An instruction issued by the Central Board of Direct Taxes, as F.No.279/Misc./M-74/2016-ITJ, dated 18 July 2016.
A pair of letters of 18 July 2016 from the Board's ITJ division, issued with the approval of Member (A&J), on the working of the Direct Tax Dispute Resolution Scheme, 2016. The first is addressed to the Principal Director General of Income-tax (Systems), the second to all Principal Chief Commissioners, the Principal CCIT (IT & TP) and the CCIT (Exemptions). Two annexures go with them: a specimen letter to be sent to an appellant, and a Standard Operating Procedure for processing declarations. It is an internal implementation instruction, not a statement of the law of the Scheme.
This is an instruction to the department's own officers. It tells them how to do something — which cases to take up, what to check, how to record it. It is an internal direction, and its whole force runs downwards inside the department.
The Systems letter asks for an online dashboard on the departmental website for progress to be reported by Pr. CCsIT in the enclosed proforma, a dedicated Scheme corner carrying the Scheme, Rules, Forms and FAQ, and a list of appeals pending before CIT (A) as on 29.02.2016 and not yet disposed, mapped to each PCIT/CIT, with name of appellant, PAN, assessment year, category of appeal, address and contact details. The field letter directs that all CsIT (A) peruse the grounds of appeal before them and draw up lists of cases fit for the Scheme, including appeals against mandatory interest and mandatory fees; that the PCIT/CIT write to each appellant in the specimen form at Annexure A; and that they interact with local CA and Bar Associations. Annexure B lays down the processing steps.
The Scheme came into force on 01.06.2016 to address the backlog before the Commissioners (Appeals). The letter records that on 29.02.2016 there were 73,402 appeals with tax effect above Rs. 10 lakhs and 1,85,858 with tax effect below it, so 2,59,260 appellants were eligible. Unlike the Income Tax Disclosure Scheme, 2016, which the letter contrasts it with, the audience here was a known and closed list that the Designated Authorities could approach directly. The letters were issued to make that outreach happen and to see that declarations were processed quickly.
It binds the department. The Systems directorate, Pr. CCsIT, PCsIT/CsIT and CsIT (A) must do what it says. It does not bind the assessee, and it does not bind a court or the Tribunal. An appellant may hold the department to what helps him — the promise of a Certificate issued without waiting the full 60 days, for instance — but takes no right under the Scheme itself from this letter.
The Scheme operates with effect from 01.06.2016; eligibility runs on appeals pending before CIT (A) as on 29.02.2016 and not yet disposed. The letters set no closing date of their own. The timelines in the SOP are the Scheme's: the Certificate in Form 3 is to issue expeditiously without waiting for the prescribed period of 60 days, and the order under section 204(2) in Form 5 or Form 6 well within the prescribed period of 30 days.
Annexure A is a specimen letter, and its summary of the reliefs is not the Scheme. The percentages it recites — full waiver of penalty where disputed tax is below Rs. 10 lakhs, waiver of 75 per cent above that on payment of tax, interest and 25 per cent of the penalty, and 25 per cent in a penalty appeal — must be checked against the Scheme and Rules. Sections 202 and 204(2) named in the SOP are of the Scheme, not of the 1961 Act.
Therefore, it becomes expedient on the part of all officers to ensure that the Scheme is a resounding success.
— the Central Board of Direct Taxes, instruction F.No.279/Misc./M-74/2016-ITJ, 18 July 2016. Read it in the department’s own PDF.
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
What we could not settle. Both date lines read 18th July, 2016 while the department lists the document as 19-07-2016; the letters' own date has been taken. The file number is scanned as 'F.No.279/Mise./M-74/2016-ITJ' and read as 'Misc.'. The dedicated corner is scanned as 'DFDRS-2016', evidently 'DTDRS-2016'. The proforma said to be enclosed is not part of the scan, and the first letter is heavily annotated by hand in ways the OCR cannot resolve; the signatory's name is scanned as Sadhana/Sadhaha Panwar, DCIT (OSD) (ITJ). The Scheme is Chapter X of the Finance Act, 2016 — sections 202 and 204(2) named in the SOP are of that Scheme — and no section of the 1961 Act is cited anywhere in the document, so 'sections' has been left empty rather than guessed.