The Supreme Court has expressed concern over the Income Tax (I-T) department's lethargy in filing appeals in tax matters, causing huge revenue loss to the government. It said the Union finance and law ministries should take immediate measures to plug the loopholes in the system.
The department’s failure to act despite the court's repeated reminders prompted the bench, headed by chief justice of India SH Kapadia, to draw the finance and law ministers' attention to the “peculiar phenomenon” of filing delayed appeals. The matter was also brought to the Attorney General's notice, the court said.
Wondering why appeals were being filed after the 90-day statutory limitation period, the court said, "In cases where huge revenue or tax demand from the department is involved, there is invariably an inordinate delay in filing appeals before the high court and this court. We do not know the reason why such inordinate delays take place only in matters of stakes. This aspect needs to be looked into.”
The court's order came on the appeal of IT International Taxation, Mumbai, against Citibank NA — stating that the recovery of Rs. 90 crore was delayed by 694 days. The appeal was against the Bombay High Court order. The SC observed that the revenue department had moved the court against the tax tribunal's order after 450 days.
Seeking a detailed affidavit on the action taken against errant officials in the Citibank case, the bench directed the registry to send its order, highlighting the concern to the two ministers. The court would take up the matter on September 21.
Recently, Union minister of state for finance SS Palanimanickam had revealed that 5,806 cases involving Rs. 2,707 crore in direct tax demand were locked in litigation before the apex court, and another 29,650 cases with a tax demand of Rs. 36,340 crore were pending in high courts.
He also said 2,855 disputes over indirect taxes, involving Rs. 8,130 crore, were pending in the apex court, and 14,626 cases amounting to Rs. 11,459 crore were pending in various high courts.