Given the dramatic increase in tax arrears, and the taxman\u2019s remarkably poor record in securing court judgments in its favour\u2014hence the term, tax terrorism\u2014it is just as well that the Central Board of Direct Taxes (CBDT) has set up a committee of tax officials to examine various issues on litigation management that, in turn, were a recommendation of a judicial conference held last month. Right now, disputed taxes\u2014or tax arrears\u2014are around 1.1 times the direct tax collections; between 2012-13 and 2017-18, tax arrears rose 2.3 times, from `4,86,180 crore to `11,22,752 crore, while direct taxes rose a much slower 1.8 times. The last CAG report on tax arrears, in December 2017, looked at a sample of cases where the taxman had added Rs 10,700 crore to the assessees\u2019 income and slapped tax notices on them, but only a fifth of these stood scrutiny after appeal. Indeed, as the CAG points out, the tax department itself classifies most of these arrears as \u201cdifficult to recover\u201d\u2014while the proportion was 95.9% in 2012-13, this went up to 98.6% in 2016-17. What has raised concerns, however, is the wording of the terms of reference of the committee; one of these is \u201cto examine the cases where ITAT (Income Tax Appellate Tribunal) has passed perverse or irregular orders or where the submissions of DRs (Departmental Representatives) have not been recorded by ITAT\u201d, and to then take them up with \u201cPresident, ITAT\/Ministry of Law\u201d. The ITAT, the second stage of appeal, is under the administrative control of the law ministry while the Commissioner Appeals, the first stage, is under the finance ministry\u2019s control. The Delhi ITAT Bar Association, not surprisingly, is worried that the committee\u2019s mandate is aimed at subverting the process of appeal since there is no reason to approach either the President of the ITAT or the law ministry if there is a logical ground for appeal; and will any order that goes against the taxman be considered perverse or irregular? Indeed, the taxman appealing an order in the high court is more fair since the concerned party can also present his\/her case at that forum. While it is important to ensure there is no attempt by the government to influence the appeals process\u2014the Delhi ITAT has cited various court judgments on different ways to exercise an influence\u2014it is, of course, possible that the CBDT wants to make legitimate suggestions like ensuring that government submissions are recorded by the ITAT. Care has to be taken that any correspondence with the ITAT or the law ministry does not make this an alternate mode of appeal or a way to influence the ITAT. What is worrying, in this context, is that when the last Central Action Plan (CAP) of the CBDT was drawn up, it said an additional credit of two points would be given for each \u2018quality\u2019 order passed by the CIT (Appeals) and \u2018quality\u2019 was defined as increasing the tax demand made or finding a way to strengthen the taxman\u2019s case; in other words, the CAP was giving incentives for the CIT (Appeals) to increase tax demands instead of genuinely adjudicating them. Apart from figuring out why the CBDT\u2019s track record is so poor, the committee will do better to examine all cases which have been dismissed by the courts and figure out whether this is due to the original demand being weak in the first place or whether there is a systematic flaw in the way the cases are argued.