In spite of having various appellate tribunals and commissions within its establishment, the Income Tax Department has registered a more than two-fold rise in appeals in Supreme Court in cases involving crores of rupees of the exchequer.
Sources in the department and the Central Board of Direct Taxes (CBDT) attribute it to growing instances of taxmen approaching the apex court over difference in interpretation of Income Tax Act and Rules by the Income Tax Appellate Tribunal (ITAT) and the Settlement Commission.
"The department feels that the interpretation of the I-T rules and the Act by these quasi-judicial bodies is not satisfactory in many cases. Moreover, the Supreme Court is the ultimate institution, and its order is considered the law of the land and hence the department is approaching it in an increasing number of cases," a top Finance Ministry official said.
A total of 1,172 appeals were filed by the I-T department in the apex court in 2008-09 financial year, a more than 100 per cent jump than 762 such appeals during the 2007-08 fiscal.
According to official data, the number of appeals filed by the department at the ITAT has gone down to 17,831 last fiscal as compared to 20,022 appeals in 2007-08, while in the High Courts appeals have declined to 9,251 (2008-09) in comparison to 10,968 appeals (2007-08).
The government has established the ITAT at various locations in the country while the Settlement Commission benches are in Mumbai, Kolkata and Chennai with the Principal bench at Delhi along with the office of I-T Commissioners (Appeals) to adjudicate and resolve cases related to tax arrears in respective areas.
"Crores of money is locked in these cases. It is essential that an appropriate interpretation is taken so that either the revenue is accrued by the department or goes to the taxpayer in good time," the officer said.
While the department has slightly increased the number of its prosecution counsel from six to eight as compared to the 2007-08 fiscal, the number of Standing Counsel (24) has gone down from 26 (2007-08) and Special Counsel are 20 (2008-09) as compared to 37 during 2007-08.
The judicial division of the CBDT deals with matters of litigation in various High Courts pertaining to writ petitions, other litigations of Direct Taxes, filing of reference in cases of Central government offices and Public Sector Undertakings.
In case of Special Leave Petitions filed in the apex court, the department's legal wing processes an appeal right from the initial processing and examination stage up to final disposal by the court.
Further, it co-ordinates with the field formations of the department from where the genesis of such litigations arise besides closely liaising and interacting with the senior central government law functionaries like Additional Solicitor General upwards .
It also provides response to the apex court's queries, requirements, making available infrastructure support to the Ministry of Law so as to ensure speedy and timely attention to the department's matters before the apex Court.