The government can monitor legal and procedural changes to ensure that tax disputes are kept to a minimum and that cases do not accumulate. This follows more than a third of the 510,000 tax disputes, that have been pending for many years to be resolved through the Vivad Se Vishwas Scheme (VSVS). Complaint litigation is done to understand the patterns of the tax complaint and to consider whether there have been any violations of certain provisions. “It may be a matter of exercise to see if the statement taken by the department is correct, or if we need a little review,” said Central Board of Direct Taxes chairman PC Mody.
Mody said the department regularly reviews the conditions. The department’s technical units are looking at current disputes, while the review unit is looking at cases to see if they should be appealed. The government has gradually increased the funding limit for appeals by the tax department at various levels of resolution to cut down on disputes, among other things. In such a final review in August 2019, the limit for an appeal by the department in the event of a loss is increased to Rs 50 lakh from Rs 20 lakh at the Income Tax Appellate Tribunal (ITAT), Rs 1 crore in the high courts from Rs 50 lakh and Rs 2 crore from Rs 1 crore in the Supreme Court.
A review of provisions is expected to reduce the progress of cases. “There may be times when we see situations of misuse of provisions – it could be both ways,” Mody said, adding that the key was holding a continuous exercise. Faceless assessments will also help to reduce tax disputes. “Since then, we will be in a position to call for the various issues which are frequently coming up,” he said. The thrust is in an enabling environment to ensure that the test is organized in a fair and objective manner, he added.
The Vivaad Se Vishwas Scheme was released last year to provide an opportunity for taxpayers to resolve past disputes. Of the total 510,000 pending tax cases, as of January 2020, the government received declarations for 148,000 lawsuits under this program while payment methods were filed with 133,000 cases. Most of the declarations and forms have been coming from the private sector.
