Bombay HC was upset about lack of preparation by income tax department for a case and said arguing legal matters ‘should not be taken casually’.
New Delhi: The income tax department would do well to devote more time to work instead of attending meetings and “boasting about revenue collection in Mumbai”.
This is the advice the Bombay High Court has given the taxman as part of a scathing observation about the “unpleasant state of affairs prevailing in the department”.
Hearing a tax matter, a bench of Justice S.C. Dharmadhikari and Justice B.P. Colabawalla was upset about the lack of preparation made by the department’s representatives.
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“It is time to remind the revenue (department) that arguing legal matters or proceedings before the highest court in the state should not be taken casually and lightly,” the bench said.
The case at hand, it added, was “a glaring example of the unpleasant state of affairs prevailing in the department”.
“We are informed that 30 per cent of the total revenue collected and generated in this country is from Mumbai,” the high court said, “The figure can be much more if strenuous efforts and hard work is put in.”
‘Lack of discipline and order’
The bench observed that the department’s conduct in court lacked the requisite discipline and order, and added that it needed “a dedicated legal team” to assist the court “properly and fully”.
“We have found that the revenue’s advocates are often handicapped, for neither the records are produced nor are officers competent to give instructions to these advocates… present in the court,” the judges noted.
In a damning indictment of the manner in which the department fights cases involving huge amounts, the bench said, “Very often, the lack of preparation is affecting the performance of the advocates.
“One of the reasons why the advocates are not in a position to render complete assistance to the court is because they themselves do not have full records. They do not have the assistance of the official, who can give them instructions,” the court said.
“If court cases and legal proceedings are heavily contested, then it is time the revenue officers inculcate a discipline and set their house in order,” it said.
“It is not sufficient that the administrative in-charge takes the matter in his hands. If such administrative in-charge or head of the department is not legally trained and experienced, then he will never be able to guide those part and parcel of the legal team.
“An inspector-level or junior officer cannot be expected to think on his toes and give immediate answers to the queries of the court,” it added.
Earlier this year, in order to ease the burden of tax litigation in courts, the Central Board of Direct Taxes (CBDT) had issued a circular increasing the monetary limit for appeals before tribunals, high courts and the Supreme Court. It had even decided to engage the services of retired commissioners to defend the department in court.
Censured by the top court too
Upset with the repeated delays in cases involving appeals filed by the income tax department, the Supreme Court, earlier this year, decided to make it a rule to dismiss such cases.
However, the top court clarified that if the revenue department was able to justify the delay, it could consider giving them a chance.
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During the hearing in the Supreme Court, attorney general K.K. Venugopal, who was present in court for an unrelated matter, jumped in and pointed out that almost all the matters filed by the tax department were considerably delayed. “In one day there are nine tax matters,” he said, adding that all were filed with delay.
“We have written letters to the income tax department to ensure that there are no delays. An order from the court would go a long way,” Venugopal said. “However, it is the system that needs to change,” he said.