TOPIC: INCOME TAX AUTHORITIES

-Income Tax Authorities-

CHAPTER 1: INTRODUCTION

In India, the Central Government has been empowered by Entry 82 of the Union List of
Schedule VII of the Constitution of India1 to levy tax on all income other than agricultural
income. The Income Tax Law comprises The Income Tax Act 1961 2, Income Tax Rules
19623, Notifications and Circulars issued by Central Board of Direct Taxes (CBDT), Annual
Finance Acts and Judicial pronouncements by Supreme Court and High Courts.

The Government of India imposes an income tax on taxable income of all persons including

individuals, Hindu Undivided Families (HUFs), companies, firms, association of persons,
body of individuals, local authority and any other artificial judicial person. Levy of tax is
separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961.
The Indian Income Tax Department is governed by CBDT and is part of the Department of
Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds
that the government uses to fund its activities and serve the public. The Income Tax
Department is the biggest revenue mobilizer for the Government.

For effective financial management it is imperative to understand the functioning, the powers
and the limitation on the powers of tax authorities. This proves to be of even more relevance
in the light of the current scenario in India where there is an uncertainty in the mind of the
assesses with regard to the power that can be exercised by these authorities and where there
have been a number of instances of abuse 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 1414.

This project explains in a simple manner the various tax authority established under the
Income Tax Act, the Central Board of Direct Taxes and its powers, the powers of other
Income Tax authorities, the jurisdiction of the Income-Tax Authorities, and a conclusive
analysis of the same with the objective to enable a comprehensive understanding of the
functioning of tax authorities for the purpose of financial management.

1
The Constitution of India.
2
The Income Tax Act, 1961 (Act No. 43 of 1961).
3
Income Tax Rules, 1962.
4
The Constitution of India, art. 141.

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CHAPTER 2: INCOME TAX AUTHORITIES

Income Tax Act, 1961 is the main law dealing with Income Taxes in India. There are several
rules made under this Act and are collectively known as Income Tax Rules, 1962. Like any
other law, this Act and rules also require authorities to regulate it. These authorities are
defined under the Income Tax Act, 1961.

2.1 LIST OF INCOME TAX AUTHORITIES

Income Tax Act, 1961 provides for the administrative and judicial authorities for
administration of this Act. The Direct Tax Laws Act, 1987 5 has brought far-reaching changes
in the organizational structure. The implementation of the Income Tax Act lies in the hands
of these authorities. The government of India imposed the Income Tax Act in the year 19616.
Two categories of taxation were prescribed

1. Direct tax
2. Indirect tax

Income tax or the tax taken by the government on an individual on his earnings is income tax.
The government has set up various authorities for lawful execution of the income Tax Act
and to oversee the righteous functioning of the income tax department. The various income
tax authorities for the purposeful existence of the Act as per Section 1167 are:

 CBDT or the Central Board of Direct Taxes which has been constituted under the
Central Board of Revenue Act 1963
 Director general of income tax
 Chief commissioner of income tax
 Directors and commissioner of income tax
 Additional directors and additional commissioners of income tax
 Joint directors and joint commissioners of income tax
 Deputy directors and deputy commissioners of income tax
 Assistant directors and assistant commissioners of income tax
 Income tax officers
 Income tax inspectors

5
The Direct Tax Laws (Amendment) Act, 1989 (Act No. 3 of 1989).
6
Supra, Note 2.
7
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 116.

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It is a joint role of all these authorities that tax payer abides by the rule mentioned in the
beginning of every financial year and pay their taxes accordingly.

2.2 CENTRAL BOARD OF DIRECT TAXES AND ITS POWERS

The Central Board of Direct Taxes (CBDT) 8 is a statutory body constituted under the Central
Board of Revenues Act, 19639. Its members are appointed by Central Government for the
performance of duties entrusted by Board. It functions under the jurisdiction of Ministry of
Finance10. It is the highest executive body to govern Income Tax Authorities. It exercises its
power to control and regulate the Income Tax Authorities. Under the Income Tax Act, 1961,
it is entrusted with certain powers.

