The recent arrest of both the judicial and accountant members of the Income Tax Appellate Tribunal (ITAT) Jaipur Bench, along with two others, in a cash-for-orders case has once again exposed a “criminal network” operating within the system and revived concerns over the integrity of tax adjudication.
The scandal has triggered calls for urgent structural reforms in the Tribunal, which adjudicates tens of thousands of high-stakes revenue disputes every year.
The episode adds to the ITAT’s chequered history with corruption. Seventeen years ago, the CBI had arrested an accountant member of the Kolkata Bench for allegedly accepting ₹30 lakh from a chartered accountancy firm in exchange for favourable orders.
That probe revealed that the firm appeared to have prior access to draft orders—and in some cases had even prepared them. During searches, the agency had seized 14 computer disks containing more than 70 pre-dated draft judgments from various Benches.
Concerns resurfaced in 2012, when the CBI launched a nationwide investigation into more than 20 ITAT members across Kolkata, Mumbai and Chennai for allegedly colluding with private intermediaries, including a prominent CA firm, to secure beneficial rulings.
Officials said the latest arrests indicate that entrenched networks continue to influence quasi-judicial decisions in revenue matters.
In the Jaipur case, the CBI has indicated at a “bench-fixing” pattern—something that, sources said, may not be confined to that Bench alone.
Despite being an administrative matter, the ITAT President reportedly exercises little oversight over Zonal Vice-Presidents, enabling “favoured members” to be repeatedly assigned important Benches and then praised for high disposals, sources alleged.
Senior Income Tax Department officials described certain Benches as a “graveyard of departmental efforts” to curb money laundering, tax evasion and related offences, arguing that Members often adopt a “hyper-technical” approach that focuses on form over substance.
For instance, hundreds of cases of alleged money laundering cleared by the ITAT Benches could be reversed only after intervention by High Courts through leading judgments in recent, officials noted.
The Supreme Court’s recent decision striking down the Tribunal Reforms Act, 2021 has also fuelled the impression that the ITAT—as the “Mother Tribunal”—now operates with diminished oversight, with the Apex Court emphasising its institutional independence. Also, the restriction of only filling appeals involving tax of ₹2 crores or above in High Courts, has allowed the ITAT to assume decisive status in majority of cases before it.
Uniquely, the ITAT functions under the administrative control of the Ministry of Law & Justice rather than the Ministry of Finance, though it deals with tax matters. In contrast, other Tribunals are rightly under the administrative control of their respective ministries. To list, NCLT is administered by the Ministry of Corporate Affairs and the CESTAT by the Finance Ministry.
Efforts to introduce greater transparency by making the ITAT “faceless” have been quietly shelved. This stands in contrast to the successful rollout of faceless income-tax assessments and first appeals, which earned broad support from taxpayers. “Why this model has succeeded everywhere except the ITAT is a question the government should look into,” a senior expert remarked.
The move was first announced in the Union Budget for 2021–22 and incorporated in the Finance Bill, 2021 as: “In order to ensure that the reforms initiated by the Department to reduce human interface from the system reaches the next level, it is imperative that a faceless scheme be launched for ITAT proceedings on the same line as faceless appeal scheme. This will not only reduce cost of compliance for taxpayers, increase transparency in disposal of appeals but will also help in achieving even work distribution in different benches resulting in best utilisation of resources”.
However, the move was nipped into the bud after postponing for 2 years, even when tax specialists have long advocated reducing human interface in the adjudication process.
