Authorities under

Income Tax Act,

1961
Authorities under Income Tax
Act
• The Income Tax authorities required to exercise powers and
functions to -
• prevent harassment of assesses, tax-evasion,
• unnecessary discrimination in collection of tax.
• However, there have been a number of instances of misuse of
these rule- making powers which have the effect of
contradicting statutory provisions that have been given
binding effect, displacing the authoritative pronouncements of
the Higher Judiciary and causing an erosion of the
constitutionally-mandated effect of Supreme Court
declarations under Article 141. In this scenario, for the
purpose of effective financial management it becomes
imperative to understand the functioning, the powers and the
limitation on the powers of these tax authorities.
• Chapter XIII of the Income-tax Act, 1961, concerned with the
income-tax authorities and contains a total of 30 Sections.
• Part-A of the Chapter, containing Sections 116 to 119, relates
to the appointment and control of the income tax authorities;
• Part-B containing Sections 120 to 130-A (out of which only the
Sections 120, 124, 127 and 129 are in force, the rest having
been omitted) pertain to the jurisdiction of the income-tax
authorities;
• Part-C containing Sec. 131 to 136 are concerned with the
powers of the income tax authorities;
• Part-D containing Sec. 137 (omitted) and 138 pertain to the
disclosure of information respecting assesses.
Classes of Income Tax
Authorities
• Section 116 - There shall be the following classes of income
tax authorities for the purposes of this Act, namely:-
(a) The Central Board of Direct Taxes constituted under the
Central Boards of Revenue Act, 1963 (54 of1963),
(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
• Assessing officer- In this connection, it may be noted that
under section 2(7A), the term ‘Assessing Officer’ means:
• (a) The Assistant Commissioner or Deputy Commissioner or Assistant
Director or Deputy Director; or
• (b) The Income-tax Officer who is vested with the relevant jurisdiction by
virtue of directions or orders issued under section 120(1) or (2) or any
other provision of the Act; and
• (c) The Additional Commissioner or Additional Director or Joint
Commissioner and Joint Director who is directed under Section 120
(4)(b) to exercise or perform all or any of the powers and functions
conferred on, or assigned to, an Assessing Officer.
Power of Commissioner Income
Tax
Power to commissioner of income tax –
• Commissioners are appointed by the Central Government.
• They are appointed to head income-tax administration of a
specified area.
• As the head of administration, a Commissioner of income-tax
enjoys certain administrative as well as judicial powers.
• A commissioner may exercise powers of an assessing officer.
• It has the power to transfer any case from one or more
assessing officers to any other assessing officer.
• It can grant approval for an order issued by the assessing
officer.
• Prior approval is required for reopening of an assessment.
• Power to revise an order passed by an assessing officer.
Commissioner (Appeals)
• Commissioners of Income-Tax (Appeals) are appointed by
the Central Government. It is an appellate authority vested
with the following judicial powers:
a. Power regarding discovery, production of evidence etc.
b. Power to call information.
c. Power to inspect registers of companies.
d. Power to set off refunds against tax remaining payable.
e. Power to dispose of appeals.
f. Power to impose penalty.
Joint Commissioners
• Joint Commissioners are appointed by the Central
Government.
• The main function of the authority is to detect tax - evasion
and supervise subordinate officers.
• Joint Commissioner enjoys –
• the power to accord approval to adopt fair market value as full
consideration,
• instruct income tax officers, and exercise the powers of income tax
officers,
• the power to call information,
• to inspect registers of companies,
• to make any enquiry among other powers.
Power to Call for Information
• Section 133
• The Commissioner, The Assessing Officer or the Joint Commissioner
may for the purpose of this Act:
• (a) Can call any firm to provide a return of the addresses and
names of partners of the firm and their shares;
• (b) Can ask any Hindu Undivided Family to provide 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 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
any sum paid or received in Exchange.
Other Powers
• Section 135 and 136
• The Director General or Director, the Chief Commissioner or
Commissioner and the Joint Commissioner are competent to
make any enquiry under this act and for all purposes they shall
have the powers vested in an Assessing Officer in relation to
the making of enquiries.
• If the Investigating officer is denied entry into the premises,
the Assessing Officer shall have all the powers vested in him
under sections 131(1) and (2).
NOTE - All the proceedings before Income tax authorities are
judicial proceedings for purposes of section 196 of the Indian
Penal Code, 1860, and fall within the meaning of sections 193
and 228 of the Code.