Subject to control and approval of Central Government, it can issue rules under the
provisions of Income Tax Act. All the rules are framed by Board under section 295 11 and are
placed before the Parliament. Also, the Board has been empowered under section 11912 to
issue instructions and circulars to its subordinates. All such authorities have to comply with
CBDT instructions and circulars. But, CBDT is not empowered to issue instructions for
assessment of a particular case or to interfere with the discretions of commissioners (appeals).

The Central Government can appoint such persons as Income Tax Authorities as it may be
required. It can further define that such person is subordinate to such classes of authorities. It
may also authorize the Board or a Principal Director or Director-General, a Principal Chief
Commissioner or Chief Commissioner or a Principal Director or Director or a Principal
Commissioner or Commissioner to appoint income tax authorities below the rank of an
Assistant Commissioner or Deputy Commissioner.

The Board has been empowered under Section 119 13 to issue instructions and circulars
to it’s subordinates for the proper administration of the Act. Under Section 11814, CBDT shall
control all the Income Tax Authorities subject to an overall framework of Central
Government. It is, in addition, obligatory for the various authorities and all other persons
8
Central Board of Direct Taxes, INCOME TAX DEPARTMENT, GOVERNMENT OF INDIA,
https://www.incometaxindia.gov.in/pages/about-us/central-board-of-direct-taxation.aspx (last accessed
17/03/21).
9
Central Board of Revenues Act, 1963 (Act No. 54 of 1963).
10
Ministry of Finance, https://finmin.nic.in/ (last accessed 17/03/21).
11
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 295.
12
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 119.
13
Id.
14
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 118.

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employed in the execution of the Act to observe and follow such orders, instructions and
directions of the Board. However, the Board is not empowered to issue orders, instructions or
directions in such a way as to –

1. Require any income-tax authority to make the assessment of a particular case in a

particular manner, or 
2. Interfere with the discretion of the Commissioner (Appeals) in the exercise of his
appellate functions.15

Further, the Board may, if it considers necessary or expedient to do so, for the purpose of
proper and effective management of the work of assessment and collection of revenue, issue
general or special orders from time to time in respect of any class of incomes or class of cases
setting the Board may relax the provisions of Section 115P, 115S, 139, 143, 144, 147, 148,
154, 155, 234A, 234B, 271 and 273. Such order etc., may be issued by general or special
orders in respect of any class of incomes or fringe benefit or class of cases. Such orders are
the guidelines, principles or procedures to be followed by other income-tax authorities in the
work relating to assessment or collection of revenue or the initiation of proceedings for the
imposition of penalties.

If the Board thinks it is necessary for public interest to do so the Board can publish and
circulate the document in the prescribed manner. Also, the Board, to avoid genuine hardship
in any case or classes of cases, may by general or specific order authorize any income tax
authority, to admit an application or claim for any exemption, deduction, refund or any other
relief under the Act after the expiry of the period specified under the Act and deal with the
same on merits in accordance with law. However, such order cannot be issued to a
Commissioner (Appeals).16

The Board, in addition, can relax any requirement contained in Sections 14 to 59 and 80A to
80U where the assessee has failed to comply with any requirement. However, such default in
the requirement was due to circumstances beyond their control or if the assessee has
complied with such a requirement before the completion of assessment in relation to the
previous year in which such deduction is claimed. Every such order is to be laid before each
House of Parliament.

15
Direct Tax, BANK BAZAAR, https://www.bankbazaar.com/tax/direct-tax.html (last accessed 17/03/21).
16
What is Direct Tax, BUSINESS STANDARD, https://www.business-standard.com/about/what-is-direct-tax/2 (last
accessed 17/03/21).

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CHAPTER 3: APPOINTMENT AND CONTROL OF IT AUTHORITIES

3.1 APPOINTMENT OF INCOME TAX AUTHORITIES

Section 11717 of the Income Tax Act, 1961 deals with the Appointment of IT Authorities. The
following are provided with the power to appoint IT Authorities.

