TO AVOID HARASSMENT, DEPARTMENT
WILL HAVE TO CHANGE ITS ATTITUDE
Speaking to fresh Indian Revenue Service recruits last month, President Ram Nath Kovind had stated that the honest taxpayer is a partner of the taxman and not his adversary. Further he expressed that “ you have a policy and regulatory role, but you are principally a service provider”. “Please be sensitive to the demands and dignity of the person – the honest tax payer – who is coming to you for a service”.
Even, the Finance Minister Nirmala Sitharaman assured India Inc. that businesses will not face any harassment by tax officials and that a new system has been put in place to make officials accountable for their communication with the assessee. The Minister also articulated the government’s intent to respect wealth creator, a sentiment that Prime Minister Narendra Modi shared in his Independence Day speech.
The Minister said a new centralized computer system has been set up for issuing income tax orders, notices and summons with a unique document identification number or DIN effective from October 01, 2019.
This is one way in which fears of harassment of assessee can be addressed. Unless a notice or documents carries a DIN, it need not be taken seriously by the assessee at all, she said.
Thus, there would be paradigum shift for doing assessment. Therefore, it would be imperative for Department to change its behavior and attitude, the officers would be accountable for their communication. So they would be responsible for the assessment. Thus, in New India, we hope to have assessment without harassment.
Till date the Poor conduct of tax officers and staff is believed to have drawn lot of complaints from taxpayers, damaging the image of the department A number of complaints about their high handed and rude conduct, the tax department has asked officers and staff to well behave with taxpayers.
Even courts have blamed the Department for their high handedness. The Bombay High Court in Coca Cola India Ltd. v. Addl CIT and others [205 ITR 419] had commented as under:
“Before parting, we would like to record our total dissatisfaction regarding the manner in which authorities below have proceeded to enforce the demand totally ignoring the parameters laid down by this court in the case of KEC International Ltd. [251 ITR 158] while disposing of the stay application. Moreover, attaching the bank accounts of the petitioner even before communicating the order passed on stay application is totally high handed. We hope that the Revenue shall ensure that in future such instances do not occur again – otherwise, the court will have no option but to take appropriate action in accordance with law”
That judgment was delivered on October 19, 2005 but still, Department has not shown any improvement in their behavior. Recently, in Vodafone India Ltd. v. CIT (TDS) [400 ITR 516 (Bom)] refusal of stay of disputed demand merely on the ground that assesse had funds was held not justified in the light of Board Circular F. No. 404/72/93 – ITCC dated February 29,2016 requiring automatic stay where 15% of the disputed tax is paid. In this context of the fact, that it is not the case of revenue that assessee was delaying the appeal, the High Court directed that no coercive step for recovery of disputed amount of ₹ 43.79 crores should be taken pending in the first appeal before Commissioner (Appeals). Similarly, in Bidar Nirmati Kendra v. Pr. CIT [98Taxmann.com 217 (Kar),] prior to taking matter in appeal by assessee his bank account was attached for tax recovery in excess of prescribed minimum limit which was to be deposited by petitioner, same was to be treated as high handed collection by revenue and not sustainable.
Therefore, on February 26, 2019 while taking over responsibility of the Chairman CBDT. Shri P. C. Mody addressed as under:
“our immediate priority, will be maximizing Revenue Collection. We need to widen and deepen the tax base, ensuring simultaneously, the optimums utilization of physical as well as human resources.
This must be done without any harassment or high handedness on the part of Officer or Officials. Our conduct must be impeccable, friendly, yet objective – without fear or favour – as we move towards becoming a non – adversarial regime
Timely delivery of quality tax payer services shall be prime area of focus. Continuous and converted efforts must be made to address and redress all public grievances within the prescribed time-limit. Systematic reforms shall continue to be undertaken, especially to redress grievances of small taxpayers, such as: Increased automation of process, e-filing, centralized processing of tax returns, and other bulk operations. Expediting Dispute Resolution, Tax Payer Education and Litigation Management shall also be areas of focus and concern.
We shall continue to strive towards greater transparency accountability and improved voluntary compliance as we roll out a Digital Administration”.
Similar observation has been made by Shri Neena Kumar, the principal director of general of income tax (administration and taxpayer services), and has stressed the necessity of soft skills among employees.
“It is important that behavior of officers and staff shall be courteous, polite and above reproach” He also stated that a number of complaints were received by the taxpayer services directorate and CBDT regarding harassment , misconduct and high – handedness of officers and staff. Such behavior earned the bad name to the Department. Therefore, he emphasized that “such incidents damage the image and reputation of income tax department to position itself as a service oriented organization”.
Another way of harassment to taxpayer is also caused by fixing collection targets for individual officers. When 90% of collection comes from advance tax and TDS, 5% from self assessment tax and only 5% from post – assessment collections, therefore there is no necessity to allot collection target to individual officers. The US did away with individual collection in 1959, still collection has not stopped. If collection targets are fixed. Officers make excessive assessments and collect taxes out of illegal demands are raised that taxpayers are unable to pay 20% of the demand. This leads to harassment in the form of attachment of bank accounts and properties.
Thus, our compliments to Mrs. Sitaraman for steps taken to improve ease of living and ease of doing business including pre-filling and faceless scrutiny of income tax returns. This is much needed announcement to build confidence with the tax payer.
H. N. Motiwalla