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TMI Blog2019 (4) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... dertone of giving priority to the issues which concern the revenue more than the assessees. What the CBDT has done is to lay down broad guidelines for disposal of Appeals category-wise. There is neither firm directives that certain class or kinds of Appeals must be decided before a particular date, nor there is any negative implication of a particular Commissioner (Appeals) not being able to do so. The guidelines of the CBDT in this respect therefore must be seen as directory and not mandatory. Incentive for quality orders - The term quality cases is explained as those including cases where (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCID, and (c) penalty under section 271(1) has been levied by the CIT (A) - HELD THAT:- All these contingencies necessarily point to circumstances where the order passed by the Commissioner (Appeals) is in favour of the revenue. For example this policy refers to the enhancement made by the Commissioner or a case where the Commissioner has levied penalty under section 271(1) of the Act. This necessarily refers to enlargement of the assessee's liability before the Commissioner as compared to what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WITH PUBLIC INTEREST LITIGATION NO.144 OF 2018 - - - Dated:- 11-4-2019 - AKIL KURESHI And SARANG V. KOTWAL, JJ. Mr. S. E. Dastur, Senior Advocate a/w Mr. Vipul Joshi, Mr. Harsh Kothari, Mr. Abhishek Padwalkar Mr. Dharan V. Gandhi, Ms. Ritika Agarwal a/w Ms. Deepti Jethva for Petitioners. Mr. Anil Singh, ASG, a/w Mr. Sham V. Walve for Respondent No.1, 2. ORDER P.C. : 1. Heard learned Counsel for the parties for final disposal of the Petitions. 2. The grievances of the Writ Petitioners and the Public Interest Litigation Petitioners substantially overlap. We may record brief facts. The Writ Petition is filed by the Association of Tax Consultants and its office bearers. They have challenged a portion of Central Action Plan (hereinafter referred to as the said plan ) prepared by Central Board of Direct Tax (for short 'CBDT') for the financial year 2018 2019. We shall take a detail note of the relevant provisions contained in this plan later. For the moment we may note that this plan contains various provisions made by CBDT setting out targets of tax collection, disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portance of this area. The Chapter on Audit has been omitted, since the CITs(Audit) are already functioning under instructions and SOPs formulated by the Directorate of Income-tax (Audit and Inspections). The separate chapter on Prosecution and Compounding has been omitted and the relevant targets, in consolidated form, have been incorporated in the Chapter on Assessment Units (prosecution targets for TDS units already form part of the Chapter on TDS). Targets in various key result areas have been re -calibrated in the light of experience gained. 5. Chapter I of the plan sets out targets for tax collection. It contains goals for major head wise direct tax collection for the financial year 2018 19. Such targets are broken up region wise, keeping in view revenue potential of the region. Chapter III of the plan pertains to Litigation Management. The Petitioners' challenge flows from this chapter. The relevant portion of this chapter reads as under; CHAPTER-III LITIGATION MANAGEMENT The rising litigation with the taxpayers and the quantum of revenue locked up in appeals is a matter of serious con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76771 23723 35701 88749 B Less than 10 Lakhs 215619 86205 1743 131157 C Current Less than 10 L 0 2706 67433 64727 328173 123480 117150 321843 (a) Total appeals pending where demand is less than 10 Lakh are 1,95,884 as on 01.04.2018, which shows a decline of about 9% from the corresponding figure as on 01.04.2017. However, the pendency is still very large, and includes 1,15,706 appeals where demand is less than ₹ 2 lakhs. A special focus is required on such cases during the current year. (b) In regard to high demand appeals, there is a decline of 35% in A1 category but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 lakhs (new category B3); c. Disposal of at least 70% of appeals that involve demand of less than ₹ 10 lakhs, inclusive of the targeted disposal in B3 (less than 2 lakh demand) category. B. Each individual CIT (A) shall be expected to dispose of a minimum of 550 appeals, or achieve a minimum of 700 units during the year. In PCCIT regions where the average number of Category B3 appeals pending with CITs(A) is more than 500, each individual CIT(A) shall be expected to achieve a minimum of 800 units during the year. C. In Regions where the targeted disposal as at A above translates into numbers of units that fall short of the norms for individual CITs(A) stated at B above, the PCCITs concerned shall scale-up the targets stated at A above so as to ensure satisfaction of the norms. Such scaling-up shall be done, as far as possible, in respect of Category A2 appeals followed by Category A3 appeals. D. Correspondingly, in Regions where the targeted disposal as at A above translates into numbers of units that are significantly higher than the norms for individual CITs(A) stated at above, the PCCITs concerned may scale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Region as a whole must achieve the targets of disposal of 25% of appeals involving demand exceeding ₹ 10 lakhs and above, 90% of appeals involving demand less than ₹ 2 lakhs and 70% overall in Category B appeals. 