Accountability in tax administration

By now we all know that death and taxes are the only two certainties of life.

Howsoever onerous it may be, every taxpayer is obliged to pay their respective taxes to the government diligently and any sort of tax evasion is considered as a violation of tax laws.

However, there is another side of the coin –the tax authorities are responsible to ensure that any default notices are issued to taxpayers only after following applicable procedures and properly checking facts supporting the cause of any notice.

About time there is some accountability and / or specific procedure in place to deal with cases in which tax authorities issue notice to taxpayers’ without properly following procedure and cross checking facts supporting cause of notice.

To make tax authorities more accountable and responsible for their actions in tax related matters, the Revenue Department has asked the Central Board of Direct Taxes (CBDT) to take strict action against tax officials for slapping notices on taxpayers without following procedures, or cross-checking facts.

Further it may be made mandatory for authorities assigned with authority to handle complaints to submit report with respect to the complaints assigned and corrective action taken to resolve complaint.

The foregoing intended measures are a serious reflection of

(i)            cases of imposing penalties for underreporting of income wherein courts has observed that these actions are taken without properly following applicable procedures;

(ii)          unnecessary notices issued by tax authorities in cases which fall into exemptions permitted under applicable tax laws; \

(iii)        unnecessary litigation due to discrepancy in tax assessment by tax authorities;

(iv)         certain string of recent disputes forced revenue secretary Mr. Tarun Bajaj to submit a personal affidavit regarding the measures required to be implemented to elude discomfort to taxpayers due to unnecessary litigations.

With the intent to make local tax authorities (who are already empowered with authority to resolve complaints related to high pitched scrutiny assessment in quick time) more effective in dispatching their duties to ensure no unnecessary discomfort caused to or unnecessary disputes are thrust upon taxpayers (who are in compliance with laws) – It is required of local committees to resolve any complaint within two months from date of receipt of complaint.

CBDT is required to inform local committees of recent developments and actions such committees need to take to resolve tax complaints and act rightly to avoid unnecessary tax disputes and form local committees wherein there are vacancies.

It is ultimate responsibility of applicable tax authorities to monitor functionality of local committees under their wing and assess reports of local committees to ensure all conflicts are properly resolved.

It is hoped these intended measures will make tax authorities to exercise their duties with caution and care to ensure tax matters are resolved in a timely and responsible manner without any sense of discomfort  and without need to open doors to unnecessary tax disputes.

Source : The Economic Times