Experts bat for proper litigation policy as taxman's delays get flak from courts
NEW DELHI : With the taxman coming under fire for filing late appeals, experts say there is an urgent need for a strong tax dispute resolution mechanism to simplify litigation and ensure timely closure of the cases. On 10 July, Chief Justice of India D.Y. Chandrachud rejected the income tax department's appeal against a Delhi high court order in favour of Xerox India because the plea was filed 215 days late.
Chandrachud underscored timely pursuit of litigation is crucial for improving India's business environment. "MNCs (multinational corporations) invest in India, generate employment and contribute to revenue. They should have confidence in the country's judicial system," said the CJI.
Experts caution that delays in appeals place an extra financial burden on MNCs, which affects India's ease of doing business ranking. "Due to delays by the income tax department, it unnecessarily burdens taxpayers, including MNCs… If an appeal is unsuccessful, the total taxes owed could significantly increase. Meanwhile, MNCs must retain tax advisors for every hearing, regardless of their effectiveness, leading to substantial costs in terms of bandwidth, time, energy and finances.
These factors contribute to India's declining rank in the ‘Ease of Doing Business’ index," said S.R. Patnaik, partner (head-taxation) at law firm Cyril Amarchand Mangaldas. Amit Gupta, partner at Saraf and Partners, said prolonged litigation also undermines the fairness of the Indian tax system.
Under the Income Tax Act, the timeline for filing tax appeals varies by the appellate authority. Appeals to the Commissioner of Income Tax (Appeals) must be filed within 30 days as per Section 249. For the Income Tax Appellate Tribunal (ITAT), Section 253 stipulates a
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