Established in 1941, the Income Tax Appellate Tribunal is India's first
Tribunal. Over the decades it has acquired a fairly solid reputation of
efficiency and fairness. But that seems to have changed in the recent
past. We've already brought you the story of alleged corruption and
order fixing at the Kolkata ITAT. Today we turn our attention to the
post of ITAT President. The last 3 appointments have been temporary. Why
is ITAT being denied a permanent president and more importantly how is
that undermining the tribunal's independence. Payaswini Upadhyay does
some sleuthing.
Last month, on September 1st, ITAT Bar members received an unusual letter from a Bar Association Official. The letter pointed out that "for the last more than 2 years the Government has not appointed a regular and a permanent President of the Tribunal". The last 3 appointments were listed as evidence and the letter also points out that GE Veerabhadrappa was not given an extension. Last month's letter follows one written by the Mumbai ITAT Bar Association last year – listing similar concerns. And so we decided to investigate.
3rd June, 2010- Vimal Gandhi retired as President of the Income Tax Appellate Tribunal
On 4th June - RV Easwar was appointed as officiating President. He continued till his elevation as Judge of Delhi High Court in October 2011.
The next day GE Veerabhadrappa was appointed – again as officiating President. When his term ended on August 31st, he did not receive an extension. Instead he went back to being Vice President.
HP Ranina
Senior Advocate
"It is unheard of; I don't think I have come across such a thing. But obviously, this is a growing trend as you see today independent senior bureaucrats being transferred. Now this is a question of demotion- how can you make a President, cancel his Presidentship, and tell him you continue to be a Vice President as you were. And then you promote another person to the office of the President; it's just not done. This has to be taken note of very very seriously because if it's allowed to continue there is very bleak future for the judiciary in this country."
There is no official reason available for why Mr Veerabhadrappa did not receive an extension though he was due to retire in July next year. But events just before he moved out make for an alarming story
On 7th May this year, GE Veerabhadrappa, then Officiating President of the ITAT, received a letter from Diva Singh- a Judicial Member of the Kolkata Tribunal. Diva Singh wanted her one year transfer to the Delhi ITAT to be extended. Mr Veerabhadrappa declined her request. Right after, he received a letter from the Law Ministry requesting him to facilitate Diva Singh's transfer.
Mr. Veerabhadrappa replied to the Law Ministry that her long term transfer to Delhi would be a violation of the conflict rules laid out by the Supreme Court.
In a 2004 case the Supreme Court disallowed tribunal postings at a place where a member's parents or spouse practiced as an advocate.
Since Diva Singh's husband was a practicing advocate in Delhi, Mr. Veerabhadraapa noted that her continued posting to Delhi would be inappropriate.
3 months later, on 31st August, one year before his term was to end, GE Veerabhadrappa received a letter from the Law Ministry requesting him to hand over the charge of the Officiating President's post to HL Karwa. Mr Veerabhadrappa was moved to Vice President, Mumbai ITAT
(This is source-based information. We were not able to confirm it with Diva Singh, GE Veerabhadrappa or the Law Ministry)
Neither Mr Veerabhadraappa, nor Diva Singh nor the Law Ministry responded to our queries regarding this transfer incident – so we don't quite know why he didn't get an extension. But this would not have happened if he had been a permanent President, at least not without valid cause.
Right after G E Veerabhadrappa's demotion, the ITAT got a new President – H L Karwa- appointed as acting President. That makes it 2 years 4 months of Officiating Presidents
K Shivaram
President, ITAT Bar Association, Mumbai
"This is the first time in the last 73 years that the Tribunal is not having a permanent President. According to our Bar Association, the government should have appointed permanent President as soon as our former President retired on 3.6.2010. We feel that indirectly it is affecting the administration of Justice because as an officiating President, he may not be able to take certain bold decisions which otherwise he would have taken."
HP Ranina
Senior Advocate
"This concept of Officiating President is alien to the Income Tax Act. The Income Tax Act only talks about the President, Vice President and members. I do not know whether there are some service rules – whether this officiating President can be there- but even if he is an officiating President under the Service Rules, under the Income Tax law, he is a President."
YP Trivedi
Senior Advocate
Former President, ITAT
"I believe that the man will not be able to act the way he wants to act if he is not sure about his position. And it may be that you have a very ideal law minister, an ideal law secretary, and a very independent, upright and honest President- in that case, there may not be any conflict but if there is one weak link somewhere- either the law minister or the law secretary or the President is weak and amenable, then the credibility of the institution will suffer."
