ISWAR SARAN DEGREE COLLEGE

A Constituent PG College Of University Of Allahabad

College with Potential For Excellence, NAAC Accredited B+

Assignment

Subject- Taxation Law

Topic-Power And Function Of Income Tax Authorities

Under Income Tax Act,1961

Submitted By- Tanya Verma

Roll No- I1950030

Submitted To- Mr. Aadesh Singh

1
 ACKNOWLEDGEMENT

Firstly , I express my sincere thanks to subject teacher of this assignment Mr. Aadesh Singh Sir,
who gave me opportunity to learn about ths topic and for all his teachings which helped me to
complete this assignment.

I take this opportunity to express my sincere thanks to department of legal education, Ishwar
saran p.g. college for providing us facilities.

I am grateful to my colleagues and friends who helped me throughout the assignment,

Lastly,I would like thank my parents and every other person who helped and supported me
throughout the assignment .

Tanya verma

2
Table of Contents
ISWAR SARAN DEGREE COLLEGE ...................................................................................1

ACKNOWLEDGEMENT ...........................................................................................................2

INTRODUCTION: .....................................................................................................................4

VARIOUS TAX AUTHORITIES UNDER THE INCOME TAX: ..............................................5

THE CENTRAL BOARD OF DIRECT TAXES AND IT’S POWERS: ...........................5

Powers of the Board ............................................................................................................6

The Scope of the Rule- Making Powers of the Board Under Section 119 of the Income Tax
Act: .....................................................................................................................................7

POWERS OF OTHER INCOME TAX AUTHORITIES .................................................. 12

Director General/ Director ................................................................................................. 13

Commissioners of Income Tax .......................................................................................... 13

Income-Tax Officers: ........................................................................................................ 14

Inspectors of Income-Tax: ................................................................................................. 14

THE SCOPE OF EXERCISE OF THE POWERS GIVEN TO THE INCOME-TAX

AUTHORITIES ................................................................................................................ 15

CONCLUSION:........................................................................................................................ 19

REFERENCES: ........................................................................................................................ 21

3
INTRODUCTION:

In India, the Central Government has been empowered by Entry 82 of the Union List of
Schedule VII of the Constitution of India to levy tax on all income other than agricultural
income. The Income Tax Law comprises The Income Tax Act 1961, Income Tax Rules 1962,
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.

The 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. 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. This paper
talks about various tax authorities under the Income Tax Act, appointment of income tax
authorities, the Central Board of Direct Taxes and it’s powers, powers of other Income Tax
authorities, jurisdiction of the Income-Tax Authorities, and a conclusive analysis of the same.

4
VARIOUS TAX AUTHORITIES UNDER THE INCOME TAX:

The Government of India has constituted a number of authorities to execute the Income Tax Act
and to control the Income Tax Department efficiently. There shall be the following classes of
income-tax authorities for the purposes of the Act as given under Section 116, namely:

� The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act,
1963 (54 of 1963),
� Directors-General of Income-tax or Chief Commissioners of Income-tax,
� Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-
tax (Appeals),
� Additional Directors of Income-tax or Additional Commissioners of Income-tax or
Additional Commissioners of Income-tax (Appeals),
� Joint Directors of Income-tax or Joint Commissioners of Income-tax.
� Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy
Commissioners of Income-tax (Appeals),
� Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
� Income-tax Officers,
� Tax Recovery Officers,
� Inspectors of Income-tax.

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 or 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.

THE CENTRAL BOARD OF DIRECT TAXES AND IT’S POWERS:

The Central Board of Direct Taxes is a statutory body constituted under the Central Board of
Revenue Act, 1963. It consists of a number of members appointed by the Central Government
for the performance of such duties, as may be entrusted to the Board from time to time. It is

5
functioning under the jurisdiction of the Ministry of Finance. The Central Board of Direct Taxes,
besides being the highest executive authority, exercises control and supervision over all officers
of the Income-tax Department and is authorised to exercise certain powers conferred upon it by
the Income-tax Act, 1961.

The important powers of the Board and the relevant sections granting them have been detailed
below.

Powers of the Board:

The Board has been empowered under Section 119 to issue instructions and circulars
to it’s subordinates for the proper administration of the Act. Under Section 118, 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 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.

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 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.

6
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.

Moreover, the Board can exercise its powers to remove difficulties in the matter of Sections
201(1A), 210, 211, and 234C.

The Scope of the Rule- Making Powers of the Board Under Section 119 of the
Income Tax Act:

The scope of the rule-making powers of the Board have been discussed below with respect to
their binding value on the Revenue Department, the assesses, the Courts/ Tribunals and the
nature of the circulars.

