Direct Taxes

1. The nicest thing that could have happened to the administration of the Income-tax department is the establishment of the office of Ombudsman. ‘Income-tax Ombudsman Guidelines, 2006’ though came into force on 1st January, 2006, the actual working in Mumbai could start only late in the year 2007.

2. The office of the Ombudsman in Mumbai have given the account of its working within a short span of 6 months in a very transparent manner. In an excellent and informative article, ‘Income-tax Ombudsman : An appraisal’ published in Bombay Chartered Accountant Journal of February, 2008, Shri Hardayal Singhji, Ombudsman, Mumbai, has given the complete account of the working of the said institution in Mumbai. The learned Ombudsman has given the account as to the nature of complaints received by the office and has also mentioned the average time taken for disposal of the complaint. It is also very heartening to know from the said article that about 98% to 99% of the complaints have been settled in favour of the tax-payer. It is also equally heartening to know that though the ‘Income-tax Ombudsman Guidelines, 2006’ talk of approaching authority superior to the Assessing Officer, no application was rejected on account of such defect and that the Ombudsman has himself referred the application to the concerned Commissioner of Income-tax for redressal of the tax-payer’s grievance. In fact, he has suggested for liberalizing the guidelines. In this regard, he has more particularly referred to gross injustice done to the tax-payers namely citizens on retirement, in not granting relief u/s.89 when relief is granted u/s. 10. The following paragraph from the article speaks for itself and shows the genuine desire of the Ombudsman to redress the grievance of the assessee where there is genuine hardship.

“Thus, if severe limitations are placed on the powers of the Ombudsman, the very purpose of setting up this institution is defeated. It should always be possible for the Ombudsman to grant immediate relief to a distressed taxpayer, regardless of whether alternative remedies are available to him or not”.

3. In view of the transparent working of the Ombudsman and genuine desire to remove the hardship of the assessee and the promptness with which the applications are disposed of, greater publicity needs to be given to the office of Ombudsman. As suggested by the Ombudsman this would make more tax-payers shed their reservation to approach the said office. It is also heartening to know from the article that the applications have been disposed of on an average between one or two months from the receipt of the complainant. The applications can be made on a plain paper.

4. In Chapter–III of Income-tax Ombudsman Guidelines, 2006, the powers and duties of Ombudsman are listed. He has been given the powers to consider the complaints of the tax-payers in respect of fifteen matters listed in para 9 of the Guidelines. The guidelines also lay down that the Ombudsman will endeavour to promote a settlement of the complaint by agreement between the complainant and the authority through conciliation and mediation.

5. It seems that there is a genuine and sincere desire on the part of the authorities to redress the grievances of the tax-payers at the earliest to win their confidence so as to make them partners in the progress of nation as will be evident from the following provisions of the ‘Guidelines’, setting time limit within which those who are responsible, should act :-

1. to identify issues that increase the compliance burden or create problems for tax-payers, and to bring those issues to the attention of the CBDT and the Ministry of Finance

2. to send a monthly report to the Chairman, CBDT and the Secretary, Department of Revenue in the Ministry of Finance recommending appropriate action. The report shall specially highlight cases where action needs to be taken against erring Income-tax Authorities for their failure to redress the grievance. The report will be accompanied with primary evidence needed to initiate action against the delinquent persons.

3. to furnish a report every year containing a general review of activities of the office of the Ombudsman during the preceding financial year to the Secretary, Department of Revenue, Ministry of Finance and the Chairman, CBDT along with such other information as may be considered necessary by him. In the annual report, the Ombudsman, on the basis of grievances handled by him, will review the quality of the working of the Income-tax Department and make recommendations to improve the tax administration; and

4. to compile a list of ‘awards’ passed by it between April and March of each financial year in respect of every Income-tax Authority Complained against, by name and report it to the controlling Chief Commissioners of the officers concerned and the Chairman, Central Board of Direct Taxes before the end of April so that this information can be reflected in the Annual Confidential Reports of the officers concerned

6. The guidelines and the account rendered by the Ombudsman in respect of its working enhances the confidence of the tax-payers and takes them nearer to the Income-tax department, thus reducing the gap between the two

7. It is interesting to note that in a published article in ‘Gujarat Samachar’ dtd 8-11-2007, it was mentioned that within 4 months of the establishment of the office of the Ombudsman it has received 260 complaints of which 120 were disposed of. It was further reported in the said newspaper that the highest refund given was Rs. 1.57 crores which was delayed for 3 years and the party received the refund within 1 month after the complaint was lodged with the Ombudsman. It was also further reported that the lowest refund granted was Rs. 60. But Ombudsman reported that small and big all are equal before him. In fact, in the said paper it was reported that Ombudsman expressed the desire that in Mumbai there are 25 lakhs assessees and compared to these numbers, the complaints are very few and he wished more people to come forward to redress their grievance. Thus, the learned Ombudsman has in practice upheld the principle of “Democratic Accountability” in the best possible way.

8. Whosoever thought of establishing the Ombudsman office, deserves sincere thanks of all the tax-payers whose goodwill and gratitude they will immensely gain. Special thanks are also due to the Ombudsman, Mumbai, namely Shri Hardayal Singhji for giving account of the said office within about 6 months’ time from the date of assumption of the office.