3.6. The above targets should cumulatively result in a significant increase in disposal of appeals with CITs(A) and substantially reduce the pending appeals carried forward, as well as unlock the demand locked therein of about ₹ 4.5 lakh crore. ACTION ITEMS: (1) Category A appeals involving demand above ₹ 50 Crore and pending as on 01.04.2018 shall be disposed of by 31.12.2018. (2) The priority for disposal of appeals in different Categories shall be as under: (i) Higher priority shall be given to appeals involving demand of less than ₹ 2 lakhs and filed up to 31.03.2018 (Category B3). There shall be no inter-se priority within the Category. (ii) The next priority shall be given to disposal of appeals involving demand of ₹ 10 lakhs and above (Category A), irrespective of the year in which the appeals are filed. There shall be no inter-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I has been levied by the CIT(A). (ii) The concerned CCIT shall examine any such appellate orders referred to him by the CIT(A), decide whether any of the cases reported deserve the additional credit and convey the same through a DO letter to the CIT(A), which can be relied upon while claiming the credit at the year end. 6. From the above noted portion of the plan it can be seen that in order to achieve certain disposal targets of pending Appeals before the CIT Appeals, CBDT has made detail provisions for expeditious disposal of such Appeals. Part 3 of Chapter III pertains to incentive for quality orders and provides that additional credit of 2 units shall be allowed for each quality appellate order passed. Such term quality cases or quality orders has also been defined in the said part. 7. In the background of such facts on 22/03/2019, we had on the question of higher weightage for quality orders made following observations; 5. With respect to the Petitioners second part of the challenge, we are of the opinion that the CBDT should reconsider the same. From the action plan, it is not clear as to the utility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s one of the key priority areas of the CBDT. A two pronged strategy has been detailed in the CAP for respect of disposal of appeals filed with CIT(A),. having proportionate focus on optimizing disposal in terms of numbers and on maximizing disposal of appeals involving high quantum of demand. (i) As per Central Action Plan (CAP) for the FY 2018 19, the Department has laid out targets and norms for disposal of appeals pending with CsIT (A) in each PCCIT Region. CITs(A) in each PCCIT charge shall be expected to dispose of a minimum of 550 appeals, inter alia involving a). Disposal of at least 25% of appeals that involving tax effect of ₹ 10 lakhs or more b). 100% of appeals pending as on 01.04.2018 that involve tax effect of ₹ 50 crores and above c). Disposal of at least 90% of appeals that involve tax effect of less than ₹ 2 lakhs and disposal of at least 70% of appeals that involve tax effect of less than ₹ 10 lakhs inclusive of appeals with demand less than ₹ 2 lakhs. (b) With respect to recommendation of Hon'ble court to reconsider the incentivization provided to CsIT(A) for quality orders, it is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the ultimate outcome of the Appeal. Such directives have the scope of influencing the outcome of Appeal on merits; (iv) Learned Counsel submitted that there can be no additional weightage to the orders, based on the contents or the subject matter. He submitted that these directives issued by CBDT transgress the exercise of quasi judicial functions by the statutory appellate authorities, which is impermissible. In this respect our attention was drawn to section 119 of the Act, which contains a provision that any instructions or providing directions the CBDT may issue in exercise of such powers, shall not be so as to require any income-tax authority to pass an order in a particular manner. 