Tax disputes are one of the most taxing issues before courts today. More than 3 lakh cases are pending before various judicial authorities with Rs 5,82,000 crore tax amount locked in litigations. This includes cases before various high courts and the Supreme Court.

In a renewed initiative, the Central Board of Direct Taxes (CBDT) has created a central data base, and special cells within the department consisting of top official addressing all litigations through institutionalized mechanism, discouraging frivolous appeals and fresh cases.

In 2014-15, the CBDT has rejected over 40% of proposals of various tax officials seeking permission to file cases against taxpayers. In the last fiscal, the I-T officials had sought to file 1,825 petitions. The CBDT only approved 1,088, or 60% cases. The total such proposals approved by the CBDT in last four years has been 4,636, around 62%, rejecting rest of the pleas.

The officials of the Income Tax department have been asked not to appeal in every case. There is also a change in policy brought in by the NDA government which has emphasized that India should not be seen as engaging in fruitless litigations.

Probably, this was the reason the finance ministry refused to give permission to the I-T department to appeal against Vodafone after it lost its case in the Bombay high court on a transfer pricing issue involving Rs 8,000 crore of tax demand.

An online portal, National Judicial Reference System, is expected to go live soon and all assessing officers will have to go through appeals filed by other centres to form a structured opinion before proposing any fresh petition. As part of this project, already 1 lakh appeals (3,000 in SC, 16,000 in HCs and 90,000 before ITATs) have been scanned and put online for officials to review.

The purpose of the department is to put all cases across the country related to a taxpayer online and available at the press of a button.

The department has also started bunching together appeals and seeking their bulk disposals. The apex court has now a dedicated bench of Justices A K Sikri and Rohinton Nariman to deal exclusively with tax matters. The CBDT has identified 16 issues on which various appeals could be bunched for bulk disposal.

These are steps towards sending across message to foreign investors that India is a non-adversarial tax regime and appeals will only be filed on merits. I-T officials have been reminded of various adverse court judgments and cost imposed on the department for frivolous litigations. They have been issued detailed guidelines and instructions on filing of new appeals.