Lok Sabha Question No. 569 (UNSTARRED), answered on 2016-02-26
Subject: Pending Income Tax Cases
Ministry: FINANCE
Asked by: ASHOK SHANKARRAO CHAVAN, GAJANAN CHANDRAKANT KIRTIKAR, SUDHEER GUPTA, RAMDAS CHANDRABHANJI TADAS, KONDA VISHWESHWAR REDDY, KUNWAR HARIBANSH SINGH, JAYAKUMAR JAYAVARDHAN, VIJAY KUMAR S.R., T.G. VENKATESH BABU

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK    SABHA

## UNSTARRED QUESTION NO. 569

TO BE ANSWERED ON FRIDAY, THE 26 TH    FEBRUARY, 2016 7 TH  Phalguna, 1937 (SAKA)

## PENDING INCOME TAX CASES

569.   SHRI ASHOK SHANKARRAO CHAVAN: SHRI GAJANAN KIRTIKAR: SHRI SUDHEER GUPTA:SHRI RAMDAS C. TADAS: SHRI KONDA VISHWESHWAR REDDY: SHRI BIDYUT BARAN MAHATO: KUNWAR HARIBANSH SINGH: DR. J. JAYAVARDHAN: SHRI S.R. VIJAYAKUMAR: SHRI VENKATESH BABU T.G.:

Will the Minister of FINANCE be pleased to state:

- (a) the total amounts of various tax disputes under various Central Taxes along with the number of pending cases in various courts, case/court-wise;
- (b) whether the Government has taken steps to reduce the number of pending tax cases;
- (c) if so, the details thereof along with the time by which these pending cases are likely to be disposed;
- (d)  whether  the  Government  has  raised  the  monetary  limit  for  filing  appeals  in  Appellate Tribunal/High Court; and
- (e) if so, the details thereof along with the other steps taken/being taken by the Government to minimize litigation on tax matters?

## ANSWER

## MINISTRY OF STATE IN THE MINISTRY OF FINANCE (JAYANT SINHA)

- (a) The details of pending cases before various courts are as follows:

## DIRECT TAXES

| Pendency before various courts as on 30.09.2015   | Pendency before various courts as on 30.09.2015   | Pendency before various courts as on 30.09.2015   |
|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------|
| Forum                                             | Number of Cases                                   | Amount(In Crores)                                 |
| Commissioners of Income Tax(Appeal)*              | 2,68,726                                          | 5,57,040.03                                       |
| Income Tax Appellate Tribunals                    | 26,852                                            | 1,61,990.03                                       |
| High Courts                                       | 33,931                                            | 1,63,080.58                                       |
| Supreme Court                                     | 5,842                                             | 4,279.05                                          |
| * as on 31.12.2015                                | * as on 31.12.2015                                | * as on 31.12.2015                                |

## INDIRECT TAXES

| Forum                |   Number of cases |   Amount (in Crores) |
|----------------------|-------------------|----------------------|
| CESTAT               |              3004 |              12200.5 |
| Commissioner(Appeal) |             14964 |              28644.2 |
| High Court           |             77450 |             161007   |
| Supreme Court        |             40967 |              10031.8 |

- (b) & (c) Yes Madam. The Government has taken number of measures to reduce tax litigation. Details are as follows:-

## Direct Taxes:

- (i) The Department monitors the monthly disposal of appeals at the level  of  CsIT  (A)  by setting targets for disposal and monitoring the same by Zonal Members, CBDT.
- (ii) Additional  119  posts  of CsIT have  been  created  in  the  cadre-restructuring to  expedite disposal.
- (iii) Monitoring the disposal at other forums like ITAT/HC/SC is beyond the purview of CBDT. However,  Standing  Counsel  and  Departmental  Representatives  are  instructed  not  to  take adjournments.