With Respect to Binding Value of Circulars on the Revenue:

The present view is that all circulars issued by the CBDT under Section 119 of ITA, 1961 would
be binding upon the department even if they deviate from the provisions of the Parent Act. An
earlier case decided by the Supreme Court which dealt with the binding value of circulars on the
Revenue was that of K.P. Varghese. The assessee had entered into a bona fide transaction for the
sale of a house, earning no profit, as it was a related party transaction. Despite the fact that there
had been no underestimation of its value, the Revenue sought to tax the assessee on the basis of
the fair market value of the house. The assessee argued on the basis of a circular issued by the
CBDT, stating that the purpose of using fair market value in certain circumstances was to
prevent tax evasion through the understatement of the full value of consideration on the transfer
of a capital asset. It came to the notice of the CBDT that several Income Tax Officers were, in
violation of Section 119 of the Income Tax Act, 1961, taxing bona fide transactions based on
their fair market value. Thus, it became necessary for the Board to issue another circular,

7
clarifying that Board circulars shall be binding on all Officers in view of the decisions of the
Supreme Court in Navnitlal Javeri and Ellerman Lines. In view of these decisions, the Division
Bench in this case held the circulars to be binding on the Revenue, even if they deviate from the
statute, holding that fair market value must only be used in cases where consideration has been
understated.

Other cases have also reiterated that it is not open to the Revenue to argue against circulars
issued by it: 'It cannot but urge the point of view made binding by the...circular'. Similarly,
in Mahavir Aluminium, the Supreme Court held the CBEC circular exempting agricultural
mechanical appliances from the payment of duty to be binding on the Board. The most recent
case that deals with the question of whether circulars issued by the CBEC shall be binding on the
Department is India Cements. The Supreme Court, in 2011, held that circulars issued for the
purpose of providing sales tax deferral (to increase the production levels of industries in the State
of Tamil Nadu) that are not contrary to the provisions of the Tamil Nadu General Sales Tax Act,
1959 would be binding on the Department. In the instant case, the circular did not conflict with
either the statute or the scheme contemplated thereunder, and the question of whether they shall
be binding was thus inconsequential.

While the relevant provisions of various taxing statutes all suggest that circulars issued by taxing
authorities shall be binding on Department authorities, arguments are made that the extent to
which these instructions and directions shall be binding must be restricted in certain
circumstances. Thus, the assessee can challenge the issuance of circulars, and adjudicatory
authorities are also afforded the flexibility to use their independent interpretations which may
deviate from Department circulars.

With Respect to Binding Nature of Circulars on Assesses:

While the position regarding the binding nature of circulars upon the Revenue is well-settled, a
related question that arises for consideration is whether circulars shall be binding on assessees. It
is well-established that circulars issued by the CBDT do not bind assessees. Thus,

8
the assessee has the right to challenge the correctness of a circular before a quasi-judicial
authority constituted under the relevant statute if it confers greater burden than the statue
permits.

A Full Bench in Uco Bank considered the effect of a certain circular issued under Section 119 of
the Income Tax Act, 1961 exempting from income the interest payable on ‘sticky loans’, whose
recovery is doubtful and has not been included in the profit and loss account of the assessee. It
stated: ‘Such instructions may be by way of relaxation of any of the provisions of the sections
specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the
law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its
statutory powers under Section 119 of the Income-tax Act which are binding on the authorities in
the administration of the Act. Under Section 119(2)(a), however, the circulars as contemplated
therein cannot be adverse to the assesses.’ Therefore, the settled position of law with regard to
assesses is that they can challenge the circular if it has an adverse impact on them that deviates
from the statutory position.

With Respect to Binding Effect of on Courts and Tribunals:

According to the present position taken by the Courts, CBEC circulars shall be binding on the
Courts as the interpretation of the statue will supersede the interpretation given by
Courts. According to the earlier point of view held by the Courts, notifications issued by the
Government are, in the opinion of the Court, mere understandings of statutory provisions, and
cannot be used to usurp the jurisdiction of the courts in interpreting statutory provisions. Thus,
Bengal Iron suggests that quasi-judicial authorities shall be bound only by ‘law’, which does not
include administrative instructions, opinions, clarifications and circulars. Nevertheless, the same
Court in Kirloskar Oil Engines held that while trade notices issued by the CBEC generally have
no binding value, in the absence of other evidence, the court must consider trade notices in
deciding disputes. The argument that CBEC circulars shall not bind adjudicatory authorities was
raised in Paper Products, wherein the orders of the Customs Excise and Gold (Control) Appellate
Tribunal (CEGAT) were challenged by an assessee who argued that the circulars exempting
certain products of the printing industry include his products of manufacture. The Revenue
argued that the impugned circulars, though binding on the Department, would not bind the

