New Delhi: In order to present the revenue side more effectively in high-value and important cases before the AAR judicial forum, CBDT has decided to stop the practice of sending junior-level Income Tax officials to these hearings and has ordered their seniors to take up the task. An order to this effect was issued recently by the Central Board of Direct Taxes, the apex policy-making body of the I-T department, to deal with cases being heard at the Authority for Advance Rulings (AAR).
The AAR is a judicial forum which has been created under the I-T Act to ascertain the tax liability of a non-resident, to plan their tax affairs in advance and to avoid long drawn and expensive litigation. "It has been brought to the notice of Board (CBDT) that many a times officers of the level of Deputy or Assistant Commissioner are being nominated for representing cases before AAR who are not able to effectively represent departmental view in complex issues.
"The quality of representation before AAR is an important aspect. Accordingly, for improving the quality of representation before AAR, it has been decided that officers below the level of Additional or Joint Commissioner should not be nominated for representation before AAR," said the CBDT order. The CBDT directive has further noted that in "important cases", these representations will be made by the Principal Commissioner or Commissioner rank officer of the department. In I-T department's hierarchy, Indian Revenue Service(IRS) officers join the service in the rank of Additional Commissioner of Income Tax (CIT) and they rise through the ranks as Deputy CIT, Additional CIT, Joint CIT, CIT and Principal CIT.
The directive adds that in cases where the CIT holding the charge of Disputes Resolution (DR) is supposed to appear for the hearing at AAR, the officer concerned should be briefed "well in advance". Officials said the decision to fine tune the litigation system in the AAR was taken after the CBDT observed that there was a laxity in following the procedures in this regard as AAR is an important judicial forum and cases worth multiple crores are being heard at this forum at present and their orders have far reaching implications when it comes to taxation.
"The new directives have been issued to ensure that officials give proper attention to the cases being litigated at the AAR and officers in the mid-senior and senior level are the best to do this as they have about 7-8 years of experience by the time they are appointed as Addl or Joint CIT," a senior I-T officer said. The order added it has been found that sometimes updated reports are not being sent to the AAR in time and henceforth such documents and dossiers should be sent at least "ten days" before an application is taken up for hearing by the AAR.
The Board has asked all field offices of the tax department in the country to ensure "strict compliance" of these directives. In the AAR, a non-resident or certain categories of residents can obtain binding rulings from the Authority on question of law or fact arising out of any transaction or proposed transactions which are relevant for the determination of their tax liability. AAR has a single bench based in Delhi.
