Grievance redressal procedure gets more restricted

Powers of Commissioner (Appeals) ARE further curtailed by restricting the power of condonation of delayed appeals to one year even for sufficient cause.

There is no specific provision to deal with the grievances of the taxpayer but these are available in the present law under rectification, appeal and revisional powers. These provisions, under the existing law, are proposed to be curtailed by the Direct Taxes Code.

Curb on assessing officer’s powers: The assessment power stands restricted in view of the fact that the Joint Commissioner can suo motu call for a file and issue such directions “as he thinks fit for the guidance of the assessing officer”.

The Joint Commissioner may also seek directions of the Commissioner. Though it is provided that an opportunity will be given, if the Commissioner or Joint Commissioners issue any adverse instruction, there is no provision by which the assessee is made aware of the fact that the matter has gone to the Joint Commissioner or the Commissioner.

Power to seek assistance of Joint Commissioners removed: The Joint Commissioner has power to entertain the pre-assessment application from an assessee for interference against any proposed action of the assessing officer under the present law in Sec. 144A. Now the corresponding Sec. 164 would limit such interference only at the instance of the assessing officer himself.

Lesser powers for CIT(A): Powers of Commissioner (Appeals), which was already restricted by removing the power to set aside an assessment, are now further curtailed by restricting the power of condonation of delayed appeals to one year even for sufficient cause. In the absence of powers similar to Sec. 264 for revision petition to the administrative Commissioner under the Code, the limitation of power of condonation in appeal may well mean that in genuine cases, where the assessee could not file an appeal within a year, even frivolous additions made ex-parte would lead to coercive recovery or write off as irrecoverable demand.

Revision petitions will be shut out: The Commissioner of Income-tax (Administrative) can now entertain revision petition from an assessee for relief under Sec. 264.

Even delayed application for relief could be entertained by him after condoning the delay. There is no corresponding provision in the Direct Taxes Code, 2009, but the revisional power for orders prejudicial to revenue under Sec. 263 alone will continue to be available for revenue, while the corresponding relief now available under Sec. 264 is conspicuous by its absence in the Code.

Tribunal’s powers are also to be clipped: The power of the Tribunal to stay demand has already been restricted. Power to entertain a delayed appeal is also proposed to be restricted to one year under Sec. 188 of the Code as for the first appellate authority.

Genuineness of the reasons for delay could make no difference with no alternative remedy in such cases as in the case of appeal dismissed by the Commissioner (Appeals) for delay. A time limit of two years for disposal of appeal by the Tribunal is also proposed in the Code.

Rectification will be more restrictive: The powers of rectification under Sec. 154 are also restricted in the corresponding Sec. 167 of the Code. Time limit is to be curtailed from four to two years, but the manner in which the time limit will be reckoned will be prescribed by the Board.

The scope is, however, widened to cover a mistake discovered in view of any direction or finding for any other year or in any other cases, a situation now recognised only under Sec. 150 of the Act. The period of six months for disposal of rectification petition as now available is repeated in the Code. But the view that where no order is passed within the time limit, application for rectification will be treated as allowed is sought to be neutralised by Sec. 167(6) of the Code specifically providing that in all such cases, such petition for rectification will be treated as “rejected”. It is suggested in Paragraph 21.6 of the Discussion Paper that the assessee will be entitled to file an appeal against such deemed rejection. But then, Sec. 183 of the Code provides for appeal only against an order passed by an income-tax authority with no provision for such an appeal contemplated in the Discussion Paper.

Doors of CBDT shut for genuine grievances: The Central Board of Direct Taxes (CBDT) under the present law under Sec. 119 is vested with powers to remove grievances of taxpayers arising out of their genuine hardship in the administration of the tax laws. The corresponding Sec. 133 omits this power from the Board.

No reference to the High Court: There is no reference to the High Court in the Code, apparently in view of the substitution of National Tax Tribunal for the High Court.

Supreme Court will be tolerated: Sec. 193 of the Code referring to the appeals to the Supreme Court from an order of National Tax Tribunal seeks to confer on the Supreme Court the benefit of application of the provisions of Code of Civil Procedure, 1908, as they apply in cases of appeals from the decrees of High Courts. This is a provision too presumptuous in view of the constitutional role of the Supreme Court. Such a provision makes no sense at all. The need for such a provision is not explained in the Discussion Paper but there is a comment in Paragraph 21.5 in the Discussion Paper conceding that the Code does not affect the writ powers of the High Court or the powers of the Supreme Court. Less said about such comments the better.


Late N. A. Palkhiwala said that the path of the taxpayer is hard and tax laws do not make it any less easier. It often makes it harder. The Code attempts to make it “hardest” by restricting or shutting out every conceivable redressal provision now available under the present law. Such a negative approach in the Code is incidentally not confined only to this aspect of redressal of taxpayer grievance.


Recommended for you