 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.18
 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.19 
 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.20

3.2 CONTROL OF INCOME TAX AUTHORITIES

Section 11821 deals with the Control of Income Tax Authorities. According to it, the Board
may, by notification in the Official Gazette, direct that any income-tax authority or
authorities specified in the notification shall be subordinate to such other income-tax
authority or authorities as may be specified in such notification.

17
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 117.
18
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 117(1).
19
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 117(2).
20
Section 117, https://www.taxsutra.com/sites/taxsutra.com/files/sections/Section%20117.pdf (last accessed
17/03/21).
21
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 118.

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CHAPTER 4: JURISDICTION OF IT AUTHORITIES

Jurisdiction means legal authority over a certain area or certain persons. Generally, it is an
authority given to a department/legal body to deal with and make pronouncements on legal
matters. It can also be defined as the limit of a judicial authority or legally constituted body to
the extent to which they can exercise authority over suits, cases, appeals etc.22

4.1 JURISDICTION OF IT AUTHORITIES (SECTION 120)

Section 12023 deals with Jurisdictions of Income Tax Authorities. Income tax authorities shall
exercise all or any of powers and functions conferred upon it by CBDT. CBDT can in
accordance with section 120(1) issue directions to such income tax authorities. Also, if
CBDT directs, all such high-rank authorities can exercise powers and perform functions of
such lower ranked authorities. This section requires CBDT to consider matters in issuing such
directions:

 Territorial Area
 Persons or classes of persons
 Incomes or classes of incomes
 Cases or classes of cases

Central Board of Direct Taxes (CBDT) may authorize any Principal Director General or
Director General or Principal Director or Director of income tax to perform such functions of
any other income tax authority. CBDT can empower the Principal Director General or
Director General or Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner. Such empowered authority can issue orders in writing to the
effect that the powers and functions conferred on or assigned to the Assessing Officer under
this Act in respect of any specified area or person or class of person or persons or incomes or
classes of income or cases or classes of cases shall be exercised or performed by an
Additional Commissioner or Additional Director or a Joint Commissioner or Joint Director.

CBDT or any other such authorized authority in this behalf can confer jurisdiction with more
than one income-tax authority in relation to any case24.

22
Juhi Chandel & Sandesh Kumar, Jurisdiction under Income Tax, MONDAQ,
https://www.mondaq.com/india/income-tax/904934/jurisdiction-under-income-tax (last accessed 17/03/21).
23
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 120.
24
Jurisdiction, INCOME TAX DEPARTMENT, GOVERNMENT OF INDIA,
https://incometaxindia.gov.in/Acts/Income-tax%20Act,%201961/1991/102120000000011064.htm (last accessed
17/03/21).

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4.2 JURISDICTION OF ASSESSING OFFICERS (SECTION 124)

An Assessing officer shall exercise his jurisdiction over persons who carry business in his
area of jurisdiction as per Section 12425 of the Act. He shall also exercise his jurisdiction over
persons who have businesses over many places but their principal place of business is in his
area of jurisdiction.

Where there arises a question whether an Assessing Officer has jurisdiction to assess any
person, it shall be determined by the Principal Director or Director General or the Principal
Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In
case such high ranking authorities are also not in agreement, Board can determine their
jurisdiction by way of notification in the Official Gazette26.

Where a person has filed return of income after the expiry of one month from the date on
which AO has served notice under section 142(1)27 or section 143(2) or after the completion
of the assessment, whichever is earlier; such person will have no right to question the
jurisdiction of such AO. Also, where assessee doesn’t file return after expiry of such time
given to him in the notices, AO’s jurisdiction cannot be questioned28.

Where the assessee has questioned jurisdiction of AO, AO shall first determine the
correctness and if not satisfied with it, he shall determine it under rules mentioned above
before making the assessment. Every AO shall have all powers conferred by this Act on
income accruing or arising or received within the area over which direction is issued under
section 120(1) and 120(2)29.

