Income-tax act, a national disgrace

In 1991, Nani Palkhivala called the Income-tax Act “a national disgrace” because of its “maddening instability“. He expressed anguish at the “pathological change mania” that had gripped the Finance Ministry which caused it to make repeated and mindless amendments to the Law. He also expressed disappointment with the Indian public who endured injustice and unfairness with “feudalistic servility” and “fatalistic resignation“.

• Administrative justice demands compromise. There is no pre-determined solution to the problem of tempering power with justice. 
• The cardinal error is to mistake amendment for improvement and change for progress. 
• A stable fiscal policy is to a nation what a stable family life is to an individual.
• The obsessive attitude that the exercise of power must take the form of churning out new laws and regulations is shared by the legislature and the rule-making authority alike.
• No class of people stands to benefit more in the long run from just administration than the administrators themselves.
• Government depends upon the approval of the governed.
• Fair play in administration will enlist the citizen’s sympathies and will enormously reduce the friction with which the machinery of government works.
• Good administrators should take care that the machinery is properly tended and that the lubricant of justice is supplied in the right quantity at the right points.
• Today the income-tax Act, 1961, is a national disgrace. There is no other instance in Indian jurisprudence of an Act mutilated by more than 3300 amendments in less than thirty years.
• The tragedy of India is the tragedy of waste – waste of national time, energy and manpower. Tens of millions of man-hours, crammed with intelligence mild knowledge – of tax gatherers. tax-payers and tax advisers – are squandered every year in grappling with the torrential spate of mindless amendments. The feverish activity achieves no more good than a fever.
• We legislate first, and think afterwards. Sections are introduced which never come into force, because they are repealed or substituted before the date they are scheduled to come into operation. In the event, complexity is heaped upon complexity and the confusion becomes worse confounded.
• Legislative work expands so as to fill the time available for its completion. This is a branch of Parkinson’s Law and its operation has caused Parkinson’s disease in the body of our fiscal code.
• The avalanche of ill-conceived changes and complications, which may be compendiously called “legal litter”, is mainly responsible for the poor quality of our tart administration.
• In the UK there are less than 29 million income-tax payers but the number of references filed in the High Court is only around thirty in a year. In India there are only five to seven million income-tax payers but the number of references filed in our High Courts is around 6,500 a year, in addition to about 1,500 writ petitions. These figures reflect the tremendous public dissatisfaction with the quality of the law and of fiscal administration. 
• The situation is continuously aggravated by the deluge of new amendments – the indigestible verbiage; and the flood of litigation is heavier today than ever before.
• These are people that have lost the power of astonishment at their own actions. When they give birth to a fantastic passion or foolish law, they do not start or stare at the monster they have brought forth… These nations are really in danger of going off their heads en masse, of becoming one vast vision of imbecility ... G. K. Chesterton, in his essay “The Mad Official“.
• The rot begins when wild actions are received calmly by society.
• We Indians are a “low arousal” people. We endure injustice and unfairness with feudalistic servility and fatalistic resignation. The poor of India endure inhuman conditions. The rich endure foolish laws and unending amendments which benefit none except the legal and accountancy profession, and instinctively prefer to circumvent the law rather than to fight for its repeal.
• One of the main reasons for India’s backwardness and stunted development is that we as a nation have no sense of time at all. We are individually intelligent and collectively foolish. 
• Taxes are the life-blood of any government, but it cannot be over-emphasized that the blood is taken from the arteries of the tax-payers and, therefore, the transfusion has to be accomplished with the principles of justice and fair play.
• Let us never forget the wise words of Justice Hughes who observed that no democracy can survive without respect for laws and institutions, but that in a free democracy laws and institutions will command that degree of respect which they deserve.

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