9
CEGAT. The Supreme Court, in deciding that the circulars were binding on the Department,
ultimately held that the Department does not have the option of making arguments contrary to
the impugned circulars. Unfortunately, it did not actually address this validity of the Revenue’s
contention. In Hindustan Aeronautics Ltd., however, a conclusive decision on this point was
made. A government-owned company aggrieved by the Revenue’s disallowance of certain
deductions for its manufacture of aeroplanes filed a revision petition before the Commissioner of
Income Tax. Since the order disallowing the deduction had been made the subject of a separate
appeal before the Appellate Tribunal, the Commissioner dismissed the petition. This decision
was challenged by the assessee, who used Navnitlal Javeri and Ellerman Lines to argue that the
circular requiring the Commissioner to examine the revision of the assessee on merits would
bind him. The Revenue, on the other hand, argued that while it is unquestionable that circulars
shall be binding on the Revenue, the Judiciary cannot direct that a circular shall be given effect
to rather than the Supreme Court or High Courts’ interpretation of the law in question. The
Division Bench agreed with the Revenue’s contention that a circular shall not bind adjudicatory
bodies.

In 2002, this decision was effectively overruled by a Constitution Bench requested

in Dhiren Chemicals. Here, a notification had been issued by the CBEC exempting certain
products from excise duty, where duty was ‘already paid’ on the raw materials used in their
manufacture, thus preventing the payment of double duty. The construction of this exemption
had, for some time, been the subject of controversy, raising the question of whether imported raw
materials which are either not liable to excise duty, or have the benefit of nil duty payable, shall
be included within the ambit of this notification. The CBEC had, consequently, issued a number
of circulars clarifying that the benefit shall not apply unless excise duty had actually been paid
on the raw materials utilised. On the other hand, a Full Bench of the Supreme Court had already,
in Usha Martin, decided that the notification would apply even when a nil rate of duty was
applicable. Thus, the Court in Dhiren Chemicals was required to choose whether to follow the
precedent set by its Full Bench earlier, or the interpretation rendered by the CBEC circular issued
in this regard. The Court ultimately held: 'We need to make it clear that, regardless of the
interpretation that we have placed on the said phrase, if there are circulars which have been
issued by the Central Board of Excise and Customs which place a different interpretation upon

10
the said phrase, that interpretation will be binding on the revenue.” This decision was the first to
reflect a marked shift in the Judiciary’s perspective on the extent to which circulars issued by the
CBEC shall be binding. In effect, by holding the Department strictly to the position adopted by it
in the circulars it issues, the Court unwittingly weakened the impact of its own decisions by
disregarding the interpretation of the Full Bench in Usha Martin in favour of the interpretation
rendered by the CBEC in the impugned order. This precedent-setting statement, negating the
impact of the decision rendered by a weaker bench earlier in Hindustan Aeronautics Ltd., was
subsequently followed in 2004 in Maruti Foam, when the Supreme Court reaffirmed that CBEC
circulars shall be binding notwithstanding their conflict with the judgment rendered
in Usha Martin.

With Respect to Benevolent Circulars:

Benevolent circulars issued by the Board even if they deviate from the legal position are required
to be followed by the department since such circulars would go to the assistance of the assessee.
Apart from the fact that the circulars issued by the Board are binding on the department, the
department is precluded from challenging the correctness of the said circulars even on the ground
of the same being inconsistent with the statutory provision.

In Navnitlal Javeri, a Constitution Bench of the Supreme Court addressed the question of
whether a circular issued by the Board of Revenue, granting an exemption from income tax on
genuine loans advanced by companies to their shareholders, would be binding on the Board,
notwithstanding that its contents violated the parent statute. Section 2(6A) of the Income Tax
Act, 1961 made no distinction between bona fide transactions and devices used for tax avoidance
(by providing shareholders tax-free loans instead of taxable dividends). The Court held that since
the circular was conferring a benefit upon assessees and diluting the stringent requirements of the
Act, the Board was required to comply with its own instructions, and could not itself contend that
the circular could not be enforced. The decision in Navnitlal Javeri was affirmed by the Division
Bench in Ellerman Lines, in which the impugned notification laid down the principles to be
followed in assessing the Indian income of foreign shipping companies.
Accordingly, Ellerman Lines, a British shipping company, was by the said notification assessed

11
by way of a certificate issued by U.K. authorities (declaring the income of the company),
allowing an investment allowance which had been recognised by the Revenue in India as
equivalent to the development rebate made available under the Income Tax Act, 1922.
Interestingly, the Court recognised the difficulties faced by shipping companies in complying
strictly with the income tax provisions of various countries in which they operate, and, as a
result, considered the notification, waiving strict compliance with the requirements of the Act, to
be valid and binding on the Revenue

With Respect to Aid to Construction:

Further a circular provides extraneous aid to construction being contemporanea exposito.