10. In support of his contentions learned Counsel relied on following decisions; In case of P.K. Ghosh, IAS Anr. Vs. J.G. Rajput, reported in (1995) 6 Supreme Court Cases 744, in which it was observed as under; 10. A basic postulate of the rule of law is that 'justice should not only be done but it must also be seen to be done.' If there be a basis which cannot be treated as unreasonable for a litigant to except that hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a rigid time frame, if the same cannot be done having regard to the interest of justice. With respect to Petitioners' later part of the challenge to additional weightage for quality orders, Counsel pointed out that the CBDT has reconsidered the issue and decided not to implement the same henceforth. With respect to the orders already passed, in any case, no harm or damage would be done to the Petitioners or any of the assesses in allowing such provisions to be effected. 13. Having heard learned Counsel for the parties and having perused documents on record, we may first consider the Petitioners' challenge to the first part of the circular. We have reproduced the relevant portion of the circular at length. Perusal of this portion would show that the CBDT has set out broad targets for revenue collection projected over the different regions. Internal distribution between the regions has been carried out on scientific basis. For any organization, setting of goals and targets is neither impermissible nor unknown. Only because certain targets for tax collection are set out, would not render the policy arbitrary or unreasonable. In the context of the disposal norms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax effect is less than ₹ 10 lakhs and the Appeals are filed during the financial year 2018 2019. The Policy prescribes that individual norm of disposal 550 Appeals or 700 units should be achieved, having regards to the number and categories of Appeals pending before such Commissioner, so as to attain maximum output and optimum work allocation. The policy also makes certain general prescriptions such as giving the higher priority to Appeals involving demand of less than ₹ 2 lakhs and filed upto 31/03/2018. Next priority would be given to disposal of Appeals involving demand of ₹ 10 lakhs and above irrespective of the year of filing and the lowest priority would be given to Appeals filed during the financial year 2018 2019 involving tax effect of less than ₹ 10 lakhs. 16. We do not think that these guidelines in any manner breach the reasonableness or can be stated to be arbitrary or illegal. These guidelines are for general directives and prescriptions to on one hand enable the revenue to collect taxes which are otherwise due and on the other hand to assess the work output of the Appellate Commissioners which in any organization is of consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the guidelines issued by CBDT in the impugned plan, are contrary to sub section (6A) of section 250 the Act. What the CBDT has done is to lay down broad guidelines for disposal of Appeals category-wise. There is neither firm directives that certain class or kinds of Appeals must be decided before a particular date, nor there is any negative implication of a particular Commissioner (Appeals) not being able to do so. The guidelines of the CBDT in this respect therefore must be seen as directory and not mandatory. 18. Coming to the Petitioners' second limb of the grievance, we may recall the policy provided for incentive for quality orders. This clause states that with a view to encourage quality work by Commissioner (Appeals) additional credit of 2 units shall be allowed for each quality appellate order passed. Ofcourse subject to CCIT upon examination of the order finds of deserving higher weightage. The term quality cases is explained as those including cases where (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCID, and (c) penalty under section 271(1) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to dispose of a particular case in a particular manner. In exercise of these powers thus the CBDT cannot issue any instructions or directions to any income tax authority to make a particular assessment or to dispose of a case in a particular manner. 22. When the CBDT guidelines provide greater weightage for disposal of an Appeal by the Appellate Commissioner in a particular manner, this proviso of sub section (1) of section 119 of the Act, would surely in a breached. It is neither possible nor necessary to judge the actual effect of such guidelines on the orders passed by the appellate authorities. Suffice it to record that such guidelines have a propensity to influence the appellate Commissioners and be tempted to pass an order in a particular manner so as to achieve a greater target of disposal. Any temptation though in the guidelines referred to as incentives for disposal of an Appeal in a particular manner, would not stand the test of law. 23. Under the circumstances the CBDT has now decided to withdraw the guidelines for the coming year. In our opinion in its existing form for the past financial year also the same cannot be allowed to have eff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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