Special Provision For Avoiding Repetitive Appeals
AS per Section 158A of the Income Tax Act, if the question of law arising in any case before the AO or the appellate authority including the Tribunal, is identical with a question of law in his own case for another assessment year, the assessee can approach the AO or the appellate authority and these authorities will dispose the case without awaiting the final decision on the question of law in the other case. The assessee shall not be entitled to raise, in relation to the relevant case, such question of law in appeal before any appellate authority in appeal before the High Court or the Supreme Court. The AO or the appellate authority will decide whether the question of law is identical and this decision is final - there is no appeal against this.
When the question of law in the other case becomes final, it will be applied to this case and the AO/appellate authority may if necessary amend the order already passed.
This is supposed to be a facility to the assessee liberating him from the burden of pursuing appeals at various stages on the same issue - for different years. If he has the same issue pending before the AO, CIT, Tribunal, High Court and Supreme Court, he can pursue the litigation only in the Supreme Court and the final decision by the Apex Court will apply to all his cases in the lower forums.
In this Budget this facility has been extended to the Department also. A new Section 158AA is proposed to be inserted in the Act with effect from the 1st day of June, 2015.
Under the new provision,
If
1. a question of law in respect of an assessee is pending in the Supreme Court against an order of the High Court in favour of the assessee - that is a departmental appeal is pending in Supreme Court.
2. Same issue is decided by a Commissioner (Appeals) and the department wants to go in appeal to the Tribunal (obviously not happy with the Appellate Commissioner following the High Court decision).
3. The assessee accepts that the question of law in this case and the one pending in the Supreme Court is identical;
Then, instead of filing an appeal before the Tribunal, the Department can file an application stating that the appeal will be filed when the decision on the question of law becomes final in the other case.
If finally the Supreme Court decides the case in favour of the Department, they can file the appeal against the order of the Commissioner (Appeals) before the Tribunal within sixty days from the date on which the order of the Supreme Court in the other case is communicated to the Commissioner.
The whole idea (and the Chapter Heading says so) seems to be to avoid repetitive appeals on the same issue before several authorities.
But this is only in relation to a particular assessee - why can't it be made applicable on issue basis? -That is if the same issue is pending in the High Court or Supreme Court in respect of any assessee, repetitive appeals should be avoided.
No appeal but Revenue is free to demand: There is a problem in Section 158A. Even though the same issue is pending in the Supreme Court and the assessee need not file repetitive appeals, the Department is not barred from adjudicating and enforcing the demand. Even if the assessee tells the AO or the appellate authority that his case is pending in the Supreme Court, the AO/Appellate Authority can pass the order and the department can enforce it, if not stayed. The Karnataka High Court in the case of Karnataka Chamber of Commerce held: The declaration under section 158-A will not provide any immunity to the assessee from payment of tax due. There is no merit in the contention that once an application under section 158-A is accepted, the Assessing Officer should refrain from demanding the tax in terms of the orders of assessment.
If my case is pending in the Supreme Court and on the same issue, if I have to pay the tax for a subsequent period, what is the benefit I get if I don't appeal?
Awareness on Section 158A: Not many people seem to be aware of this provision. In a Discussion Paper released in 2013, FICCI recommended:
Section 158A provides an option to an assessee to agree to the application of the decision of a High Court / Supreme Court relating to an earlier year to the proceedings of the subsequent years where identical question of law is involved. Section 158A can be invoked at the assessment stage and upto the ITAT level.
General awareness about this provision should be increased. Further, the Assessing Officers should identify such cases and advise the respective assessee on the option available to them. This can help in avoiding repetitive appeals.
Why are similar provisions not incorporated into the Indirect Taxes? Shouldn't similar provisions find place in the Customs, Excise and Service Tax Statutes? After all there are hundreds of cases pending on identical issues in indirect taxes pending in several courts and the Department goes on merrily issuing notices and adjudication orders for subsequent periods, adding to the quantum of litigation in the country.
If the Government is really serious about reducing the number of pending cases at various stages, they should have a relook at Section 158A of the Income Tax Act and import the revised provisions into the indirect taxes also. If they have the will, they can do it in this Finance Bill itself.
Unfortunately, there seems to be no coordination between CBEC and CBDT and the Revenue Secretary doesn't seem to be much of a bridge. More unfortunately, there is absolutely no coordination between the various wings in the CBEC. The latest amendments to the penalty provisions in Excise, Customs and Service Tax bear witness to this fact. Identical provisions are differently worded like in Customs, the notice has to be received, while in Central Excise, it is issued and in Service tax, it has to be service . (Please see our Budget article Be aware of - Notice Received in Customs, Issued in Excise and Served in ST).
If three persons working in the same Board drafting three laws cannot consult each other, what coordination can be expected from two powerful Boards? Who suffers - the Law - and ultimately the Citizens?