TIOL-DDT 509 · the untouched capture
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<html> <head> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <title>Taxindiaonline's DDT 402</title> </head> <body > <p align="justify"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 509</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br> 11.12.2006<br> Monday</b></font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">The Income Tax Ombudsman Guidelines 2006</font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not happy with the working of the Income Tax department? Now there is an ombudsman to wipe your tears and maybe even grant a token compensation of one thousand rupees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has notified <b>The Income Tax Ombudsman Guidelines 2006 </b>with the objective of enabling the resolution of complaints relating to public grievances against the Income Tax Department and to facilitate the satisfaction or settlement of such complaints. The scheme is said to be in operation from 1.1.2006, but for some strange reason, the CBDT kept it a top secret all these days. It was only on 6-11-2006 that CBDT announced the scheme. <strong>(</strong>Please see<u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4513"> TIOL-DDT 488 10 11 2006</a></u><b><u>) </u></b>and now the scheme is officially announced effective from 1.1.2006! Or did they mean 1.1.2007? It was only on 6<sup>th</sup> November 2006 that the JS in the Revenue department had called for nominations for the post of ombudsmen and the last date for submitting the nominations was 27.11.2006. Have they already made the appointments with effect from 1.1.2006?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ombudsmen will be located at New Delhi, Mumbai, Chennai, Kolkata, Bangalore>, Hyderabad>, Ahmedabad, Pune, Kanpur, Chandigarh, Bhopal and Kochi.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ombudsman will have the powers to </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) receive complaints from taxpayers</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) consider such complaints and facilitate their satisfaction or settlement by agreement, through conciliation and mediation between the Income Tax Department and the aggrieved parties or by passing an ‘award’ in accordance with the Guidelines;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) require the Income Tax Authority complained against or any other related Income Tax Authority to provide any information or furnish certified copies of any document relating to the subject mailer of the complaint which is or is alleged to be in its possession; provided that in the event of failure of such authority to comply with the requisition without any sufficient cause, the Ombudsman may, if he deems fit, draw the inference that the information, if provided or copies if furnished, would be unfavourable to the concerned Income Tax Authority;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) suggest remedial measures for redressal of grievances; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) report his findings to the Secretary, Department of Revenue, GOI and the Chairman CBDT for appropriate action against erring officials;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His duties:-</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) to exercise general powers of superintendence and control over his office and be responsible for the conduct of business in his office;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) to maintain confidentiality of any information or document coming into his knowledge or possession in the course of discharging his duties and not disclose such information or document to any person except with the consent of the person furnishing such information or document; provided that nothing in this clause shall prevent the Ombudsman from disclosing information or documents furnished by a party in a complaint to the other party or parties, to the extent considered by him to be reasonably required to comply with the principles of natural justice and fair play in the proceedings;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) to protect individual taxpayer’s rights and reduce taxpayers’ burden; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) to identify issues that increase the compliance burden or create problems for taxpayers, and to bring those issues to the attention of the CBDT and the Ministry of Finance;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) to send a monthly report to the Chairman CBDT and Secretary, Department of Revenue in the Ministry of Finance recommending appropriate action. The report shall specially highlight cases where action needs to be taken against erring Income Tax authorities for their failure to redress the grievance. The report will be accompanied with primary evidence needed to initiate action against the delinquent persons;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) to furnish a report every year containing a general review of activities of the office of the Ombudsman during the preceding financial year to the Secretary, Department of Revenue, Ministry of Finance and the Chairman, CBDT along with such other information as may be considered necessary by him. In the annual report, the Ombudsman, on the basis of grievances handled by him, will review the quality of the working of the Income-tax Department and make recommendations to improve the tax administration; and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) to compile a list of ‘awards’ passed by it between April and March of each financial year in respect of every Income Tax Authority Complained Against, by name, and report it to the controlling Chief Commissioners of the officers concerned and the Chairman, Central Board of Direct Taxes before the end of April so that this information can be reflected in the Annual Confidential Reports of the officers concerned.