is of the

nosewith gold"
authority is a
stubborn
bearyet heShakespeare (From the
Winter's Tale)
Though

8
INCOME-TAX AUTHORITIES

Board of
Authorities :(1) Central
Income-tax Authorities [3] Executive Income-tax (4) Deputy
Introduction [2] (3) Commissioners of
Director General of Income-tax
t (Judicial)
nirect Taxes (2) Ofñcers (6) Income-tax
Inspector [4] Appellate
(3) Appellate
Commissioners (5) Assessing
C o m m i s s i o n e r (Appeals) (2)
Commissioner (Appeals)
Exercises.
Authorities: (1) Deputy Supreme Court [5]
Settlement Commission
Courts (5)
Tibunal (4) High
[1] INTRODUCTION

Central
Income-tax Law is the
responsibility of the
of
The Administration constituted a number of
authorities
Government of India has
Government. The to control the
Income Tax Department
theIncome Tax Act and
to execute
efficiently.
deal with the following aspects of Income-Tax Authorities
Sections 116 to 138
Control
(i)Appointment and
(ii) Jurisdiction
ii) Powers, and
(iv)Disclosure of Information.
executive authority and
Taxes is the supreme
The Central Board of Direct for the
all the officers and other persons responsible
has the authority over

administration of the Act. Perhaps the most important

authority is the Assessing
direct touch with the assessees.
Officer (Income-tax Officer), who comes in
As per Section 2(7A), 'Assessing Officer' means:
Commissioner/Assistant Director/Deputy
() Assistant Commissioner/Deputy
virtue of directions
Director/ITO: who is vested with the relevant jurisdiction by
and
ororders issued U/s 120(1)/(2)) or any other provision of this Act,
Commissioner/Joint
(i) Additional Commissioner/Additional Director/Joint
Director who is directed to exercise or perform all or any of the powers &
Act.
unctions conferred on, or assigned to, an Assessing Officer under this
121 INCOME-TAX AUTHORITIES [Section 116]
The authorities constituted to administer the Act are of two types: (i) executive,
and (i) judicial. The executive authorities have to see that the provisions of law
are and people comply with the tax laws. The appellate
POperly
or
implemented
judicial authorities see to it that proper justice is done to.honest tax payer
guilty persons are penalised.
(389)
 HORITIES

Income-tax Authorities

Executive Authorities Appellate Authorities

Finance Minister Supreme Court

Central Board of Direct Taxes (CBDT)| High Courts

Principal Directors General of Income-tax|| Appellate Tribunal

Income-tax|Commissioners of Income-tax
OR Chief Commissioners of
(CIT appeals)
Director General of Income-tax
OR Chief Commissioner of Income-tax Additionals Commissioners of
Income-tax (ACIT: Appeals)
Principal Directors of Income-tax OR
Deputy Commissioners of
Principal Commissioners of Income-tax
Income-tax (DCIT: Appeals)
Directors of Income-tax OR
Commissioners of Income-tax Assessing Officers (ITO)

Additional Directors of Income-tax OR||Settlement Commission

Additional Commissioners of Income-tax

Joint Directors of Income-tax OR

Joint Commissioners of Income-tax

Deputy Directors of Income-tax OR

Deputy Commissioners of Income-tax

Assistant Directors of Income-tax OR

Assistant Commissioners of Income-tax

Income-tax Officers (ITO)

Tax Recovery Officers (TRO)

