Cure risks becoming a disease

Most people remember Ricky Martin for “Livin’ la Vida Loca”. Lawyers and chartered accountants remember him for a December 1998 evening at Hotel Radisson, where income-tax officials examined the Puerto Rican singer before he could board his British Airways flight, over a missing “tax clearance certificate” under Section 230 of the Income Tax Act. The questioning ran from 7.30 pm into the small hours.

Sony Music Entertainment, which had organised his shows, filed a writ in the Delhi High Court in 1999. The court quashed every summons, notice, and order. The year was 2016. Seventeen years had passed, for a matter the department could not even substantiate. The harassment was, to borrow an old MTNL phrase, more than necessary. But it is the 17 years that should detain us, because the delay has an address. It lives in the appellate machinery.

The Income Tax Appellate Tribunal (ITAT), set up in 1941 and the oldest quasi-judicial tribunal in the country, runs 63 benches across 30 stations with a sanctioned strength of 126 members. Its pending docket has barely moved in five years: 26,111 appeals in 2020-21, then 19,238, 21,966, 20,296, and 22,960 in 2024-25.

One could see this as a tribunal holding its caseload in check. Pause before agreeing. A pile that does not grow can mean one of two opposite things. Either the tribunal is disposing of cases as fast as they arrive, which is healthy, or the cases are not arriving in the first place, which is something else entirely. The number cannot tell you which. For that, you have to look at what sits beneath it.

Recall the old story of Akbar and Birbal. The emperor drew a line on the floor and asked his courtiers to make it shorter without touching it. They were stumped. Birbal walked up, chalk in hand, and drew a longer line beside it. The first line had not moved by a hair. Next to the new one, it simply looked shorter. The tribunal’s line is short for precisely this reason.

One rung below it, the Commissioner of Income Tax (Appeals), together with the Joint Commissioner (Appeals), held 539,863 pending appeals at the end of 2024-25. That is 89% of all direct-tax pendency by volume. The first layer has swollen year after year, from 448,992 in 2020-21 to 502,111, then 525,367, and a peak of 548,278. Appeals stuck at this stage never reach the tribunal at all. The tribunal’s calm is not disposal outrunning intake. It is a queue downstream so long that the queue upstream looks tidy by comparison.

Strip the problem to the bone and the diagnosis shifts once more. ITAT pendency is what you see. The pattern beneath it is a first-appellate stage that cannot breathe. And beneath that pattern is the structure feeding it, i.e., the rate at which disputes are manufactured to begin with. The department files roughly 85% of all appeals in the system and wins fewer than 30% of them. It is a machine that turns assessment targets into paper, most of which the department itself is destined to lose. The backlog is a symptom. The disease is upstream, in how assessments are raised and what officers are rewarded for raising.

The system is also starting to move, which is exactly why the comfortable reading is dangerous. In 2024-25, with faceless appeals and better staffing, the first-appellate layer fell for the first time in five years, from 548,278 to 539,863, a drop of some 8,400 cases. In the very same year, ITAT appeals climbed, from 20,296 to 22,960.

The figures placed before the Rajya Sabha in December 2025, answering Unstarred Question No. 1038, confirm it. This is plumbing, not mystery. Ease the flow at the bottom and the level above begins to rise. The effect is lagged, which is why it fools us. The relief at CIT(A) is announced today. The surge at the tribunal lands quietly tomorrow. It is already showing higher up, where high court direct-tax cases have risen about a quarter in two years, from roughly 48,000 to 60,000. And the tribunal that must absorb the wave is carrying 21 vacancies out of 126.

So where should one actually push? Here the instinct reaches for the smallest knob within arm’s reach. The reflex fix is to adjust a number, as the Central Board of Direct Taxes did in September 2024, raising the thresholds below which the department may not appeal to Rs 60 lakh for the ITAT, Rs 2 crore for high courts, Rs 5 crore for the Supreme Court. Sensible, but it only tunes a dial. The behaviour that fills the pipe is left intact.

The real force sits in rules, goals, and information. The goal that matters is what an assessing officer optimises for. Reward assessment quality, not demand raised, and the meritless appeal dies at birth instead of being litigated for two decades. The rule that matters is the one-year limit for first-appellate disposal, the original spirit of Section 250, which belongs in the statute, not in a speech. The information that matters is real and current. Live pendency dashboards and case triage, not the dual filing still demanded at ITAT benches, where an appeal is filed electronically and then, absurdly, on paper as well.

There is a familiar trap in all this, the fix that fails. Clear the benches without mending assessment quality and the queue does not disappear. It moves up, one forum at a time, until it reaches a court with no faceless scheme to soak it up. And while it travels, the money waits. Some `3.64 lakh crore sat at the ITAT at the end of 2024-25, with a further `235,483 crore frozen in stays granted by courts and the tribunal.

The tribunal was built in 1941 to unburden the courts. It now risks becoming the very thing it was meant to cure. Its present quiet is borrowed, and the loan is being called in. The right time to mend a roof is before, not during, the rains. The data says the first drops have already fallen.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.