Tax litigation is a testament to a living legal order, says Justice R Mahadevan

Justice Mahadevan noted that benami transactions were previously misused to hide unaccounted wealth, but the 2016 amendment strengthened the regulatory framework, enabling stricter enforcement against undisclosed assets. “For decades benami transactions were misused to park unaccounted wealth in inmove assets like land, houses and buildings. While there were a lot of prohibits against such transactions existed in the prohibition of benami property transaction act 1988 it lacked the teeth necessary for strict enforcement consequently the menace of undisclosed assets persisted in the economy. The Benami Transactions Prohibition Amendment Act 2016 came into force, this amendment marked a shift from a weak regulatory frame to a more robust regime,” he said.

Justice R Mahadevan said, “It is often said that taxes are a price we pay for a civilised society. Tax litigation is not a sign of failure of the system but rather a testament to a living legal order… It is driven by three powerful forces: economic change, legislative response and judicial interpretation. Globalisation, digital commerce and cross border transactions have challenged traditional tax concepts. It must be remembered that taxation of income necessarily presupposes the recognition of legitimate business expenditure. Despite several schemes by the government for easing the pressure and burden of the tax payers there is an emergence of challenges and disputes on tax compliance issues and disputes of tax certainty. In recent years, India has been one of the countries heading towards a digital economy with the introduction of unified payments, several e-commerce platforms, and start up schemes. The landscape of direct taxation in India has undergone significant changes.”

Former Justice CV Bhadang, president, Income Tax Appellate Tribunal, who was the special guest to the event said that the association has witnessed significant changes since its formation in the pre-independence period. He noted that the social and economic landscape has undergone a significant change, giving rise to challenges in international taxation.

“The association was formed in the pre-independence period when the taxes collected were mostly to rule and not to govern. The first revamp of tax laws came in 1961 when the present income tax came into force and now we are on the verge of yet another revamp of the income tax act 2026 . The social and the economic landscape after the framing of the 1961 act has undergone a significant change both in industrialisation and subsequently globalisation which set in an interdependence of the world economies that has given rise to challenges in the field of international taxation.”

Pointing out that “we are facing a new tax act that’s meant to simplify the existing law, but has already undergone multiple amendments before its April launch,” he also cautioned against over-dependence on Artificial Intelligence (AI) in advocacy. “I would just like to say that the over dependence on AI in advocacy is not good, ultimately it is AI and normally we would prefer natural intelligence over artificial one. There are limitations of the AI, there are instances where AI can fail you or instances where AI hallucinates and produces judgements which are not in force. Technology can be a great servant but a bad master. So over dependence on AI tools would be very risky,” he said.