[Opinion] Role of Acquiescence in Income-tax Matters

CA S. Krishnan – [2024] 163 taxmann.com 660 (Article)

1. Introductory Remarks

The Income-tax Act (the Act) is an exhaustive enactment dealing with set of rules and regulations upon which the Income-tax Department levies, administers, collects and recovers taxes. Income-tax is a form of direct taxes that needs to be borne by the taxpayer. It cannot be transferred to another individual.

The Madras High Court in the case of CIT v. Indian Express (Madurai) (P.) Ltd. [1983] 140 ITR 705/13 Taxman 441 had firmly observed that the primary purpose of the Income-tax Act is to levy and collect Income-tax and the purpose of the statutory provisions, especially those relating to the administration and management of Income Tax, is to ascertain the tax liability correctly. These relevant observations made by the Hon’ble Judges at para.22 are extracted below-

“The primary purpose of the I.T. Act, 1961, is to levy and collect income-tax and as the purpose of the statutory provisions especially those relating to the administration and management of I.T. is to ascertain the tax liability correctly, the various provisions relating to appeal and reference, etc., cannot be equated to a lis or dispute arising between two parties as in a civil litigation. Although the I.T. statute makes the Department and its officers figure as parties in appeal proceedings, they are not in the strict sense what are called by American writers as parties to “adversary proceedings” because the very object of the appeal is not to decide a point raised as a dispute but any point which goes into the adjustment of the taxpayer’s liability and hence the authorities sitting in appeal in a tax case cannot be regarded as deciding a lis. They are only engaged in an administrative act of adjusting the taxpayer’s liability. Even though the appellate authorities exercise quasi-judicial functions, the proceedings before them lack the basic elements of adversary proceedings. In a case where the Revenue is a party, at the same time being an authority vested with the responsibilities of drawing up the assessment and determining the correct tax liability, it would not be in accord with the scheme of the Act to impose restrictions on the ambit and power of the Tribunal by notions such as finality, subject-matter of the appeal, etc.”

The term “lis” means “a piece of litigation, a controversy or dispute “[ Black’s Law Dictionary (8th Edition) as cited in Namit Sharma v. Union of India [2013] 1 SCC 745 (para.78.1)

[Source- Page 1120 from P. Ramanatha Aiyar’s The Law of Lexicon -Fifth Edition]

The Act has fixed time limits for levy and collection of taxes, penalties etc. The Act has also set certain time limits for filing tax returns and obtaining refunds. Sometimes inaction on the part of the assessees or their representatives may result in loss of income/money by the assessees. One such term, in this regard, which one frequently comes across is “Acquiesce” which means to give silent or passive assent to; to tacitly agree to; resting satisfied with any state of things. [ Section 23 of the Indian Trusts Act, 1882 and Section 20(b) of Civil Procedure Code, 2008] In simple language it also means to accept something reluctantly but without protest. The noun part of the verb is “acquiescence”.

In the ensuing paragraphs let us understand the definition of the term “acquiescence” as explained in English dictionaries, by authorities on law and how it has been understood and explained by various judicial authorities. Let us also analyse a few important cases in income-tax explaining the doctrine of “acquiescence”

2. Acquiescence – As defined in dictionaries

1. Cambridge Dictionary – the act of accepting or agreeing to something often unwillingly
2. Oxford Learner’s Dictionaries – the fact of being willing to do what somebody wants and to accept their opinions, even if you are not sure that they are correct.
3. Merriam-Webstar – passive acceptance or submission;
4. Vocabulary.com – Acquiescence is an agreement, usually a willingness to go along with what someone else suggests

3. Acquiescence – As explained by authorities on law

3.1 Acquiescence is the common element in a somewhat indefinite group of equitable estoppels, constituted by the fact that the person entitled has, as it is said,” slept upon his rights” and by his conduct at the time of a breach of them, or subsequently thereto, has with full knowledge, both of his own rights and the acts which infringe them, led that person responsible for the infringement to believe that he has waived or abandoned his rights. The Term “laches”,” acquiescence”, “standing by” and “delay” are frequently associated together, and they do not appear to be capable of distinct definitions. (Encyclopaedia of the Laws of England)

However, it is to be understood that while the words “laches” and “acquiescence” are often used as similar in meaning, the distinction in their import, is both great and important. The term “Laches” imports a merely passive, while the term “acquiescence” implies active, assent.

3.2 Acquiescence is to be distinguished from avowed consent, on one hand, and from open discontent or opposition, on other hand. It amounts to a consent which is impliedly given by one or both parties to a proposition, a clause, a condition or to any act whatever [Bouvier Law Dictionary]

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