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
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