THE TRUE OBJECT OF APPEAL FUNCTIONS

[Sadanand Bulbule]

“The conflicts are plenty in this world because of tax”

1. The office of Appeals has been established in all the tax statutes as its integral part to provide an “independent” appeal function that is separate and independent from tax compliance functions that maintain responsibility for collecting and assessing taxes.  By statute, its function is to resolve tax controversies without litigation on a basis that: (1) is fair and impartial to both the revenue and the taxpayer; (2) promotes a consistent application and interpretation of and voluntary compliance with tax laws; and (3) enhances public confidence in the integrity and efficiency of the appellate authority.

2. The perception of appeals and the appellate authority has been around-by one name or another-more than a century. Every new Tax Act renames the office of appeals with some variances compared to the other tax Acts. But most of its operations remain the same depending upon the fluctuating requirements of the predominant situations.

3.The office of Appeals plays an important role in the overall taxation structure. Indeed, it resolves thousands of tax cases every year. Perhaps the two most common avenues for such resolutions are due process of hearings and deciding appeals pursuant to the critical and unbiased examination of factual and legal position of each case independently.

3. The tax appeals’ function, like any other laws, traces since more than a century, when it was technically an offshoot of the predecessor to the Tax Court.  Over time, it took on new organizational structures - taking on the names of the technical staff and appellate division and even becoming an separate division of appeal - but always played a pivotal role addressing tax disputes in the “gray.” The democratic structure of tax laws post-independence in 1947 developed, implemented and reorganized the lawful right to appeals to the tax payers. So the Parliament and the State Legislatures specifically included the integrated statutory provisions to “ensure an independent appeals function within the taxation laws” to reach the truth of the matter and render justice unconditionally, irrespective of which side it leans is immaterial.

4. Independence is one of appeals’ most important core values; the tax Act therefore prohibits interference or instructions to the appellate authorities “to the extent that such communications appear to compromise the independence of the appellate authorities.”

5. After filing the valid appeal memo within the prescribed period of time, the due process of personal hearing begins and it is the most common and essential proceedings in the appeal functions. Personal hearing is the backbone of principles of natural justice and therefore by law, the litigants have the right to personal hearing when they receive a notice and/or when they timely file a request for early hearing. Taxpayers who do not apply for early hearing would nonetheless be entitled to an “equivalent” hearing.

6. The office of Appeals handles a variety of cases. It is gathered that,  after diagnosing the the case history of appeal cases since two decades or more, the cause for constant flood of appeals involve the hasty assessment/penalty orders, non-application of judicial mind, violation of principles of natural justice, illogical interpretation of law and facts, abuse of powers, over-zealous attitude of field functionalities, pointing at hyper-technical errors, hypothecating own mind, disproportionately blowing the human errors, reading between the lines, lack of knowledge, skill and experience, silliness in handling statutory proceedings, disrespecting the truth, fear of higher authorities, lack of self-confidence, cynicism, ruthlessness, personal ego, passing the buck, complexity in accepting the facts, worry of transfer or pension settlement and so on. The list of causes is unlimited and it is not assumed but enough statistics are available. That’s why most of the appeal cases ignoring the merits and truth are miserably lost with costs in the High Courts and are decided in favour of the genuine litigants.

7. Despite the innocent tax payer who fights with full truth in the statutory proceedings, justice is denied for unknown reasons. And obviously, one of the above mentioned would be cause.

8.The true justice delivery.

 Keeping the hurting causes [supra], it is beneficial to understand the intrinsic moral of the following gist of the judgement:

The Madras High Court recently said that though courts normally refrain from interfering with the opinions of expert bodies, if such opinion was demonstrably wrong, courts must not keep their eyes shut to such error.

In an order passed on November 2, 2022, Justice GR Swaminathan of the Madurai bench of Hon’ble Madras High Court directed the State Teachers' Recruitment Board to award an extra mark to a woman candidate, who despite selecting the right answer had lost a mark, because the question setters had decided on the incorrect option as correct answer.

The Court was hearing a petition filed by a woman candidate belonging to a Backward class, who had appeared for the post of an English Postgraduate Assistant in the exam conducted by the State authorities in 2021. She lost out on making it to the merit list by one mark on account of the above error.

The question required all candidates to complete a quote by American poet Allen Tate. While the petitioner chose option 'c', which was the correct answer, the answer key to the question paper had wrongly marked option 'a' as the right answer.

The Board, however, argued that the opinion expressed by its expert committee was final and that it was not open for the court to "second guess" the correctness of the final key answers. It urged the court to dismiss the writ petition

The court however, said that “Satyameva Jayate” was the "national motto" and judicial review must not be totally ousted in certain circumstances.

"Where the key answer is manifestly and patently erroneous, interference will be warranted," the single-judge underlined.

Justice Swaminathan, therefore, said that when the material relied upon by the respondent counsel itself showed that the key answer was patently erroneous, it was necessary for the Courts to interfere, otherwise absurd consequences will ensue.

"The court cannot shut its eyes to what is too obvious and apparent. Only an ostrich donning judicial robes will hide its head in the sand," the high court said. "Let me demonstrate. Assume, the question is 'who is now the Prime Minister of India?' The candidate writes 'Shri.Narendra Modi.' If the key answer is 'Shri.Rahul Gandhi,' will it not be absurd?" the court asked. Thus, concluding that the petitioner was wrongfully denied extra mark, the court directed the Board to correct the marks of the petitioner and make necessary changes to the selection list also.

9. After recognizing the divine spirit of  justice delivered to the innocent and the most deserving person [supra], the appellate authorities are really expected to be courageous enough to separate “milk from water” to deliver not only legal justice but also lasting justice. And it is possible if the insight is bright and clean. Being pro-active is more important than re-active. The appeal function, like penance, means burning away all the disruptions in the way of manifestation of justice. Let the appellate authorities be the best version of themselves on daily basis in pursuing delivery of justice to the litigants on merits.

10. Many innocent and wounded litigants have expressed like this: when a court or temple or school is built on stolen land, what can one expect from such structures? The spirit of justice is not visible but needs to be seen through inner eyes on par with the judgement referred [supra] in the Hon’ble Madras High Court.

11.Freedom from “fear” is the epitome of the appellate authorities. Otherwise it is pushing the innocent litigants into jungle, where lawlessness is the law.

12. Lotus, the national flower of India, blooms in extreme adverse circumstances and therefore it is a symbol of hope. So let the appellate authorities bloom in adverse circumstances and beacon a ray of hope to the innocent and honest litigants to fulfill the object of the tax Act. Consequently the flood of litigations may rescind saving precious time & money of both litigants and tax administration too.