Inspectors of Income-tax
 INCOME-TAX AUTHORITIES 391

13] EXECUTIVE (ADMINISTRATiVE) AUTHORITIES

Appointment of Income-Tax Authorities
Following are the appointing authorities (Section 117):
()Income-Tax Authorities are appointed by the Central Governments.
)Income-Tax Authorities below the rank of Assistant Commisioners or
Deputy Commissioners are appointed by the Board (CBDT), Director
General, Chief Commisioner, Director or Commissioner.
Income Tax Authorities authorised by the
) Executives are appointed by
Board (CBDT).
(1) CENTRAL BOARD OF DIRECT TAXES
for the administration
The Central Board is the topmost executive authority
law. This Board was created under the Central
and execution of the Income-tax
Board consists of a chairman and six members.
Board of Revenue Act, 1963. The
the Act [Section 295].
(1) It has the powers to make rules under
issue orders, instructions and
(2) Under Section 119, it has the powers to
for the execution of the Act and under
directions to all the officers responsible
and follow such orders ofthe Board. The
Section 118 they are bound to observe
issued by the CBDT to be laid before
Central Government shall cause every order
consists of many members, one
each House of Parliament. At present the Board,
of them is the Chairman of the Board.
for issurance of reassessment order
3) The Board is authorised to accord sanction
(4) The Board can declare an organisation as company. (Section 2(17) (iv).
seizure under the Act
(5) It can entertain objections in respect of search and
(6) It can also approve reduction or waiver of penalty. (Section 132)
(7) It can issue orders containing guidelines, principles or procedures to be
followed by Income-tax authorities, in the work relating to assessment or
collection of revenue etc. However, the Board has no powers to issue orders,
instructions or directions so as to interfere with the discretion of the Appellate
Assistant Commissioner or the Commissioner (Appeals) in the exercise of the

appellate function.
(2) DIRECTOR GENERAL OF INCOME-TAX OR CHIEF
cOMMISSIONER OF INCOME-TAX
The Central Government appoints the Directors General who are required
o perform such functions as may be assigned by the Central Board of Direct
laxes. The powers of Director General are as stated below:
) To gie instruction to Assessing Officer.
(ii) To enquire or investigate into concealment of income.
(ii) To search and seizure.
(iv) To requisite books of account.
(v) To survey, and
(vi) To make any enquiry.
392INCcOME-TAXAUTHORITIE> INCOME-TAX

OF
n c o m e - t a x . He is the
of IIncome-tax.
COMMISSIONERS

of
(3)
head ofthe Income-tax administrat f specified
two area,
or more
C

which
o m m

Commissioners
i s

is usually a state
may
s i o n e r s

appoints
The Central Govermment

two or more
Commis issioners may
is heavy, Commissioner
state
Maharashtra etc. The Commissioner
If the work-load of a particular
Gujarat, Maharashtra
appointed for that state, c.g., Board and is given powers to
be
under the control and supervision
of the Procedure'.
works
under the
'Code of Civil
civil court
Act like a
He has the power: also Inspectors of Income-tax. The
income-tax officers and
) to appoint under his direct control and
and Income-tax officers work
IAC the instructions issued by the
have to observe
supervision. They
Commissioner.
one Income-tax
officer to another officer
transfer
to any case from
()
procedure redarding discovery and inspection, production of
initiate
(i) to commission etc.
books of account, issuing
interest etc. levied by an Income-tax officer
to waive or reduce any penalty,
v) issue notice for assessment in such
allow an Income-tax officer to
(v)to
cases where the
time limit of four years has expired.

(vi) make
to inquiry under the Act.
any
oficer to make an appeal to the Appellate
(vii) to direct the Income-tax
Tribunal the order of an AAC.
against
authorise the ITO to withhold
the refund under certain circumstances
(vil) to
the
or can set-off the amount of refund due to any person against
arrears of tax due from such person.
DEPUTY
(4) DEPUTY COMMISSIONERS OR
DIRECTORS OF INCOME-TAX

They are also the Central Government. The main functions

appointed by
subordinate
of such Deputy Commissioners is to detect tax evasion and supervise
officers. They are empowered to accord approval to adopt fair market value
as

full consideration for the transfer of capital asset in case of understatement of

1ts value. They are authorised to approve orders of additions to tax on

undistributed profits, to instruct the I.T.O. to exercise all powers of

income-tax officer, to hear and examine draft assessment orders and to cancel
registration etc.
(5) ASSESSING OFFICERS (INCOME-TAX OFFICERS)
(1) There are two classes of Income tax officers Class I ITO and Class
1 ITO. Class I Income-tax Officers are
appointed by the Central Government.
whereas Class II Income-tax officers are appointed by the Commissioner or
Income-tax.
 INCOME-TAX AUTHORITIES 393

