Tax World

Government of India
Ministry of Law & Justice
INCOME TAX APPELATE TRIBUNAL,
Old CGO Bldg., 101, M.K. Road, Mumbai – 400 020.

VIMAL GANDHI
President

Dated : 20-6-2008

Circular

I am enclosing a copy of Code of Ethics adopted by the judges of the Supreme Court and of the High Courts. Although the Sr. Vice President/Vice-Presidents/Members of the Tribunal who also discharge judicial functions are not strictly governed by the above code of ethics, it is desirable to follow the above code of ethics to maintain the highest standard of credibility in our day-to-day functioning.

I, therefore, direct the Sr. Vice President/Vice-Presidents/Members of the Tribunal to scrupulously follow the above guidelines in the code of ethics to maintain the highest standard of values in judicial service and there should be no deviation in this regard.

(Vimal Gandhi)

President

Code of Ethics – Adopted by Judges of Supreme Court and High Courts

Chief Justices of all the High Courts have adopted a resolution that the judiciary will be bound by its own code of ethics to be known as the “restatement of values of judicial life”. The 15-point Code stipulates that any act of a judge of the Supreme Court or a High Court, whether in official or personal capacity, which erodes the judiciary’s credibility has to be avoided. The following are the main points of the Code.

• A judge should not contest election to any office of a club, society or other association.

• He should not hold such elective office except in a society or association connected with the law.

• Close association of a judge with individual members of the bar, particularly those who practise in the same court, must be eschewed.

• A judge should not permit any member of his immediate family, such as spouse, son, daughter, son-in-law or any other close relative, if he or she is a member of the bar, to appear before him or even be associated in any manner with a case to be dealt by him.

• A member of a judges’ family, if he or she is a member of the bar, should not be permitted to use the residence in which the judge actually resides, as an office.

• A judge should conduct himself with a degree of aloofness consistent with the dignity of his office.

• A judge should not hear and decide a matter in which a member of his family, a close relative or a friend is concerned.

• A judge should not enter into public debate or express his views in public on political matters or on matters that are pending or are likely to arise for judicial determination.

• A judge is expected to let his judgments speak for themselves. He will not give interviews to the media.

• A judge will not accept gifts or hospitality except from his family, close relatives and friends.

• A judge will not hear and decide a matter in which a company in which he holds shares is concerned, unless he has disclosed his interest and no objection to his hearing the matter is raised.

• A judge must not speculate in shares, stocks or the like.

• A judge should not engage directly or indirectly in trade or business, either by himself or in association with any other business (Publication of a legal treatise or any activity in the nature of a hobby will not be construed as trade or business).

• A judge should not ask for, accept contributions or otherwise actively associate himself with the raising of any fund.

• Every judge must at all times be conscious that he is under the public gaze and there should be no act or omission by him which is unbecoming of his office.

• The Code of Ethics was released by Chief Justice A. S. Anand at the Chief Justices’ annual conference. It was also resolved that it would be mandatory for every judge to declare his assets, including those of his spouse and dependents.

Income Tax Appellate Tribunal
Ministry of Law & Justice
Government of India
Lok Nayak Bhavan, New Delhi – 110 003

VIMAL GANDHI

President                                                                                                                                            Dated :11-12-2007
(Ex-Officio Secretary to the Govt. of India)

Dear Brother,

ITAT has always been known for the high quality of its orders. Our orders have received praise from judges, including sitting judges of the Supreme Court, who sit in appeal over them. However, of late I am concerned to note that some of the High Courts have criticized our orders for lack of quality, detailed reasoning, non-recording of basic or vital facts and the arguments etc. I know that these are only exceptions to the general rule that we pass well-reasoned and speaking orders. I am also aware of the pains and efforts taken by Members in general to pass quality orders and that wherever they slip, it is not intentional. It is, however, unfortunate that adverse publicity is sought to be given only to the small percentage of orders which suffer in quality. I am afraid that an uninformed person may draw wrong conclusions from such publicity and may be misled to think that we are, in general, not passing proper and speaking orders. That is a situation which I want to avoid, if I can help it. I want to remove this impression, whether it is carried by higher courts or by the public or the members of the Bar. I therefore, thought it necessary to take measures to ensure that every single orders we pass meets the requirements of a speaking order. One such measure which was actively debated and decided in the conference of the Vice-Presidents recently held in Mumbai was to reduce the monthly disposal-target to 50, but with the understanding that Members will pay utmost attention to the quality of the orders they pass and will not give room for any criticism from any quarters.

