Unit – 4: Income Tax Authorities, their Powers and Functions
Income Tax Authorities
Section of the Income Tax Act, 1961 provides for the
administrative and judicial authorities for administration of this Act. The
Direct Tax Laws Act, 1987 has brought far-reaching changes in the
organizational structure. The implementation of the Act lies in the hands of
these authorities. The change in designation of certain authorities and
creation of certain new posts in the structure are the main features of
amendments made by The Direct Tax Laws Act, 1987. The new features of
authorities has been properly depicted in a chart on the facing page. These
authorities have been grouped into two main wings :
(i) Administrative [ Income Tax Authorities ][
Sec. 116 ]
(a) the
Central Board of Direct Taxes constituted under the Central Boards of Revenue
Act, 1963 (54 of 1963),
(b) Directors-General
of Income-tax or Chief Commissioners of Income-tax,
(c) Directors
of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax
(Appeals),
(d) Additional
Directors of Income-tax or Additional Commissioners of Income-tax or Additional
Commissioners of Income-tax (Appeals),
(e) Joint
Directors of Income-tax or Joint Commissioners of Income-tax.
(f)
Deputy Directors of Income-tax or Deputy
Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals),
(g)
Assistant Directors of Income-tax or Assistant
Commissioners of Income-tax,
(h)
Income-tax Officers,
(i)
Tax Recovery Officers,
(j)
Inspectors of Income-tax.
"Assessing Officer" means the Assistant Commissioner or
Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax
Officer who is vested with the relevant jurisdiction by virtue of directions or
orders issued under sub-section (1) or sub-section (2) of section 120 or any
other provision of this Act, and the Joint Commissioner or Joint Director who
is directed under clause (b) of sub-section (4) of that section to exercise or
perform all or any of the powers and functions conferred on, or assigned to, an
Assessing Officer under this Act;
Importance of Assessing Officer : In the organizational setup of the
income tax department Assessing Officer plays a very vital role. He is the
primary authority who initiates he proceedings and is directly connected with
the public. Form the time of filing of return till the assessement is completed
he plays a pivotal role . He can start proceedings for non filing of return,
imposition of penalties etc. Orders passed by him can be challenged only on
approval. The department can revise his orders only if it is proved that there
are prejudicial to the revenue and that too only by the Commissioner of Income
Tax.
(1) Power of Central Government : The Central
Government may appoint such persons as it thinks fit to be income-tax
authorities. It kept with itself the powers to appoint authorities upto and
above rank of an Assistant Commissioner of Income-Tax [ Sec. 117 (1) ]
(2) Power of the Board and Other Higher Authorities
: Subject to the rules and orders of the Central
Government regulating the conditions of service of persons in public services
and posts, the Central Government may authorize the Board, or a
Director-General, a Chief Commissioner or a Director or a Commissioner to
appoint income-tax authorities below the rank of an Assistant Commissioner or
Deputy Commissioner. [ Sec. 117 (2) ]
(3) Power to appoint Executive and Ministerial Staff : Subject
to the rules and orders of the Central Government regulating the conditions of
service of persons in public services and posts, an income-tax authority
authorized in this behalf by the Board may appoint such executive or
ministerial staff as may be necessary to assist it in the execution of its
functions.
The Central Board of Direct Taxes (CBDT) is the highest executive
authority. It is subject to the overall control of the Central Government. It
is authorized to discharge all those functions prescribed in the Act and those
which are entrusted to it by the Central Government. The Central Board of Direct Taxes consists of
a Chairman and following six Members: -
1.
Chairman
2.
Member
(Income-tax)
3.
Member
(Legislation & Computerisation)
4.
Member (Personnel
& Vigilance)
5.
Member
(Investigation)
6.
Member (Revenue)
7.
Member (Audit
& Judicial)
Powers of
the Board :
(a)
It declares any association etc. as company u/s
2(17)(iv).
(b)
Conditions for Leave Travel Concession are
prescribed by the Board u/s 10(5).
(c)
House rent “allowance limit is prescribed for
exemption u/s (13A).
(d)
Various rules arid limits u/ss 11 and 12A
regarding charitable institutions and their registration are prescribed by the
Board.
(e)
Rates of depreciation are determined by the
Board u/s 32.
(f)
Prescribed authorities are named by the Board
u/s 35CCA and 35CCB.
(g)
The Board prescribed cases where payment
exceeding Rs. 10,000 could be made in cash u/s 40A(3).
(h)
The Board notifies professions and persons who
have to maintain books of accounts etc. u/s 44AA.
(i)
The conditions governing the reference to the
Valuation Officer are prescribed by the Board.
(j)
To specify permanent disability or
mental-retardation for deduction u/s 80DD.
(k)
The Board assigns proper jurisdiction on
income-tax authorities,
(l)
In case of clash of jurisdiction between various
authorities, it solves the issue u/s 124(2).
(m) It
authorizes particular income-tax authorities to conduct a search etc. u/s
132(1).
Powers of other Income Tax Authorities
1) Power relating to Discovery, Production of
evidence, etc: The
Assessing Officer, The Joint Commissioner, the Chief Commissioner or the
Commissioner has the powers as are provided in a court under the code of Civil
Procedure, 1908, when trying to suit for the following matters:
(a) discovery and
inspection;
(b) to enforce any person
for attendance, and examining him on oath
(c) issuing commissions;
and
(d) compelling the
production of books of account and other document.
2) Power of Search and Seizure: Today it is not hidden
from income tax authorities that people evade tax and keep unaccounted assets.
When the prosecution fails to prevent tax evasion, the department has the to
take actions like search and seizure.