(2) He occupies a very important position in the whole set up of income-

tax law administration. He is the first person who comes in direct contact with
e, the assessees. He is the person who initiates the assessment, makes the assessment
order after verifying the particulars given in thee return by the assessee. He makes
the demand for income-tax.
(3) He has to make assessment of assesses covered under his department.
He has to also supervise the work done by inspectors and other employees
working under him.
If an assessee is not satisfied with the order
passed by the 'Assessing
And Officer, an appeal can be filed with the Income-tax Commissioner
within a period of 30 days from the service of notice of demand.
(Appeals)
Income-tax Officers are subordinate to the Commissioner and the
Assistant Commissioner and also to the Director of Inspection. They
Inspecting
their functions in respect to such areas or such class of persons as the
perform
Commissioner
may direct.
Some of the powers given to an 'Assessing Officer' are as under
uch (1) Power to make assessment and issuing notice of
demand to an assessee.
(2) Power to instruct an assessee to get his accounts audited.
(3) Power to reassess income which has escaped assessment.
(4) Power to allot permanent account number
(PAN).
(5) Power to call for information.
ces (6) Power to collect certain
informaion.
(7) Power to inspect
register of company.
(8) Power to impose penalty for non-payment self-assessment tax.
(9) Power of determining the proportion of
expenses allowable as deduction in
respect of premises partly used for.business or profession.
(10). Power regarding discovery,
IOnS recording
statement on oàth, production of
nate
evidence etc.
(11) Power to requisition of books of accounts.
(12) Power of search and seizure, if authorised by higher authorities.
(13) Power to rectify apparent mistakes on his own or on
on assessee. application made by the
of
(14) Power to impose penalty for default in
ncel payment of taxes.
(15) Power to grant refund
or to adjust the refund against any outstanding tax
from the assessee.
(16) Power to withhold refund in certain cases.
a (17) Power to issue a certificate to an assessee for receiving any income without
ent, deduction of tax at source.
rof (18) Power to grant relief in respect of'arrears of salary' received by an assessee.
(19) Power to apply the asset seized and retained in satisfaction of the
liabilities of the assessee under the Direct Taxes Laws. existing

TR RBA (Sem 5)
 394INcOME-TAXAUTHORITIES

(6) INCOME-TAX INSPECTORS

The Income-tax Inspectors are appointed by the Commissioner subject to
rules and orders of the Central Govemment. They are subordinate to the Income-tav
Officers. They perfom such functions as are assigned to them by the Commissioner
They have no particular powers or functions. Their main function is to assist
the Income-tax Officer or any other Income-tax authority under whom thev are
placed. Generally, they move into the wards under their jurisdiction to find ou
liable topay income-tlax and issue notices to them.
persons who are

141 APPELLATE OR JUDICIAL AUTHORITIES

The Income-tax officer is an executive authority who assesses the income
of the assessee and issues the assessment order. The assessee may be dissatistied
a
with the assessment. In that case, appellate authorities are appointed by the
government who would listen to the appeals and try to give justice. The following

appellate authorities are appointed under the Act.

(1) DEPUTY COMMISSIONERS (APPEALS) to

T
The Deputy Commissioner is appointed by Central Government. (1) His
fro
main function is to hear the appeals filed by an assessee who is dissatisfied with
to
the order of the Income-tax Officer. Such appeal is to be made to him within
30 days from the date of the order. Deputy Commissioners are under the control in
of the Board. But the Board cannot interfere with their discretion in the exercise da
of their appellate function. If the Deputy Commissioner gives a decision against Ca
the Income-tax department, it can go in appeal to the Appellate Tribunal. ask
In disposing of an appeal they can (2) confirm, reduce, enhance or annual to
the assessment of the ITO. (3) He may set aside the assessment and refer the
case back to the Income-tax officer for making a fresh assessment. (4) IF there
is an appeal against the order of the ITO
imposing a penalty, he may confim iHig
or cancel the penalty.
of s
(2) COMMISSIONER (APPEALS)
to t
Commissioners of Income-tax (Appeals) are also appointed by the Central
Government. They are empowered
etc., to call for information, to
regarding discovery, production of evidence accoacce
inspect registers of
against tax unpaid, to dispose of appeals and to companies,
to set off refunas
que
impose penalty. the
(3) APPELLATE TRIBUNAL Pres
This is an independent body from
the
department. Jts function is to hear appeals executive wing of the Income-1a
against the order of the Depuy
Commissioner (Appeals). The Tribunal is constituted
It functions under the
Ministry of Law. by the Central Governme emp-
emp
tax a
of ca