No withdrawing of cases on plea for ADR process: CBR

ISLAMABAD (November 22 2005): In response to applications filed by taxpayers to take up their cases through Alternative Dispute Resolution (ADR) mechanism, the Central Board of Revenue (CBR) has decided not to abandon the previous practice of pursuing these cases at the level of tribunal/courts.

In this connection, the CBR has issued instructions to all Commissioners of Income Tax (CITs) Appeals.

Official sources told Business Recorder on Monday that some corporate units had approached the CTIs Appeals for obtaining stay of legal proceedings on ground that they had referred the matter to ADR. The income tax department should not pursue cases where ADR committees are going to finalise decisions.

CBR Chairman Abdullah Yusuf observed that filing of a reference to ADR does not mean stay of appeal proceedings, and the commissioners should proceed to deal with such cases as per law. However, Member Direct Taxes should ensure that ADR cases filed by the corporate companies would be expedited for obtaining decisions without delay.

Tax officials expressed concern over the increase in the number of fresh appeals, particularly in corporate sector, during July-September (2005-06) and directed CITs Appeals to submit report highlighting reasons for this increase.

Some Commissioners of Income Tax Appeals also informed the CBR Chairman that they were not in a position to set aside any appeals cases where enquiries were involved eg verification of actual tax payment with the Data Processing Centers (DPCs). The CITs demanded appointment of special officer for speedy completion of enquiries. CBR Chairman has agreed to provide special officers for completion of this task.

Sources said that the Commissioner of Income Tax Appeals-II, Lahore, has complained to the CBR that a large number of appeals pertaining to Medium Taxpayer Unit (MTU), Lahore, were pending, but the concerned officials had not submitted relevant tax record even in a single case. MTU, Lahore has taken the plea that the tax record of cases demanded by the CIT Appeals-II is not available with it.

Commissioner of Income Tax Appeals-II, Lahore also informed CBR that a large number of 'wealth tax' cases, involving millions of rupees revenue were got time-barred due to poor management of cases by MTU, Lahore. CBR Chairman took serious notice of situation and directed income tax department to review functioning of MTU, Lahore, on the basis of these complaints.

Sources said that lawyers are relying on an order of Income Tax Appellate Tribunal Lahore. According to decision, 'assessment order' be served upon assessee within limitation period prescribed for an assessment or reassessment and the order not served within limitation period would be considered as time-barred.

The CBR has directed commissioners of income tax to file review petition before the ITAT and request Chairman Income Tax Appellate Tribunal to constitute a large bench for settlement of the issue. The CBR also directed that commissioners should seek stay against this order from the tribunal. The CBR has also issued instructions to Regional Commissioners to co-ordinate and properly contest this issue before the ITAT.

When contacted a tax practitioner claimed that the order issued by the ITAT was a legal order. The directives of CBR appear to be against the law, which has been correctly interpreted by the ITAT. It is surprising to note that the directions of CBR itself are defective because ITAT does not enjoy powers to review its own earlier decisions either through review petition or miscellaneous application. In this regard, the correct legal position is that the department should seek appeal remedy in the relevant high court having competent jurisdiction. The commissioner appeals are also relying on precedent of the ITAT for disposal of appeal cases, he added.

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