3) Requisition of Books of account, etc: Where the Director or
the Director-General or Commissioner or the Chief Commissioner in consequence
of information in his possession, has reason to believe that (a), (b), or (c)
as mentioned under section 132(1) and the book of accounts or other documents
or the assets have been taken under custody by any authority or officer under
any other law, then the Chief Commissioner or the Director General or Director
or Commissioner can authorize any Joint Director, Deputy Director, Joint
Commissioner, Assistant Commissioner, Assistant Director, or Income tax Officer
to require the authority to provide sue books of account, assets or any
documents to the requisitioning officer, when such officer is of the opinion
that it is no longer necessary to retain the same in his custody.
4) Power to Call for Information: The Commissioner The
Assessing Officer or the Joint Commissioner may for the purpose of this Act:
(a) can call any firm to
provide him with a return of the addresses and names of partners of the firm
and their shares;
(b) can ask any Hindu
Undivided Family to provide him with return of the addresses and names of
members of the family and the manager;
(c) can ask any person who
is a trustee, guardian or an agent to deliver him with return of the names of
persons for or of whom he is an agent, trustee or guardian and their addresses;
(d) can ask any person,
dealer, agent or broker concerned in the management of stock or any commodity
exchange to provide a statement of the addresses and names of all the persons
to whom the Exchange or he has paid any sum related with the transfer of assets
or the exchange has received any such sum with the particulars of all such
payments and receipts;
5) Power of Survey: The term 'survey' is not
defined by the Income Tax Act. According to the meaning of dictionary 'survey'
means casting of eyes or mind over something, inspection of something, etc. An
Income Tax authority can have a survey for the purpose of this Act. The objectives
of conducting Income Tax surveys are:
• To discover new
assessees;
• To collect useful
information for the purpose of assessment;
• To verify that the
assessee who claims not to maintain any books of accounts is in-fact
maintaining the books;
• To check whether the
books are maintained, reflect the correct state of affairs.
6) Collection of Information: For the purpose of
collection of information which may be useful for any purpose, the Income tax
authority can enter any building or place within the limits of the area
assigned to such authority, or any place or building occupied by any person in
respect of whom he exercises jurisdiction.
Procedure for Filling an appeal
In general
parlance, ‘appeal’
means ‘making a request’ and in legal parlance, it means ‘apply to a higher
court for a reversal of the decision of a lower court’. In this article I have
covered the levels of appeal under Income Tax Act. Hope this helps. In
India, the taxpayer computes the tax payable on his total income and pays to
the government. If the Income Tax department (the government) disagrees with
the tax computed by the taxpayer, they can levy an additional tax. Under Income
Tax Act, the liability is determined at the level of Assessing Officer (it can
be Income Tax Officer (ITO) or Assistant/Deputy Commissioner of Income Tax)
A tax payer
aggrieved by various actions of Assessing Officer (say higher tax demand) can
appeal before Commissioner of Income Tax (Appeals). Further appeal can be
preferred before the Income Tax Appellate Tribunal. On substantial question of
law, further appeal can be filed before the High Court and even to the Supreme
Court.
1. Appeal before
Commissioner (Appeals): Aggrieved tax payer can file appeal before the
Commissioner (Appeals) having, jurisdiction over the tax payer. Appeal can be
filed when a taxpayer is adversely affected by the Orders passed by Tax
authorities. Every appeal to the Commissioner (Appeals) is to be filed in Form
No. 35, signed by the taxpayer/director or his authorized representative.
Appeal Fees to be paid depending upon total income determined by the Assessing
Officer, subject to a maximum of Rs.1000.
Appeal is to be
filed within 30 days of the date
of service of notice of demand relating to assessment or penalty order or the
date of service of order sought to be appealed against, as the case may be. The
commissioner may admit an appeal after the expiry of 30 days, if he is
satisfied that there was sufficient cause of not presenting the appeal within
the period of 30 days.
On receipt of
Form no. 35, Commissioner of Income-tax (Appeals) fixes date and place for
hearing the appeal by issuing notice to the tax payer and the Assessing
Officer, against whose order appeal is preferred. After the hearing is
concluded, Commissioner (Appeals) passes order in writing, disposing of the
appeal and stating the decision on each ground of appeal with reasons.
2. Appeal before
Income Tax Appellate Tribunal (ITAT): Appeal against an order of Commissioner
(Appeals) lies with the Income Tax Appellate Tribunal (ITAT). Both tax payer
and the Assessing Officer can file appeal before ITAT. Appeal is to be filed (in Form
36) before the Appellate Tribunal within 60 days of the date on which order
appealed against is communicated to the taxpayer or the Commissioner, as the
case may be. Appeal fee to be paid based on the taxable income subject to a
maximum of Rs.10000. The Appellate Tribunal may admit an appeal after the
period of 60 days if it is satisfied that there was sufficient cause for not
presenting it within the prescribed time. Normally appeals are heard by a Bench
comprising of one judicial member and one accountant member.
3. Appeal before High Court: Appeal against Appellate Tribunal’s order lies
with the High Court, where the High Court is satisfied that the case involves a
substantial question of law. Appeal to the High Court against Appellate
Tribunal’s order can be filed by the tax payer or the Chief
Commissioner/Commissioner within 120 days of receipt of the order and in the
form of memorandum of appeal, precisely stating the substantial question of law
involved. Appeal
filed before High Court is heard by bench of not less than two Judges and
decision is by majority
4. Appeal before Supreme Court: Appeal against High Court’s order in respect
of Appellate Tribunal’s order lies with the Supreme Court in those cases, which
are certified to be fit for appeal to the Supreme Court. Special leave can also be
granted by the Supreme Court under Art. 136 of the constitution of India
against the order of the High Court.
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