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Bombay HC sets aside CBDTs reward policy for income tax officials
April, 24th 2019

The Bombay High Court (HC) has directed the Central Board of Direct Taxes (CBDT) to put a halt on its policy of rewarding Commissioner Income Tax (Appeals) to enhance assessments and levy penalty.

The petitioners, Chamber of Tax Consultants, had approached the court challenging the CBDT’s direction in Central Action Plan of offering incentives to CIT(A). It provided for appeals to be disposed of by the Appellate Commissioner in an expeditious manner and had targets and norms to be achieved within certain time. It gave additional credits of two units for each quality order passed. Trade associations too had written to the Finance Ministry seeking relief.

Justice Sarang V Kotwal and Justice Akil Kureshi said, “Prima facie, we feel that it may be impermissible for the CBDT to prioritise the disposal of the appeals and to set the goals for disposal of the certain number of such appeals by the Appellate Commissioner. From the action plan, it is not clear as to the utility of the norms set which the CIT(A) has to achieve. If the purpose of the setting of norms is to evaluate the performance of the CIT(A) there would be all the more reason why the above-quoted portion of the action plan be reconsidered by the CBDT.”

Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP said, “The judgment has come as a relief and is on expected lines. The CBDT policy had attracted a lot of criticism. Such incentives are impermissible and interfere with the CIT(A) quasi- judicial powers. Moreover such policies send out a very wrong signal to the taxpayers.”

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