Here's how the Tribunal system works. The Departmental Promotion Committee comprising a senior Supreme Court judge, the incumbent President of the Tribunal and the Law Secretary selects members and the government appoints President from among them.
Once appointed, the ITAT President draws his powers from the Income Tax Act, 1961. Two of the most important powers being - the constitution of Benches in the 27 jurisdictions where the Tribunal exists and the power to determine transfer and postings of Tribunal members.
In 1996, the government, for the first time, sought to interfere with these powers. It issued a notice that the ITAT President needs to submit all proposals for transfers and postings of Members to the Ministry for approval. A public interest litigation took the matter to the Supreme Court - and the Apex Court ruled that the Central Government cannot confer upon itself this statutory power
YP Trivedi
Senior Advocate
Former President, ITAT
"SC had recognised that this is a quasi-judicial authority and it must have certain amount of independence in order that they can exercise their power fearlessly but at the same time, the SC had laid down certain rules – how appointments have to be made, how transfers have to be effected- a man should not be transferred to a place where he was himself practicing or his relatives are practicing. All those precautions SC had taken and Ajay Gandhi's case lays down some very important guiding principles. And if they are followed, the institution will serve the purpose for which it was created."
The powers that eluded the Government in 1996, are now at its disposal. Because, while permanent Presidents cannot be removed mid-term, without valid cause, say a corruption charge or some such...when it comes to officiating presidents the Government has free run!
K Shivaram
President, ITAT Bar Association, Mumbai
"The Officiating President has certain limitations. He always is in fear- suppose he takes a bold decision and some complaint is made to the Ministry, possibly after one year, they may appoint another person as Officiating President and it may go on like this. Apart from that, this is an institution where Revenue is involved- the government is either the respondent or the petitioner- so that independence has to be there. If there is no independence, it will definitely affect the taxpayers as such."
And this is why ITAT Bar Association members are a concerned lot. Let me close by quoting from the letter that I referred to in the beginning `it appears that the government continues to exercise its control over this highly important institution by appointing only acting Presidents of the Tribunal and change them as and when it pleases. This is a very serious issue and appears to be a blatant attempt on the part of the government to subjugate and undermine the independent functioning of the great institution of the Tribunal.'
In Mumbai, Payaswini Upadhyay
Last month, on September 1st, ITAT Bar members received an unusual letter from a Bar Association Official. The letter pointed out that "for the last more than 2 years the Government has not appointed a regular and a permanent President of the Tribunal". The last 3 appointments were listed as evidence and the letter also points out that GE Veerabhadrappa was not given an extension. Last month's letter follows one written by the Mumbai ITAT Bar Association last year – listing similar concerns. And so we decided to investigate.
3rd June, 2010- Vimal Gandhi retired as President of the Income Tax Appellate Tribunal
On 4th June - RV Easwar was appointed as officiating President. He continued till his elevation as Judge of Delhi High Court in October 2011.
The next day GE Veerabhadrappa was appointed – again as officiating President. When his term ended on August 31st, he did not receive an extension. Instead he went back to being Vice President.
HP Ranina
Senior Advocate
"It is unheard of; I don't think I have come across such a thing. But obviously, this is a growing trend as you see today independent senior bureaucrats being transferred. Now this is a question of demotion- how can you make a President, cancel his Presidentship, and tell him you continue to be a Vice President as you were. And then you promote another person to the office of the President; it's just not done. This has to be taken note of very very seriously because if it's allowed to continue there is very bleak future for the judiciary in this country."
There is no official reason available for why Mr Veerabhadrappa did not receive an extension though he was due to retire in July next year. But events just before he moved out make for an alarming story
On 7th May this year, GE Veerabhadrappa, then Officiating President of the ITAT, received a letter from Diva Singh- a Judicial Member of the Kolkata Tribunal. Diva Singh wanted her one year transfer to the Delhi ITAT to be extended. Mr Veerabhadrappa declined her request. Right after, he received a letter from the Law Ministry requesting him to facilitate Diva Singh's transfer.
Mr. Veerabhadrappa replied to the Law Ministry that her long term transfer to Delhi would be a violation of the conflict rules laid out by the Supreme Court.
