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The Supreme Court Monday asked the government to streamline the Income Tax (I-T) Department’s working to check delays in challenging adverse verdicts related to tax demand orders.

An apex court bench of Chief Justice S.H. Kapadia and Justice A.K. Patnaik said that the government should also put in place a monitoring mechanism so that streamlined apparatus did not go onto inertia.

The court’s observation came during a hearing on a case involving the Citi Bank N.A. during which the I-T department claimed that the delay in filing an appeal was not “intentional or deliberate”.

The tax authorities said they first filed an appeal before the Bombay High Court and later before the apex court.

The court was examining the question why there were inordinate delays in moving higher courts against adverse orders related to the department’s tax demands involving high stakes.

Appearing for the government, Additional Solicitor General Mohan Prasaran told the court that he had apprised the finance minister and the central board of direct taxes (CBDT) chief about the concerns of the court.

He said he was scheduled to hold a meeting with the officials Thursday to take stock of the situation and fix responsibility.

The affidavit filed by the Income Tax department said that the delay in filing an appeal in the Citi Bank tax case was “neither intentional nor deliberate but is on account of the departmental, administrative procedures involved in the filing of special leave petition”.

“Unlike the private litigants, matters relating to the government are required to be considered at various levels and only then a decision can be taken to file the special leave Petition,” the affidavit said.

“It is reiterated that the petitioner being a government department had to follow several formalities and strict procedure exchanging various hands and for that reason an unavoidable delay was caused,” he said.

The apex court Sep 14 said: “In large number of cases, we find a peculiar phenomenon. In cases, where huge revenue/demand from the department is involved, invariably, there is inordinate delay in filing appeals before the high court under Section 260A of the Income Tax Act, 1961, and in filing special leave petitions before this court.”

“We do not know the reason why such inordinate delays take place only in matters of high stakes. This aspect needs to be looked into,” the court said.

The court directed that a copy of its order be sent to “the finance minister and law minister for doing the needful at the departmental level so that such cases of revenue leakages do not recur”.

The court direction came after it found that the affidavit in the Citi Bank case filed by the Income Tax department was not satisfactory. The court noted that the “amount involved in this matter is approximately Rs.90 crore”.

According to government figures, the quantum of tax demands locked in litigation in the country before the apex court and the high courts is to the tune of Rs.58,636 crore.

On the direct tax side, 5,860 cases involving a tax demand worth Rs.2,707 crore were pending in Supreme Court. Another 29,650 cases with a demand of Rs.36,340 crore were pending in the high courts.

As for the indirect tax, 2,855 cases involving Rs.8,130 crore were pending in the Supreme Court and 14,626 cases related to to Rs.11,459 crore were lying in the different high courts.


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