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A complaint can be made to the Ombudsman on </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) delay in issue of refunds beyond time limits prescribed by law or under the relevant instructions issued from time to time by the Central Board of Direct Taxes;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) sending of envelopes without refund vouchers in cases of refund;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) non adherence to the principle of ‘First Come First Served’ in sending refunds;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) non acknowledgement of letters or documents sent to the department;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) non up-dating of demand and other registers leading to harassment of assessees;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) lack of transparency in identifying cases for scrutiny and non communication of reasons for selecting the case for scrutiny;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) delay in disposing cases of interest waiver;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) delay in disposal of rectification applications;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) delay in giving effect to the appellate orders;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(j) delay in release of seized books of account and assets, after the proceedings under the Income-tax Act in respect of the years for which the books of account or other documents are relevant are completed;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(k) delay in allotment of permanent account number (PAN);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(l) non credit of tax paid, including tax deducted at source;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(m) non adherence to prescribed working hours by Income Tax officials;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(n) unwarranted rude behaviour of Income Tax officials with assessees:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(o) any other matter relating to violation of the administrative instructions and circulars issued by the Central Board of Direct Taxes in relation to Income-tax administration.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The problem is sorted out by a settlement between the parties and if no settlement is possible, the Ombudsman will grant an award</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The ‘award’</b> passed shall be a speaking order consisting of the following components:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Directions to the concerned Income Tax Authority such as performance of its obligations like expediting delayed matters, giving reasons for decisions and issuing apology to complainants etc., except a direction affecting the quantum of tax assessment or imposition of penalties under the Income Tax Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) A token compensation amount not exceeding Rs. 1000/- (Rs.One Thousand only) for the loss suffered by the complainant.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Designation of the Income Tax officer to whom the letter of acceptance of the award is to be communicated </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/ombudsman.htm">The Income Tax Ombudsman Guidelines 2006</a></u></font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Release the seized cash – Board directs the field<strong>.</strong></font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now that the Ombudsman is in place, the CBDT has realized that the department is sitting on a neat pile of seized cash which is not returned even after the case is settled on flimsy grounds like pending appeals. Now the CBDT has instructed that </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Where an application is made for release of seized cash and the nature and acquisition of such cash is explained to the satisfaction of the Assessing Officer, the seized cash should be released after adjustment of any existing liability. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Where seized cash or part thereof was not released, the amount lying in PD account should be released within one month of passing the (search and seizure) assessment.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Where assessee is in appeal against the assessment order and the penalty has not been imposed up to the date of the order of the CIT(Appeals), the position regarding the amount lying in the PD Account should be reviewed at the time of giving effect to the order of the CIT(Appeals). Only such amount thereof should be retained which is sufficient to meet the expected amount of penalty imposable on the assessment as revised in appeal effect. The balance should be released within one month from the order, after recovery of any existing demand at that time, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) The amount, which was retained after the assessment order or the order of the CIT(Appeals) for the amount of penalty imposable, should be released within one month from passing of the penalty order, after recovery of demand arising out of the penalty order and any other demand existing at that time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Where assessment was made before issue of this Instruction and cash in PD account has not yet been dealt with or partly dealt with, all the Assessing Officers should examine such cases and amount lying in the PD Account be released within one month from the date of this Instruction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has informed the field that any disobedience of the instructions will be viewed seriously by the Board. The Board also wants all Commissioners to ensure that</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. no amount in their PD Accounts is retained merely because of the reason that Department is in appeal before the ITAT/HC/SC.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. the amount to be retained on account of expected penalty demand should not exceed the amount of penalty imposable on the basis of assessment order</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See also our Breaking News.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2006/instruct0611.htm">CBDT INSTRUCTION NO. 11/2006., Dated: December 1, 2006</a></u></font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Can an opportunity to commit a crime be used as a claim for immunity?