With respect to Earlier Orders:

Where a circular is issued after the date on which the particular order is passed, the later issued
circular can have no application to the earlier passed order unless there is something in the
circular making itself applicable even retrospectively.

With Respect to Withdrawn Circulars:

Sometimes a circular is withdrawn or the section concernedis amended. In the case

of Ellerman Lines Ltd. vs CIT, the Supreme Court held that instructions issued by the Board
prior to the amendment of a section will hold good even if they are not strictly in accordance
with the related section but merely lay down certain just and fair methods of approach to a
difficult problem. In Tata Iron and Steel Co. Ltd. vs Upadhyaya, it was made clear that the
withdrawal of a circular, subsequent to an assessment or any other action in pursuance of the
same, will not affect the legal position.

POWERS OF OTHER INCOME TAX AUTHORITIES:

Powers of the Income Tax Authorities vary with the nature of the position acquired. Given below
are the various tax authorities along with the powers they hold under that position.

12
Director General/ Director:

The Director General/ Director, appointed by the Central Government, are required to perform
such functions as maybe assigned by the Central Government, are required to perform such
functions as may be assigned by the Central Board of Direct Taxes. This position enjoys the
following powers under different provisions of the Act:

a. To give instructions to the Income-Tax officers

b. To enquire or investigate into concealment

c. To search and seizure

d. To requisite books of account

e. To survey

f. To make any enquiry

Commissioners of Income Tax:

Commissioners are appointed by the Central Government. Generally, 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. Its, also, has the
power to revise an order passed by an assessing officer in addition to many other powers as
given in the Income Tax Act, 1961.

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.

13
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. Under the different
provisions of the Act, the Joint Commissioner enjoys the power to accord approval to adopt fair
market value as full consideration, instruct income tax officers, exercise powers of income tax
officers, the power to call information, to inspect registers of companies, to make any enquiry
among other powers.

Income-Tax Officers:

While Income-Tax officers of Class I services are appointed by the Central Government,
Income-tax Officers of Class II services are appointed by the Commissioner of Income-Tax.
Powers, functions and duties of Income-Tax officers are provided in many sections, some of
which are Power of search and seizure, Power of assessment, Power to call for information,
Power of Survey etc.

Inspectors of Income-Tax:

They are appointed by the Commissioner of Income-Tax. Inspectors of Income-Tax have to

perform such functions as are assigned to them by the Commissioner or any other authority
under whom they are appointed to work.

14
THE SCOPE OF EXERCISE OF THE POWERS GIVEN TO THE
INCOME-TAX 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]:

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.

Opportunity of Being Reheard [Section 129]:

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

15
opportunity of being reheard to the assessee, shall be excluded while calculating time limit to
complete the assessment.

Discovery, Production of Evidence etc. [Section 131]:

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]:

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]:

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

16
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.

Application of Retained Assets [Section 132B]:

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 authorisations 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 authorisations 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]:

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;

17
(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;

Power of Survey [Section 133A]:

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]:

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.

18
Power to Inspect Registers of Companies [Section 134]:

The Assessing Officer, the Joint Commissioner or the Commissioner (Appeals), or any person
subordinate to him authorised 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]:

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.

CONCLUSION:

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

19
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.

20
REFERENCES:

Text books.

1. Singhania, Vinod K., Direct Taxes: Law And Practise, 50th Edition 2013, New
Delhi: Taxxman Publications Ltd.

2. Gururaj B.N., Guide to the Customs Act: Law, Practice And Procedure I, 2nd Edition
2005, New Delhi: Wadhwa and Co.

3. Chaturvedi and Pithisaria, Income Tax Law Volume 1, 5th Edition 1998, New Delhi:
Lexis Nexis Butterworths

4. Sinha R.K., The Transfer Of Property Act, 4th Edition 1999, Central Law Agency.

5. Datar A.P., Guide to Central Excise, Law and Practice I, 6th Edition 2010, New
Delhi: Wadhwa and Co.

Articles

1. M. Govindarajan, “CBEC Circulars/Orders/Instructions Relating to Service Tax”

(2008)availableat http://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=199

2. Binding Nature of Board Circulars: Still Doubtful (2005), available

at http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3andnewsid=13
08

3. V. Ramaswami, "Binding Nature of CBDT/CBEC Circulars" 191 Current Tax Reporter 175
(2004)

Statues.

1. The Income Tax Act, 1961

Internet sources.

21
1. www.manupatra.com

22
This document was created with the Win2PDF “Print to PDF” printer available at
https://www.win2pdf.com
This version of Win2PDF 10 is for evaluation and non-commercial use only.
Visit https://www.win2pdf.com/trial/ for a 30 day trial license.
This page will not be added after purchasing Win2PDF.
https://www.win2pdf.com/purchase/