I am enclosing certain broad guidelines, which are by no means exhaustive, for you consideration and they may be kept in view while passing the orders, as far as possible. Undoubtedly, most of our orders conform to these guidelines in general, but as Hon’ble Justice Ashok Bhan said in our recent conference, we should always be open to suggestions for improvement in our work. I also appreciate that each one of us has his or her own style of writing the orders and it is not my intention to interfere with the same; but within this broad framework, you will agree that there are certain basic features which we all can observe while drafting our orders and it is my endeavour to point out to some of them in the enclosed guidelines. For your information, I may state that these guidelines have been culled from several decided cases and observations of the Judges. In drawing your attention to the guidelines it is certainly not my intention to interfere in your decision making process or your judicial independence or discretion or in your judicial conscience or wisdom. I reiterate that your judicial independence is as important to me as the quality of your orders. The enclosed guidelines are brought to your notice only with the hope that they may help you improve the quality of your work, irrespective of the view you take about the case. I am sure they will be read and understood in this spirit. If you consider that the quality of your order can improve by adopting any other measure which does not find a place in the enclosed guidelines, you are free to do so, for, our ultimate common objective is to pass speaking, well-reasoned and well-structured orders and to give a good account of ourselves before the public.

It is also my desire that from January, 2008 each one of you may send at least two orders every month which according to you are your best orders of that month. This may enable me to assess your work and the quality of the order which will be kept in mind while writing Annual Confidential Reports. These orders may be sent to me through your Vice-President.

I have been also disturbed to see huge pendency for disposal for more than one month of 789 appeals as on 1-12-2007. Individual Members are having large appeals of more than 40 in some cases. I depreciate their casual approach adopted in this matter.

I am sure that the ITAT will not give room for any criticism regarding the quality of its orders in future. I seek your co-operation in this. With my best wishes and greetings for a very happy New Year, I remain.

Yours sincerely,

Vimal Gandhi,

President, ITAT

Guidelines to be kept in view by the members of the Itat while drafting orders

1. The order should be self-contained. It may be better, for the sake of completeness, if there is a brief description of the assessee, his business, method of accounting, etc., as a preface to the order. There should be clear recording of the facts as found by the AO. This may be followed by the findings of the first appellate authority against which the appeal is preferred.

2. There should be reference to all the arguments addressed before the Bench and to the pages of the paper book, if any, which were referred to and the citation of the case-law.

3. It shall be the endeavour of the Members to record clear findings of fact in the order as the Tribunal is the ultimate fact-finding body. These findings may be supported by reference to the evidence on record and wherever possible it may be better to refer to the pages of the paper-book in which the evidence is compiled.

4. The Bench may also give reasons as to how the statutory provisions are applicable to the factual findings. Their reasoning may be supported by reference to the case-law wherever necessary.

5. If it is possible to do so, reproduction of long passages from the orders of the income-tax authorities and the case-law may be avoided, for the sake of brevity. It is generally felt that Members can give a better account of themselves if they explain, in their own words, the findings and reasoning contained in the orders of the income-tax authorities. This is not a hard and fast rule, but it is being suggested not only for the sake of brevity of the order but, it may also demonstrate application of mind. There may however be cases where the Members may feel that it is absolutely essential to reproduce the relevant portion verbatim, in which case it should not be avoided. Members may use their discretion in this regard.

6. The Members may, if they consider fit, summarise the controversy in their own words (instead of merely reproducing the grounds of appeal) which may have the advantage of indicating to the readers that they have appreciated and understood the controversy in the right perspective.

7. Members may consider whether it is absolutely necessary to burden the order with long extracts from the judgment. But if they are found necessary to be extracted, then the same should be duly acknowledged with proper citation. The citations should be full and clear and should not be unnecessarily abbreviated. If the Bench considers a judgment to be not applicable, the distinguishing features may be clearly brought out, without being superficial.

8. If the Members are following an earlier order of the Tribunal either in the case of the same assessee or in some other case, the practice of merely referring to the earlier order and saying that it is being followed may not meet the requirements of a judicial order. Several High Courts have deprecated this practice. Therefore it is absolutely essential that wherever an earlier order of the Tribunal is being followed, firstly full reference to that order along with details such as the date of the earlier order, the ITA No., name of the assessee, assessment year and the concerned Bench may be given without fail. Further what was the issue before the earlier Bench, how it was resolved, what was the line of reasoning adopted and how the facts match with the facts for the present year and the case before the Tribunal, should be at least briefly explained in the order so that is becomes self-contained order and there is no need to call for and look into the earlier order for such details. It may also help the High Court before whom an appeal is filed to appreciate the order of the Tribunal without reference to the earlier order.

9. The decisions of the Members should be intelligible to any reader of the order and this can be achieved if the conclusion is explained properly and logically by giving reasons, supported both by the factual findings and the relevant authorities. More than the correctness of the ultimate conclusion which is for the higher courts to decide, it is the process of reaching that conclusion which should be considered more important and which should be easily discernible from the order.

10. The practice of using strong or unduly critical expressions and remarks (in the orders) against the actions of the income tax authorities or the arguments of the counsel as well as the departmental representative should be avoided at all costs. Similarly, use of intemperate or derogatory language while referring to other orders of the Tribunal should also be scrupulously avoided. Members may note that while referring to High Courts, the general practice for lower courts or Tribunals is to refer to them as “Hon’ble High Court” and not as “learned High Court” which is found used by some Members.

