Transfer of cases: I-T dept moves SC

The transfer of the cases, a move intended to speed up disposal of cases, was made through amendments to the Settlement Commission scheme in the Finance Act 2007. The commission was originally intended as a forum to settle undisclosed cases of income and recover pending dues. It allowed tax payers to pay up and get immunity from penalties and prosecution.

However, the long list of cases and slow pace of their disposal led the finance ministry to announce a revised Settlement Scheme, which set March 31, 2008, as the deadline for the commission to dispose of all pending cases.

Once the deadline expired, all unresolved cases were to go back to the department's assessing officers for resolution.

However, three days before this deadline expired on March 31, the Delhi High Court, acting on a writ petition, passed an interim ruling that unresolved cases would not be sent back to tax officers, contrary to the policy. This came as a setback to the department's attempts to recover outstanding dues and resolve litigation quickly, as cases would continue to remain stuck in the commission.

According to I-T officials, a number of tax payers, whose applications for settlement are pending before the commission, have filed nearly 500 cases across various courts in India. The attempt is to stall the entire process and prevent their cases from getting resolved as an endless wait suits them, an official said.

While moving the apex court, the I-T department has taken the stance that since Parliament has ratified the Finance Bill 2007 (with the changes to the Settlement Scheme), the implementation of the changes cannot be stalled.

The commission is also understood to have pointed out that the March 31 deadline was impossible to meet as only 100-150 cases can be disposed of in a year due to infrastructure and manpower constraints.

At this rate of disposal, tax officials have expressed concern that it will take over 15-20 years to settle all the 3,000 cases.

As a consequence of the drastic reduction in its powers, very few applications have been filed before the commission after June 1, 2007.