4.3 POWER TO TRANSFER CASES (SECTION 127)

Section 12730 provides power to high rank authorities to transfer cases from one Assessing
Officer to another. However, before transferring such cases, Assessee must be given a
reasonable opportunity of being heard. Also, wherever possible, such authority shall maintain
reasons in writing for doing so.
25
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 124.
26
Who is an Assessing Officer? How do you fine your assessing officer?, CLEARTAX
https://cleartax.in/s/income-tax-assessing-officer#:~:text=Every%20taxpayer%20is%20assigned%20a,a
%20smooth%20and%20efficient%20manner.&text=Jurisdictional%20AO%20is%20an%20assigned
%20income%20tax%20officer%20for%20every%20taxpayer. (last accessed 18/03/21).
27
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 142.
28
Supra, Note 22.
29
Supra, Note 23.
30
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 127.

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Now suppose the Assessing Officer to whom the case is being transferred is under another
such high-ranking Authorities above Assessing Officer. There is no issue if such high-
ranking authorities are at agree. Such high-ranking authorities under which the new AO is
subordinate shall pass the order. But, in case such high ranking authorities are at
disagreement, the Board or authority authorized by board shall pass the order.

Where there is transfer between AO within the same city or locality or place, then Assessee
may not be given an opportunity of being heard. Such transfer can be made at any stage of
the proceedings and it is not necessary to re-issue any notices that have already been issued.

In Sagarmal Spinning and Weaving Mills Limited v. CBDT31 the Madhya Pradesh HC had
held that on bare reading of Section 127 of the Act, 2 things are absolutely clear: firstly, that a
reasonable opportunity of being heard in the matter whenever it is possible to do so, and
secondly, the recording of reasons for transferring of case. If either of the two are absent, it is
not possible to support an order to transfer.

An order passed u/s 127 of the Act is not appealable before the Ld. CIT(A). Since the first
appellate authority has no jurisdiction to decide the validity or otherwise of an order passed
u/s 127, transferring the jurisdiction from one Assessing Officer (AO) to another, it is, but,
natural that he cannot declare any order passed u/s 127 as invalid and consequently set aside
the assessment order.32

31
Sagarmal Spinning and Weaving Mills Limited v. CDBT, 1970 (10) TMI 18.
32
CIT (A) cannot cancel order U/s. 127 transferring jurisdiction from one AO to another, TAX GURU,
https://taxguru.in/income-tax/cita-cannot-cancel-order-u-s-127-transferring-jurisdiction-from-one-ao-to-
another.html (last accessed 18/03/21).

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CHAPTER 5: POWERS OF THE IT AUTHORITIES

The Income Tax Act, 1961 specifies the scope of the powers handed to the income-tax
authorities. Given below are some of the important powers of the Income Tax Authorities and
their scope as given in the Sections provided under the Income Tax Act, 1961:

 Power to Transfer Cases [Section 127]33

CBDT can transfer the case from Assessing Officer 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.34

 Opportunity of Being Reheard [Section 129]35

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.36
33
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 127.
34
Income Tax Authority and its powers under Income Tax Act, REGISTERATIONSEVA.COM,
https://registrationseva.com/income-tax-authority-and-its-powers-under-income-tax-act/ (last accessed
19/03/21).
35
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 129.
36
Various Tax Authorities, and their powers under the Income Tax Act, ASIAN JOURNAL OF MANAGEMENT,
https://ajmjournal.com/HTMLPaper.aspx?Journal=Asian%20Journal%20of%20Management;PID=2015-6-1-5
(last accessed 19/03/21).

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 Discovery, Production of Evidence etc. [Section 131]37

The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner,
Commissioner (Appeals), the Chief Commissioner and the Dispute Resolution Panel
referred to in section 144C have the powers vested in a Civil Court under the Code of
Civil Procedure, 1908 while dealing with the following matters:
(i)    discovery and inspection;
(ii)   enforcing the attendance of any person, including any officer of a banking
company and examining him on oath;
(iii)  compelling the production of books of account and documents; and
(iv)  issuing commissions

 Search and Seizure [Section 132]38

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 to take actions like search and seizure.  Under this section, wide powers of search
and seizure are conferred on the income-tax authorities. The provisions of the
Criminal Procedure Code relating to searches and seizure would, as far as possible,
apply to the searches and seizures under this Act. Contravention of the orders issued
under this section would be punishable with imprisonment and fine under section
275A.