11. When a Member is agreeing with the view taken by the first appellate authority, even then it may be better to give detailed reasons for the conclusion and explain as to why he is agreeing with the order of the first appellate authority. Mere mentioning of the fact that he is agreeing with the conclusion of the CIT(A) may not suffice and at times it is likely to be termed as not-application of mind by the higher courts.

12. Proper attention may be paid to structuring, paragraphing and sequencing the order, Repetition may be avoided, if possible.

13. If after the hearing of the case and while holding discussions or writing the order, any statutory provision or judgment or order is noticed (which was not referred to in the course of the hearing) which is contrary to the impression, if any, given in the court or which has a material bearing on the outcome of the case, the same must be put to the parties by fixing the case for clarification and the order should be passed only after obtaining the clarifications. If it is an indispensable requirement of the concept of justice that the parties shall not have the feeling that decisions are taken at their back.
     

CBDT Circular – Monetary limits for filing an appeal to Appellate Tribunal, High Courts and Supreme Court.

F.No. 279/Misc. 142/2007-ITJ
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, the 15th of May 2008

To

All Chief Commissioners of Income Tax and
All Directors General of Income Tax

Subject : Revision of monetary limits for filling appeals by the Department before Income Tax Appellate Tribunals, High Courts and Supreme Court – measures for reducing litigation – reg.

Sir/Madam,

Reference is invited to Board’s instructions No. 1979 dated 27-3-2000, No. 1985 dated 29-6-2000, No. 6 of 2003 dated 17-7-2003, No. 19 of 2003 dated 23-12-2003, No. 5/2004 dated 27-5-2004, No. 2/2005 dated 24-10-2005 and No. 5/2007 dated 16-7-2007, wherein monetary limits for filing departmental appeals (in Income-tax matters) and other conditions were specified, for filing appeals before Appellate Tribunals, High Courts and Supreme Court.

2. In supersession of the above instructions, it has been decided by the Board that departmental appeals will be filed before Appellate Tribunals, High Courts and Supreme Court as per monetary limits and conditions specified below.

3. Appeals will henceforth be filed only in cases where the tax effect exceeds monetary limits given hereunder:

Sr. No.	Appeals in Income-tax matters Monetary Limit	(in Rs.)
1.	Appeal before Appellate Tribunal	2,00,000/-
2.	Appeal under section 260A before High Court	4,00,000/-
3.	Appeal before Supreme Court	10,00,000/-

4. For this purpose, “tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is intended to be filed (hereafter referred to as “disputed issues”). However, the tax will not include any interest thereon. Similarly, in loss cases notional tax effect should be taken into account. In the cases of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.

5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal shall be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals will be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one year, appeal shall be filed in respect of all assessment years even if the “tax effect’ is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which ‘tax effect’ exceeds the monetary limit prescribed.

6. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that “even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction”. Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.

7. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsel must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only by reason of the tax effect being less than the specified monetary limit and therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value.

8. Adverse judgments relating to the following should be contested irrespective of the tax effect.

(a) Where the constitutional validity of the provisions of an Act or Rule are under challenge.
(b) Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires.
(c) Where Revenue Audit objection in the case has been accepted by the Department.

9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research) New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.

10. The monetary limits specified in para 3 above will not apply to writ matters.

11. This instruction will apply to appeals filed on or after 15th of May, 2008. However, the cases where appeals have been filed before 15th of May, 2008 will be governed by the instructions on this subject, operative at the time when such appeal was filed.

12. This issues under section 268A(1) of the Income-tax Act, 1961.

Your faithfully,

(Madhukar Kumar Bhagat)

Deputy Secretary to the Government of India.
 

VAT Audit
S. 61 of the MVAT which confers right to do audit to CAs and
excluded advocates and STPs is neither discriminate unreasonable and
consequently not unconstitutional/only CAs and competent to perform
audit function having expertise achieved as a result of their
academic knowledge and practical experience.

Supreme Court of India

Record of Proceedings

Petition(s) for Special Leave to Appeal (Civil) No(s). 11880/2008

(From the judgment and order dated 28-3-2008 in WP No. 2000/2007 of the High Court of Bombay)

(With prayer for interim relief)

With SLP(C) No. 12494/2008 (With appln.(s) for exemption from filing c/c of the impugned judgment, prayer for interim relief and office report) SLP(C) No. 12827/2008 (With appln.(s) for exemption from filing C/C of the impugned judgment, prayer for interim relief and office report)

Date : 13-5-2008 – These petitions were called on for hearing today.

CORAM :

Hon’ble Mr. Justice H. K. Sema

Hon’ble Mr. Justice Markandey Katju

UPON hearing counsel the Court made the following

ORDER

Heard

No merit. The special leave petitions are dismissed.

 

Note: The Bombay High Court Judgment has been reported in www.itatonline.org.