In a 2004 case the Supreme Court disallowed tribunal postings at a place where a member's parents or spouse practiced as an advocate.
Since Diva Singh's husband was a practicing advocate in Delhi, Mr. Veerabhadraapa noted that her continued posting to Delhi would be inappropriate.
3 months later, on 31st August, one year before his term was to end, GE Veerabhadrappa received a letter from the Law Ministry requesting him to hand over the charge of the Officiating President's post to HL Karwa. Mr Veerabhadrappa was moved to Vice President, Mumbai ITAT
(This is source-based information. We were not able to confirm it with Diva Singh, GE Veerabhadrappa or the Law Ministry)
Neither Mr Veerabhadraappa, nor Diva Singh nor the Law Ministry responded to our queries regarding this transfer incident – so we don't quite know why he didn't get an extension. But this would not have happened if he had been a permanent President, at least not without valid cause.
Right after G E Veerabhadrappa's demotion, the ITAT got a new President – H L Karwa- appointed as acting President. That makes it 2 years 4 months of Officiating Presidents
K Shivaram
President, ITAT Bar Association, Mumbai
"This is the first time in the last 73 years that the Tribunal is not having a permanent President. According to our Bar Association, the government should have appointed permanent President as soon as our former President retired on 3.6.2010. We feel that indirectly it is affecting the administration of Justice because as an officiating President, he may not be able to take certain bold decisions which otherwise he would have taken."
HP Ranina
Senior Advocate
"This concept of Officiating President is alien to the Income Tax Act. The Income Tax Act only talks about the President, Vice President and members. I do not know whether there are some service rules – whether this officiating President can be there- but even if he is an officiating President under the Service Rules, under the Income Tax law, he is a President."
YP Trivedi
Senior Advocate
Former President, ITAT
"I believe that the man will not be able to act the way he wants to act if he is not sure about his position. And it may be that you have a very ideal law minister, an ideal law secretary, and a very independent, upright and honest President- in that case, there may not be any conflict but if there is one weak link somewhere- either the law minister or the law secretary or the President is weak and amenable, then the credibility of the institution will suffer."
Here's how the Tribunal system works. The Departmental Promotion Committee comprising a senior Supreme Court judge, the incumbent President of the Tribunal and the Law Secretary selects members and the government appoints President from among them.
Once appointed, the ITAT President draws his powers from the Income Tax Act, 1961. Two of the most important powers being - the constitution of Benches in the 27 jurisdictions where the Tribunal exists and the power to determine transfer and postings of Tribunal members.
In 1996, the government, for the first time, sought to interfere with these powers. It issued a notice that the ITAT President needs to submit all proposals for transfers and postings of Members to the Ministry for approval. A public interest litigation took the matter to the Supreme Court - and the Apex Court ruled that the Central Government cannot confer upon itself this statutory power
YP Trivedi
Senior Advocate
Former President, ITAT
"SC had recognised that this is a quasi-judicial authority and it must have certain amount of independence in order that they can exercise their power fearlessly but at the same time, the SC had laid down certain rules – how appointments have to be made, how transfers have to be effected- a man should not be transferred to a place where he was himself practicing or his relatives are practicing. All those precautions SC had taken and Ajay Gandhi's case lays down some very important guiding principles. And if they are followed, the institution will serve the purpose for which it was created."
The powers that eluded the Government in 1996, are now at its disposal. Because, while permanent Presidents cannot be removed mid-term, without valid cause, say a corruption charge or some such...when it comes to officiating presidents the Government has free run!
K Shivaram
President, ITAT Bar Association, Mumbai
"The Officiating President has certain limitations. He always is in fear- suppose he takes a bold decision and some complaint is made to the Ministry, possibly after one year, they may appoint another person as Officiating President and it may go on like this. Apart from that, this is an institution where Revenue is involved- the government is either the respondent or the petitioner- so that independence has to be there. If there is no independence, it will definitely affect the taxpayers as such."
And this is why ITAT Bar Association members are a concerned lot. Let me close by quoting from the letter that I referred to in the beginning `it appears that the government continues to exercise its control over this highly important institution by appointing only acting Presidents of the Tribunal and change them as and when it pleases. This is a very serious issue and appears to be a blatant attempt on the part of the government to subjugate and undermine the independent functioning of the great institution of the Tribunal.'
In Mumbai, Payaswini Upadhyay
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