Delhi High Court Directs Affidavit on Case Backlog Before Board for Advance Rulings under Section 245N

Background of the Proceedings

In a set of connected writ petitions, including W.P.(C) 5178/2021 titled A.T. Kearney Limited Vs Union of India, the Delhi High Court examined issues concerning the functioning and effectiveness of the Board for Advance Rulings constituted under the Income Tax Act 1961. The proceedings arose in the context of concerns regarding delays and the substantial accumulation of pending cases before the Board.

Along with A.T. Kearney Limited – India Branch Office, two other matters were tagged and heard together:

  • W.P.(C) 5454/2021 filed by Mitsubishi Electric India Pvt Ltd, and
  • W.P.(C) 5728/2021 with CM APPL. 27029/2023 filed by The Regents of the University of Michigan.

The petitions primarily relate to the manner in which the newly constituted Board for Advance Rulings is discharging its mandate under Section 245N and the practical consequences of institutional and administrative challenges, including appointment of personnel and disposal of applications.

Submissions on Behalf of the Union of India

Justification of Amendments to Section 245N

During the hearing, Mr. Indruj Singh Rai, learned Senior Standing Counsel representing the Union of India, explained the rationale behind the legislative changes brought to Section 245N of the Income Tax Act 1961.

His core submissions were:

  • The amendments to Section 245N were introduced with the objective of ensuring that advance rulings are made available to the assessee within a reasonable and prompt timeframe.
  • The new framework was intended to streamline and accelerate the process, so that assessees seeking advance clarity on their tax positions could obtain binding rulings without undue delay.

Difficulty in Appointment of Chairman and Vice-Chairman

Mr. Rai also placed on record an administrative difficulty being faced by the Union of India. He submitted that:

  • The Union of India is encountering challenges in identifying and appointing suitable candidates to the positions of Chairman and Vice-Chairman of the Board for Advance Rulings.
  • This difficulty in staffing the top posts has had a bearing on the functioning and capacity of the Board to deal with applications efficiently.

The submissions highlighted that while the statutory changes were aimed at faster advance rulings, implementation was being impeded by constraints in recruitment or availability of qualified individuals to man the Board at senior levels.

Submissions on Behalf of the Petitioner

Pendency and Ineffectiveness of the Board

Appearing for the petitioner in W.P.(C) 5178/2021, Mr. Sachit Jolly, learned Senior Advocate, contested the effectiveness of the amended regime.

His submissions included:

  • Despite the amendment to Section 245N, the ground reality remains that there is still a large backlog of cases before the Board for Advance Rulings.
  • The legislative intent behind constituting the Board under Section 245N of the Act of 1961—namely, providing timely advance tax certainty to assessees—has, in practical terms, not been fulfilled.
  • On account of the continuing accumulation of matters and slow disposal, the very object for which the institution was created stands undermined.

By drawing the Court’s attention to actual pendency and delays, counsel for the petitioner effectively argued that the statutory structure, even post-amendment, has not translated into tangible relief for assessees seeking advance rulings.

Directions Issued by the Delhi High Court

The Court, while not deciding the substantive constitutional or legal challenges at this stage, considered it necessary to obtain comprehensive factual information regarding the functioning of the Board.