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Prof. Nihit Jhaveri Direct Tax – FINAL C.A.
Mob.: 98202 25728 Income Tax Authorities and their Powers
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CHAPTER – XIII
INCOME TAX AUTHORITIES AND THEIR POWERS
(SECTION 116 TO 131)
Section 116: Income Tax Authorities: The following are the Income Tax Authorities:-
C B D T
Director General of I.T (DGIT) / Chief Commissioner of I.T. (CCIT)
Director of I.T. (DIT) / Commissioner of I.T. (CIT) / CIT(A)
Addnl. Director of I.T. / Addnl. C.I.T. / Addnl. C.I.T.(A)
Joint Director of I.T. [JDIT] / Joint Commissioner of I.T.[JCIT]
Deputy Director of I.T. [DDIT] / Deputy Commissioner of I.T.[DCIT]
Assistant Director of I.T. / Assistant Commissioner of I.T. (ACIT)
Income Tax Officer [I.T.O.]
Tax Recovery Officer [T.R.O.]
Inspector of I.T.
Section 2(7A) : Assessing Officer [A.O.]: means either JCIT / DCIT / ACIT / ITO
Section 117: Appointment of Income tax Authorities:
Central Government can appoint CIT /Add. CIT / JCIT
CBDT,CCIT & CIT can appoint - DCIT, ACIT, ITO, TRO…. etc.
Section 118: Control over Income Tax Authorities: CBDT shall control all the Income Tax Authorities subject to an overall framework of Central Government.
Section 119: Powers of CBDT to issue Directions, Orders, Notifications or Circulars to its subordinate Income Tax Authorities:
CBDT cannot issue following 2 types of circulars:–
1)Any circular, requiring any IT authority to make a particular assessment to dispose off a particular case in a particular manner.
2)Any circular interfering with the discretionary powers of CIT(A) while discharging his appellate functions.
CBDT can issue the following 3 types of circulars generally:--
1)CBDT may by way of issuing general or special order in respect of any class of cases or a class of incomes relax the provision regarding –
a) filing of ROI u/s. 139,
b) Assessment Proceedings,
c) Reassessment Proceedings,
d) Rectification Proceedings,
e) Levy of Interest u/s. 234A/B/C,
f) Levy of Penalty,
g) (a) to (f) in respect of FBT
2) CBDT may for the purpose of avoiding any genuine hardship in respect of any case or a class of cases by way of issuing a general or special order, authorise any I.T. authority other than CIT(A) to admit any belated claim or application for any Refund, Rebate, Relief etc.
3)CBDT may for the purpose of avoiding any genuine hardship in respect of any case or a class of cases by way of issuing a general or special order for reasons to be recorded in writing relax the provisions contained in the Chapter-IV or VIA, provided,
a) the default was due to circumstances beyond the control of the assessee.
b) Assessee has complied with such requirement before the completion assessment.
c) Central govt. has laid such circular or order before each house of parliament.
Note –
1) CBDT circulars are binding on all I.T. authorities subordinate to CBDT. However such circulars are not binding on assessee. Therefore, an assessee can challenge the validity of CBDT circular.
2) Similarly CBDT circulars are not binding on -
a) Supreme Court,
b) High Court,
c) Income Tax Settlement Commission (ITSC),
d) Income Tax Appellate Tribunal (ITAT) and
e) Authority for Advance Ruling (AAR)
as these authorities are not considered as IT authorities.
However, these authorities may make use of CBDT circular as an external aid to interpret the language of the law.
3)In any case CBDT circulars are always binding on IT authorities. Therefore Income Tax authorities can not challenge the validity of CDBT circular.
4) CBDT cannot issue a circular which overrides / overrules the judicial decision of Supreme Court (S.C.).
If CBDT issues such circular overriding S.C. decision, then such circular will be considered as an invalid circular.
5) CBDT cannot issue a circular, which contradicts with the plain language used in the Act.
6) If CBDT circular is beneficial (benevolent) to the interest of assessee, then such circular will not be considered as invalid even if it runs contrary to any judicial pronouncement or contrary to language used in law.
Section 120: Jurisdiction of I.T. Authority:
Jurisdiction is allotted on the basis of :-
1)Territorial Area For e.g.: Pin code
2) Person or Class of Person For e.g.: Company
3)Income or Class of Income For e.g.: Salary Income
4)Cases or Class of Cases For e.g.: Professionals like Chartered Accountants, Doctors, Lawyers, etc..
Section 124 : Jurisdiction of an Assessing Officer (A.O.): Once jurisdiction of an area is allotted to an A.O., then within that area he can exercise his jurisdiction over any person:-
1)who is carrying on Business or Profession in that area, or
2)who has Principal Place of his Business or Profession in that area, or
3)who resides in that area.
In case of disputes over jurisdiction A.O. shall refer to higher authority .
Assessee an challenge the jurisdiction of A.O. within the following time limits:-
ROI filed / No ROI filed /
1 month from receipt of notice u/s. 142(1) / 143(2) / within the time allowed in notice u/s. 142(1) / 148 to furnish ROI
Or / Or
before completion of asst. whichever is earlier. / within the time allowed u/s.144 whichever is earlier.
Section 127: Power to transfer cases: CCIT or CIT can transfer the case from A.O. to another A.O. subordinate to him after giving a reasonable opportunity of being heard to the concerned assessee. However, no opportunity of being heard shall be required if the case is to be transferred from one A.O. to another A.O. within the same city, town or locality. Disputes regarding jurisdiction shall be resolved by the concerned CCIT or CIT on mutual understanding. However, for any disagreement, the matter shall be referred to CBDT and CBDT shall resolve the dispute by way of issuing a notification in the Official Gazette of India.
Section 129: Opportunity of being Reheard: Whenever, an Income Tax Authority ceases to exercise jurisdiction over a particular case and is being succeeded by another Income Tax Authority, then the successor Income Tax Authority shall continue the pending proceeding from the same stage at which it was left over by the predecessor Income Tax Authority. There shall be no requirement on the part of the successor Income Tax Authority to reissue any notice already issued by his predecessor.
However, if the concerned assessee demands that before the successor Income Tax Authority continues the proceeding, he shall be given an opportunity of being reheard to explain his case to the successor Income Tax Authority, then in such case, an opportunity of being reheard has to be given to the assessee. (However, such an opportunity of being reheard is required to be given only if the concerned assessee demands for it and not otherwise).
The time of A.O. lost in giving such opportunity of being reheard to the assessee, shall be excluded while calculating time limit to complete the assessment.
Section 131: Powers of Income Tax Authorities: CCIT / CIT / CIT(A) / JCIT / A.O. shall have all the powers which are vested in a civil Court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters -
1)Discovery and Inspection,
2)Enforcing attendance of any person including an officer of a Banking Company and examining such persons on oath,
3) Compelling production of Books of Accounts and documents,
4)Issuing commissions (summons) (calling witness to appear, conduct enquiry, receive statement, refer to valuation officer, etc.),
5)Power to Impound (Retain in custody) Books of Accounts: The concerned I.T. authority can impound the Books of Accounts or documents produced before him, for a period of maximum 15 working days, unless –
a)Prior approval of CCIT or CIT has been obtained and
b) reasons are recorded in writing for retention beyond 15 working days.
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