## Indirect Taxes:

- (i)      Simplification of tax laws.
- (ii)    Clarifying the complex legal issues from the Board without resorting to litigation.
- (iii)    Settlement of the disputes through Alternate Dispute resolution mechanism of Settlement Commission & Authority for advanced ruling.
- (iv)    Scheme of mandatory pre-deposit has been introduced in appeal before the Commissioner (Appeal) & CESTAT, so that the time spent by these authorities in hearing and deciding the stay applications is saved and devoted for final disposal of the appeals.
- (v)     Additional Benches of the CESTAT are being created so that the appeals before the tribunal can be disposed expeditiously.
- (vi) As far as Central Sales Tax Act, 1956 is concerned, though this Act is administered at Central level, is executed by concerned State Governments and therefore information in this regard is not maintained by Central Government.
- (d) and (e ) :Yes Madam.  The Government has raised the monetary limit for filing the appeal in the Appellate Tribunal and Courts as per details below:-

## Direct Taxes:

The limit for filing appeals has been increased from Rs.4 lakhs to Rs.10 lakhs for ITAT and from Rs.10 lakhs to Rs.20 lakhs for High Court vide Circular No.21 dated 10.12.2015.

## Indirect Taxes:

- (i) The details of threshold limits prescribed for filing the appeals to various fora is as indicated below:

| Forum         |   Threshold limit prescribed Rs(in Lakh) |
|---------------|------------------------------------------|
| Supreme Court |                                       25 |
| High Court    |                                       15 |
| CESTAT        |                                       10 |

## Other steps to minimize tax litigation include:-

## Direct Taxes:

- (i)  Section 255(3) of the Act was amended by the Finance Act, 2015, to provide for increase in limit of single member bench of ITAT to 15 lakhs.
- (ii)  Section 158AA has been proposed to be introduced by the Finance Bill, 2015 to avoid filing appeals before the ITAT on issues pending before the Supreme Court.
- (iii)  An O.M. was issued on 06.11.2014 which impressed upon the supervisory officers to monitor the work of AOs to ensure that high pitched assessments are not made without proper basis. Further, CsIT(A) have been directed to call for remand reports on specific points only.  These administrative directions ensure that the genesis of litigation, that is the assessment order and the appellate order, are based on proper facts and law.
- (iv)    The  decision to file  against ITAT orders before High Courts is taken by a panel of Chief Commissioners as against one Chief Commissioner earlier.  This step has been taken to ensure that the case is properly vetted by more than one Senior Officer before deciding on agitating the matter.
- (v)  Alternate Dispute Resolution mechanisms in form of Dispute Resolution Panels, Advance Pricing Agreements, Authority of Advance Rulings, Income tax Settlement Commission, etc. are in  place  to  ensure  that  litigation  is  minimised  and  that  judicial  system  is  not  un-necessarily burdened.  The scope of cases for which settlement application can be made has been enlarged. Scope of Authority for Advanced Rulings has been increased so as to enable the resident tax payers  to  obtain  an  advance  rulings  in  respect  of  their  income  tax  liability  above  a  defined threshold.
- (vi)    The Supreme Court has constituted a Special Bench with effect from 09.03.2015 to deal exclusively with tax matters.  All Pr. Chief Commissioners of Income Tax have been instructed to ensure complete compliance with the requirements of the Court.
- (vii)  National Judicial Reference System (NJRS) has been launched.  It is a web based facility which also reflects the status of pending appeals, the issues/sections involved, etc.  This database is expected to enable the field officers in identification of cases involving similar issues, bunching

of such cases and pursuing the same for their early resolution. (viii)  With a view to improve quality of representation before Judicial forums, new guidelines are under consideration for engagement of counsels for the department.  The same is in process of inter-ministerial consultation. (ix)    Directions  issued on 10.12.2015 for formation of Collegium of 2 Chief Commissioners to consider withdrawal of suitable cases pending in the High Courts above monetary limit. (x)  The Central Technical Committee has issued 7 circulars on Settled Issues with directions not

- to file appeals on the issue and to withdraw pending appeals on these issues.

## Indirect Taxes:

(i) The  field  formations  have  been  directed  to  withdraw  the  pending  appeals  filed  by  the department, from various forums if the amount involved in them is below the limits as stated in para above and the appeals do not involve a substantial question of law, issue of classification, valuation or refund.

(ii)     The field formations have also been directed to get the matters pending at various forum expeditiously settled in cases where the issue involved has been decided by the Supreme Court or High Court.

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