Income-Tax Department’s delayed appeal against Bharti Airtel, exceeding the allowed period by over four years-Supreme Court.
The Supreme Court has strongly criticized the Indian income-tax department for its tendency to file legal challenges belatedly. The rebuke came in response to the department’s delayed appeal against Bharti Airtel Ltd., exceeding the allowable period by more than four years. This incident sheds light on a broader concern within the department, renowned as the nation’s “biggest litigant,” prompting a call for a more prudent and timely approach to litigation.
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The Supreme Court’s disapproval was directed towards the income-tax department’s appeal related to a case involving Bharti Airtel Ltd. The department’s appeal was dismissed due to the significant delay in its filing, which exceeded the statutory limit by over four years.
This delay was not an isolated incident but part of a pattern where the department, after achieving sporadic victories in certain cases, embarks on a spree of reopening previously settled or closed cases without sufficient cause. The court’s message was clear: the income-tax department needs to establish a proper litigation policy to avoid such unwarranted delays.
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Justice BV Nagarathna, leading the bench, pointedly criticized the department’s approach, stating,
“You succeed in one stray case and decide to file cases without any sufficient cause”
including cases which have already been closed. This observation was made in the context of the department’s handling of an appeal against a 2016 order by the Income Tax Appellate Tribunal (ITAT) in Bangalore. The ITAT had ruled that the interconnection usage charges paid to foreign telecom operators by Bharti Airtel were neither ‘royalty’ nor ‘fees’ for technical services, a decision that initially went unchallenged by the department.
The Supreme Court responded with skepticism to the income-tax department’s appeal, which, after a considerable delay, was met with scrutiny.
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The court remarked,
“The point is you (I-T department) have accepted the judgement of the Income Tax Appellate Tribunal, Bangalore, which favoured you. After succeeding there in some stray case, then you reopen (other cases) including this (Airtel). This is a typical practice of revenue. You reopen everything. It is only after the appellate tribunal ruled in your favour, you, as an afterthought, chose to file the appeal against Airtel.”
The Supreme Court’s decision to reject the income-tax department’s belated appeal serves as a cautionary tale for the department and other litigants about the importance of adhering to prescribed timelines and the need for a strategic approach to litigation. The court’s remarks underscore the necessity for the income-tax department, in particular, to refine its litigation policy, ensuring that appeals are filed within the stipulated time frames and are based on substantial legal grounds.
