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The Income Tax Appellate Tribunal (ITAT) president Justice Dev Darshan Sud (Retd) and Union Law Secretary Prem Kumar Malhotra, whose ministry is the administrative ministry for the ITAT, said usage of modern technology, like including e-courts, is facilitating speedier disposal of cases. Sud also favoured junking the outdated Income Tax Act and bringing in a new law in its place, one that is in sync with the times. Edited excerpts:
On some things that the government could do to make the tax regime more transparent:
Justice Sud: The Centre could provide more independence to tax accessing officers and commissioners and protect them from the fear of prosecution. Even if they take a bonafide decision that is not favourable to the revenue department, any sort of inquiry should not be opened up against them. Above all, a clear Income Tax Act is needed…even if you have to repeal this Act and enact a new one, do it.
Malhotra: Why just the IT Act? The government is committed to make everything more transparent, end discretion.
Does the Income Tax Act need to be revisited?
Justice Sud: It is a very complicated law and there are too many clauses that are unclear. The department has its own complications and targets to meet. The problem requires some thinking on the part of the finance ministry. So far as the IT Act is concerned, it is what we can call crazy-quilt legislation — too much patchwork. It has been changed too many times. The time has come to legislate a new law. It will bring down litigation, increase certainty, usher in more investment.
Malhotra: Tax reform is an ongoing process and the Centre is very keen to do as much as possible. As for bringing in a new income tax law, our current law is more about exemptions and rebates and this is an area that needs to looked into. A committee is already looking into it. Once the final report comes in, we will move swiftly.
On dealing with pendency (while the ITAT had at one point of time over 3 lakh cases, the number has come down to about 95,000 now):
Justice Sud: You need clear, specific legislation, which categorically defines what is taxable and what is exempted. We also need clarity on the I-T Act, there is so much confusion, ambiguity. If you ask me, the entire Income Tax Act needs to be scrapped and a new law needs to be legislated in its place.
Malhotra: The Centre has made it its mission to simplify all existing laws and to weed out outdated laws. The process is on and some progress has already been achieved, which is well known.
On rationalising tax structure to end harassment of honest tax-payers:
Justice Sud: Justice KN Vanshu committee had observed that for every one rupee earned, the government wants to take one rupee five paisa tax, which is an impossible idea. How can you do it? The way out was to bring down the rate of taxation.