Budget 2022: Litigation management Policy

Budget 2022: Litigation management Policy

A new litigation management system will be introduced on the tax front to reduce repetitive appeals in tax cases.

Finance minister Nirmala Sitharaman in her budget announcement, has said that the government will create a litigation management system "to avoid repetitive appeals by the department."

Section 158AA of the Act provides that where the Commissioner or Principal Commissioner believes that any question of law arising in the case of an assessee (relevant case) is identical with a question of law arising in his case for another assessment year (other cases) which is pending in appeal before the Supreme Court against an order of High Court which was in favour of assessee, he may direct the Assessing Officer to make an application to the Appellate Tribunal stating that an appeal on the question of law in the relevant case may be filed when the decision on the question of the law becomes final in the other case, subject to the acceptance of the same by the assessee.

2. If such a principle could be applied to cases where a question of law is common and where a decision of the jurisdictional High Court on the same question of law is available, the filing of appeal in such cases can be avoided to reduce the amount of litigation.

3. Therefore, to provide a procedure when an appeal by revenue is pending on an identical question of law, it is proposed to insert a new section 158AB in the Act, to provide that where the collegium is of the opinion that any question of law arising in the case of an assessee for any assessment year (“relevant case”) is identical with a question of law already raised in his case or in the case of any other assessee for an assessment year, which is pending before the jurisdictional High Court under section 260A or the Supreme Court in an appeal under section 261 or in a special leave petition under article 136 of the Constitution, against the order of the Appellate Tribunal or the jurisdictional High Court, as the case may be, in favour of such assessee (“other case”), it may, decide and intimate the Commissioner or Principal Commissioner not to file any appeal, at this stage, to the Appellate Tribunal under sub-section (2) of section 253 or to the High Court under sub-section (2) of section 260A against the order of the Commissioner (appeals) or the Appellate Tribunal, as the case may be.

4. Further, the Commissioner or Principal Commissioner shall, on receipt of a communication from the collegium, direct the Assessing Officer to make an application to the Appellate Tribunal or jurisdictional High Court, as the case may be, in the prescribed form within sixty days from the date of receipt of the order of the Commissioner (Appeals) or within one hundred and twenty days from the date of receipt of the order of the Appellate Tribunal, as the case may be, stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of the law becomes final in the other case. The Commissioner or Principal Commissioner shall direct the Assessing Officer to make such an application only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case. In case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed in accordance with the provisions contained in sub-section (2) of section 253 or sub-section (2) of section 260A.

5. Furthermore, where the order of the Commissioner (Appeals) or the order of the Appellate Tribunal, as the case may be, in the relevant case is not in conformity with the final decision on the question of law in the other case as and when such order is received, the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal or the jurisdictional High Court, as the case may be, against such order.

6. It is also proposed that for the proposed section, “collegium” shall comprise of two or more Chief Commissioners or Principal Commissioners or Commissioners of Income-tax, as specified by the Board in this regard.

7. To illustrate the point, it may be supposed that a question of law (Q1)A1 has arisen in the case of an assessee (A1), and the A1 has received a favourable decision on Q1A1 from the Commissioner (Appeals). Further, in the case of another assessee (A2), where the Department’s appeal on the identical question of law (Q1) A2 is pending before the jurisdictional High Court or the Supreme Court and the collegium believes that Q1A1 and Q1A2 are similar questions of law. Then in this situation, provisions of proposed section 158AB can be invoked by Revenue to defer filing of appeal for the decision on Q1A1 to the higher appellate authority in ITAT till a decision on Q1A2 is communicated to Assessing Officer having jurisdiction over the assessee, A1. Such a decision on deferment will be subject to acceptance by assessee A1 that question of law in his case Q1A1 is identical to Q1A2 in the case of assessee A2.

8. With the introduction of section 158AB, a sunset clause is proposed to be inserted in sub-section (1) of section 158AA to provide that no direction shall be given under the said sub-section on or after 1st April 2022. This amendment will take effect from 1st April 2022.

Created & Posted by Pooja

Income Tax Expert at TAXAJ

 

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/BusinessTrademark & Brand RegistrationDigital MarketingE-Stamp Paper OnlineClosure of BusinessLegal ServicesPayroll Services, etc. For any further queries related to this or anything else visit TAXAJ

 

Watch all the Informational Videos here: YouTube Channel

 

TAXAJ Corporate Services LLP

Address: 1/11, 1st Floor, Sulahkul Vihar, Old Palam Road, Dwarka, Delhi-110078

Contact: 8961228919 ; 8802812345 | E-Mail: connect@taxaj.com

 


    • Related Articles

    • Budget 2022: Key Amendments in Taxation

      The Finance Minister presented the Budget 2022 speech today. There were no changes in the individual taxpayer’s tax slab rates, but the finance minister provided new taxation rules for the income generated from virtual digital assets. Let’s look at ...
    • Budget 2022: Capping of LTCG surcharge at 15%

      Though the Financial Services Sector was looking at significant tax incentives and deductions to be announced in the Budget 2022, the Finance Minister has managed to strike a balance and refrained from making significant changes or announcements ...
    • Budget 2022: Taxation of Virtual Digital Assets

      In line with the pre-budget expectation, Finance Minister Nirmala Sitharaman has proposed a taxation scheme for virtual digital assets. The Budget 2022 has proposed sweeping changes regarding the taxation of crypto-currency, non-fungible tokens ...
    • Budget 2022 bars set off of losses against Undisclosed Income

      Set off of a loss in search cases – Amendment in the provisions of section 79A of the Income Tax Act, 1961 Chapter VI of the Act deals with aggregation of income and set off or carry forward of loss. In Sections 70-80 of the Act, there are specific ...
    • What is Income Tax E-Assessment Scheme?

      The Central Government introduced the Faceless Assessment Scheme to provide greater transparency, efficiency and accountability in Income Tax assessments. All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are ...