No. 15)
Effective Dispensation of Justice by Mr. R. V. Easwar, Vice President, ITAT (AIFTP Journal June, 2012 P. No. 5)
(Note – There are many very good speeches and articles written by the Hon'ble Members who are serving as Members, hence, no reference is made to their speeches and articles)
10. Paper reports
Continuous reports and allegations which are published in various papers about ITAT have shaken the confidence of the assessees in this institution. One must appreciate that some of the reports may be wrong or may not have been presented in right perspective. However, the ITAT being a Judicial forum cannot give any press release or give any explanation. We desire that the Hon'ble Members must discharge their duties without fear and favour whatever may be the allegations, Bar and the Bench must collectively work to restore the glory of Tribunal which has deteriorated due to recent incidents.
I am confident that when Hon'ble Members complete their Refresher Course they will be much more knowledgeable and all will make a sincere attempt to preserve the honour and integrity of this mother Tribunal. On behalf of the Bar, I wish the Residential Refresher course all the success.
Readers may have some better ideas and thoughts for better administration of justice by the ITAT. They can forward the same to the AIFTP (aiftp@vsnl.com / aiftp@yahoo.co.in) which can be considered by the ITAT Bar Association's Co-ordination Committee for their consideration.
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