 Power to Requisition Books of Account etc. [Section 132A]39

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

37
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 131.
38
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 132.
39
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 132A.

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requisitioning officer, when such officer is of the opinion that it is no longer necessary
to retain the same in his custody.

 Application of Retained Assets [Section 132B]40

This section provides that the seized assets can be appropriated against all tax
liabilities of the assessee. However, if the nature of source of acquisition of seized
assets is explained satisfactorily by the assessee, then, such assets are required to be
released within a period of 120 days from the date on which last of the authorizations
for search under section 132 is executed after meeting any existing liabilities. For this
purpose, it has been provided that the assessee should make an application to the
Assessing Officer within a period of 30 days from the end of the month in which the
asset was seized. The assessee shall be entitled to simple interest at ½% per month or
part of a month, if the amount of assets seized exceeds the liabilities eventually, for
the period immediately following the expiry of 120 days from the date on which the
last of the authorizations for search under section 132 or requisition under section
132A was executed to the date of completion of the assessment under section 153A or
under Chapter XIV-B.

 Power to call for information [Sections 133]41

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

40
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 132B.
41
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 133.

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assets or the exchange has received any such sum with the particulars of all such
payments and receipts;

 Power of Survey [Section 133A]42

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:
(a)To discover new assessees;
(b)To collect useful information for the purpose of assessment;
(c)To verify that the assessee who claims not to maintain any books of accounts is in-
fact maintaining the books; 
(d)To check whether the books are maintained, reflect the correct state of affairs.

 Power to Collect Certain Information [Section 133B]43

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.

 Power to Inspect Registers of Companies [Section 134]44

The Assessing Officer, the Joint Commissioner or the Commissioner (Appeals), or
any person subordinate to him authorized in writing in this behalf by the Assessing
Officer, the Joint Commissioner or the Commissioner (Appeals), as the case may be,
may inspect and if necessary, take copies, or cause copies to be taken, of any register
of the members, debenture holders or mortgagees of any company or of any entry in
such register.

 Other Powers [Sections 135 and 136]4546

42
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 133A.
43
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 133B
44
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 134.
45
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 135.
46
The Income Tax Act, 1961 (Act No. 43 of 1961) s. 136.

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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). 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. An income-tax authority shall be deemed to be a
Civil Court for the purposes of section 195 of the Criminal Procedure Code, 1973.47

47
Supra, Note 36.

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CHAPTER 6: CONCLUSION

The Income Tax Department, also referred to as IT Department, is a government agency in

charge of monitoring the income tax collection by the Government of India. It functions
under the Department of Revenue of the Ministry of Finance. Section 116 of the Income Tax
Act, 1961 provides for the administrative and judicial authorities for administration of this
Act. 

It is believed that tax-authorities are independent judicial officers who are required to pass
reasoned orders based on their own reasoning un-influenced by instructions or advice from
their superior officers. The Central Excise adjudication manual published in 1988 (that was
its last publication), in para 39 directed that Board Orders and reference numbers should not
be quoted in the Adjudication Orders.

It was further advised that Law Ministry’s opinion is confidential and should never be
communicated in the same language to even sub-ordinate officers. There are several Assistant
Commissioners who boast “I am an adjudicating authority and not bound by the Board
orders”.

This has resulted in a considerable degree of uncertainty in financial management with

respect to taxes. For example, it is hard to determine for the assesses, the binding value of
circulars issued by CBDT under Section 119 of the Income Tax Act, 1961. Also, these
circulars blatantly contradict statutory provisions that have been given binding effect,
displace the authoritative pronouncements of the Higher Judiciary and cause an erosion of the
constitutionally-mandated effect of Supreme Court declarations under Article 141.

In recent times the catena of judicial pronouncements and statue provisions are creating quite
a stir.  However, there is still a need to further define and redefine and implement the
extent to which Income Tax authorities are required to exercise their powers and perform
their functions so as to prevent harassment of assesses, tax-evasion, unnecessary
discrimination in collection of tax and to help assesses effectively manage taxes. Thus, the
income tax authorities play a vital role, but a few revisions in the act, might help in a better
disposal of duties.

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