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Tax ombudsmen abolished: Experts raise concern

Earlier this month, the government decided to abolish the offices of the Income Tax Ombudsman and the Indirect Tax Ombudsman. An ombudsman is a quasi-judicial body established to address the grievances of customers.

 (Mint)

A press release issued by the Cabinet stated that the ombudsman had “failed in its objectives”. It said the number of new complaints had fallen to single digits, implying that fewer aggrieved taxpayers were approaching these agencies.

However, experts have pointed out that the inefficiency of the ombudsman was largely on account of failure to fill vacant positions and create a tech-friendly process. While the Income Tax Ombudsman resolved cases of delayed refunds and other taxpayers’ complaints, the Indirect Tax Ombudsman performed functions such as giving effect to unimplemented instructions of entities like the Central Board of Excise and Customs (CBEC).

What did Ombudsman do?

The Income Tax Ombudsman was set up in 2010 to receive and settle complaints from taxpayers. It could settle these complaints either through agreements or by passing an award. An award was legally binding on the income tax department, provided it was accepted by the complainant. If the complainant rejected the award, he/she could approach a court of law.

As a quasi-judicial body, the ombudsman had the power to ask the income tax authorityto provide information or furnish certified copies of any document relating to the complaint. The ombudsman had the power to adjudicate on a wide range of complaints such as those pertaining to refunds, non-acknowledgement of letters or documents, delay in allotment of Permanent Account Number (PAN) and non-credit of tax paid, including tax deducted at source. To see full list, click here.

Taxpayers could only lodge a complaint with the ombudsman after they had first approached the authority superior to the one they were complaining against and the resolution by that authority was either unsatisfactory or no resolution was received for a month after the complaint. For example, if you did not receive your refund in time, you would have first had to approach your assessing officer (AO). If the grievance was not addressed satisfactorily by the AO, you would have had to approach the commissioner of income tax. Failure of satisfactory redressal on part of the commissioner would have given you grounds to approach the ombudsman, finally. However, if the issue was under a formal appeal to the commissioner or to higher authorities like the Income Tax Appellate Tribunal (ITAT), high court or Supreme Court, you could not approach the ombudsman. For example, if you have appealed against an order passed by an AO to the Commissioner of Income Tax (Appeals), you could not approach the income tax ombudsman on the same grounds.

The Indirect Tax ombudsman operated along similar lines.

Expert take

While some experts support the abolition of the ombudsmen, saying they had become ineffective and alternative grievance redressal mechanisms are doing the job well, there are others who believe the offices could have been empowered instead of being dismantled.