CITU has asked the central government to reconsider its decision not to appeal against the Bombay High Court order in the Vodafone case, and to seek the intervention of Supreme Court in defence of the steps taken by the Income Tax Department. In a letter to Finance Minister Arun Jaitley on February 2, CITU general secretary and Rajya Sabha MP Tapan Sen said, “I like to convey my serious concern over the manner the Union Cabinet has decided not to appeal against the Bombay High Court order of October 10, 2014 in the Vodafone case… I do not prefer to go into the technical aspect of the matter. I only want to draw your attention to certain basic issues, a serious examination of which would warrant review and reversal of the cabinet decision.” The Bombay High Court had ruled against the Income Tax Department’s demand to Vodafone to pay additional income tax claiming that it had undervalued its shares in subsidiary, Vodafone India Services, while transferring them to the parent company in 2010. According a press note issued by the Press Information Bureau on January 28, the government decision was in the interest of “not affecting the investors’ sentiment”. The Press Note sought to justify the cabinet decision as it being “a major correction of a tax matter which has adversely affected investor sentiment” and also “to set at rest the uncertainty prevailing in the minds of foreign investors and taxpayers in respect of possible transfer pricing adjustments in India on transactions related to issuance of shares and thereby improve the investment climate in the country.” “Can a tax matter premised on specific provisions of the Income Tax Act, passed by Parliament, be subjected to a major correction without amending the concerned Act, just by an executive order, as has happened in the case? I understand it is not,” Sen said. ”Secondly, the very act of correction of the tax matter can be taken when there is mistake in the assessment and claim raised by the Income Tax Department functioning under your kind control. Has that been finally settled under the provisions of the concerned statute? You will definitely appreciate, the matter involves the interpretation of the law (provisions of the Income Tax Act for transfer pricing adjustments in India on transactions related to issuance of shares). And in that matter of interpretation of the concerned law, the Supreme Court is the final authority. Whether it is at all correct and prudent or in the interest of the national economy to dump the assessment made and the tax claims raised by your own department manned by all professionals based on their interpretation of the provisions of the Income Tax Act without verifying the same by the highest court of the country particularly when the matter under dispute is already in the process of judicial scrutiny? I understand it is not,” he said. The CITU general secretary urged the central government to re-consider its decision. “Otherwise, it would tantamount to be an indulgence and/or patronage to tax-evasion, which I believe, you will not and should not endorse,” he said.