CBDT warns Income Tax Department (ITD) over "high-pitched" assessments against taxpayers

The CBDT has issued a stern directive to Income Tax Department (ITD) offices in the country, asking them to curb "high-pitched" assessments against taxpayers and ensure that assessing officers who issue such irrational orders are transferred and face disciplinary action.

CBDT Chairperson Sushil Chandra, in a recent three-page directive to all regional ITD chiefs, expressed disappointment that a special drive launched in this regard in 2015 had failed to achieve its mandate of resolving taxpayers' grievances and was under-utilised.

The Central Board of Direct Taxes (CBDT), which frames policy for the tax department, had four years ago sought the creation of local committees in every tax region headed by a principal chief commissioner to "expeditiously deal with taxpayers' grievances arising from high-pitched scrutiny assessment".

The decision was taken as part of the Modi government's plan to check high-handedness of taxmen in deciding assessments of a common taxpayer that led to issues of corruption and bribery.

The tax department has taken action against at least 10 assessing officers (AOs) till now as part of this drive, but still enough is not being done, a senior official told PTI.

A high-pitched scrutiny assessment case is one where it is found that the addition of income was made on frivolous grounds, non-observance of principles of natural justice, or non-application of mind and gross negligence by the assessing officer in deciding a case.

A local committee of senior ITD officials, in case a order was found to be unreasonable or high-pitched, was empowered by the CBDT to take remedial action to rectify the demand and ensure that the taxpayer is not harassed.

The CBDT chairperson, in his letter, said the performance of these committees in the last three years "has not been found to be satisfactory".

Citing examples, Chandra said last year (2016-17), the reports filed by the regions, after prodding from the CBDT, were found to be either deficient or incomplete.

"For 2017-18, not a single report of local committees from any of the regions has been received by the board," the chairman said in the letter.

Chandra said that he has got "personal feedback" that these committees are either vacant at many locations due to transfer or promotion of a member or meetings were not being held regularly.

"You would also appreciate that all these deficiencies in functioning of local committees are hampering their effectiveness in tackling high-pitched assessments in an institutional manner," he said.

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Therefore, he said, regional chiefs of the department should give due attention to "monitor performance of local committees on a regular basis so that these committees serve as a useful mechanism to curb high-pitched assessments in the ITD."

He said that in cases where such assessments are found, an explanation should be sought from the assessing officer and in select cases, the official should be transferred to a non-sensitive post without any delay and disciplinary action initiated against him or her.

"No coercive action should be taken for recovery of demand in cases which have been identified as high-pitched by the local committee," the chairman said.

The CBDT chief also directed that a compliance report on these cases should be sent to the board every three months and a publicity campaign should be undertaken so that taxpayers know that this mechanism can be used to get their grievance redressed, if they are not happy or feel that their tax assessment is not fair.