</font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To DDT’s remarks on investigators beating up persons an angry officer reacted as follows</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Officer of an investigative agency allegedly beats up a person summoned by his office. Generally it would be a group who lands their fist and legs in varied angles and proportions . The so called 'timid ones' will be mute spectators. Presumably a compliant is filed. The complaint will be filed against all (even the mute spectators). So far, DDT is correct. When a compliant is filed, Department will approach the panel counsel only. Why not!! No officer is going to accept that he thrashed the complainant. So, it will always be a case where government servants should be protected against "vexatious and frivolous prosecution" [the complaint will remain in such capacity unless the Court decides the merits thereof] against acts discharged by them in their official capacities [ investigation is in their official capacity and the compliant will be one borne out of it ]. In such cases, does the departmental officer foot the bill- NO!!! Even otherwise, you could have parties who foist accusations to put the pressure on the Departmental guys (It is a possibility !!! ) What I cannot gather is how is the State against the departmental officers in such cases ? The case is fought by the panel counsel appointed by the Department, he continues to sing the song and use whatever skills he has to protect the officers (rightly or wrongly - obviously the officers will maintain their stand that nothing untoward happened). So, what is this about fighting it out in the individual capacity? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That brings us to the next question posed - Is it worth taking such huge risks for the fun of beating up people? Rest assured, there is no fun in beating up people. No body has it, maybe if you leave out a few sadistic characters (?) But this at least ensures that the investigating agency has a statement which brings out facts of the case, which in other case would never have come out. DDT refers it as a hobby to beat up people to extract nonsensical statements. Ask those who have worked in a preventive setup/ investigative organisation and probably read some of the statements which gives in-depth details of how the fraud was committed -- does DDT want to state that such details were cooked up only because the accused will retract it ? It is a different ball game, DDT . Yes the unsolicited advice is fine -Rather a must read for every investigator. At least one thing is certain, as on date, no one even within the organisation is going to take you near if such a complaint crops up. All out to save their own skin so the officer better save his. But coming to the point, it is not nonsensical statement; many real facts are brought to light. Yes, it is another story that corroborative evidence to such facts do not come up and courtesy to so many of the so called fixed , oops sorry, settled case laws , Department do not have any chance in many such cases. Why does DDT not suggest that the investigative agency should not book cases at all. Just sit , wait, watch and hope that parties will come up and accept that they are engaged in evasion of duty. There is always a story on the other side of the fence. DDT knows that - only probably they will not make good reading for the Trade.</font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Internet telephone – who pays Service Tax?</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Want to make a call to the US? Go to any net to phone service and it costs as little as Rs.2/ per minute and if you have a net phone at home it is as cheap as a rupee a minute. With skype, it is even free. But does anybody pay Service Tax on this? With Geography becoming irrelevant in a net world, new problems in taxations are to be addressed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Meanwhile the Internet Service Providers’ Association of India (ISPAI) has asked the government to exempt broadband services from levy of service tax for the next five years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India now has just under 2 million broadband connections. We have also failed to meet the targets set by the Broadband Policy, which had envisaged 3 million high-speed internet connections by 2005. And we are nowhere near the target of 10 million broadband connections by 2007. So the association wants exemption from Service Tax and Income Tax. They have also suggested</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Rs 6,000 per annum allowance to employees for broadband services access at home.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Allow deduction of tax for expenditure for broadband</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. nil duty for imports by ISPs</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Sales tax exemption for e-commerce</font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Karunanidhi against regional excise exemptions and wants Service Tax for state</font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An "artificial and unproductive shift of capital" had occurred owing to the Centre exempting from excise duty goods produced in certain States, the Tamil Nadu Chief Minister Karunanidhi said at the National Development Council meeting.. He called for steps to correct these "distortions" immediately and appealed to the States to collectively evolve a mechanism to "prevent unhealthy tax competition through exemptions, which harms all of us by reducing the resource base available to help the poor and weaker sections."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He also wanted collection of Service Tax to be transferred to the States though the proceeds could be shared with the Centre.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Karunanidhi is an important member of the ruling alliance and what he says has to be heard.</font></p> <p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Silver for Anju Bobby George</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs officer Anju Bobby George, could not grab the gold but came up with a respectable silver medal in the women's long jump event at the Asian Games on Sunday.<br> <br> <font color="#FF6666">Until tomorrow with more DDT </font></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p> </body> </html>