Unit -IV Income tax Authorities - PowerPoint Presentation

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Unit -IV

Income tax Authorities

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Income Tax Authorities- Section 116

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.

Slide3

Cont…………..

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.

Slide4

Appointment of Income-Tax Authorities

– sec 117

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) ]

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) ]

Slide5

Cont….

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.

Slide6

 

Control

of Income-Tax

Authorities- Sec

. 118

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.

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Instruction to Subordinate Authorities(Sec. 119)

The CBDT has been empowered under section 119 to issue instructions and circulars to its subordinates for the proper administration of the Act.

It is 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 CBDT.

The CBDT, however, is not empowered to issue orders, instructions or directions in such a way as to –

require any income-tax authority to make the assessment of a particular case in a particular manner; or

interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions.

The CBDT 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 forth directions and instructions not being prejudicial to the

assessee

.

In appropriate cases, the CBDT may relax the provisions of sections 115P,115S, 139,143,144, 147, 148, 154, 155, 234A, 234B, 234E, 270A, 271C, 271CA and 273. The CBDT can exercise its powers to remove difficulties in the matter of sections 201(1A), 210, 211 and 234C

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Jurisdiction of Income Tax Authorities- Sec. 120

 

Income-tax authorities to exercise powers in accordance with CBDT directions [Section 120(1)]:

The income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or assigned to, such authorities in accordance with the directions issued by the CBDT for the exercise of such powers and performance of the functions by all or any of those authorities.

Deemed directions under section 120(1) by CBDT [Section 120(2)]:

Any

incometax

authority, being an authority higher in rank, may exercise the powers and perform the functions of the income-tax authority lower in rank, if so directed by the CBDT. Such direction issued by the CBDT shall be deemed to be a direction issued under the said section 120(1).

Slide9

Cont…..

Criteria for issue of directions [Section 120(3)]:

In issuing such directions, the Board may have regard to the following criteria:

Territorial area.

Persons or classes of persons.

Incomes or classes of incomes.

Cases or classes of cases.

CBDT

authorisation

assigning functions [Section 120(4)]:

The CBDT may

authorise

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 as may be assigned to him. Such

authorisation

may be through a general or special order.

Slide10

Cont….

The CBDT can empower the Principal Director General or Director General or Principal

Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to 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.

The CBDT or any other authority

authorised

in this behalf can confer jurisdiction with more than one income-tax authority in relation to any case.

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Power to transfer cases- sec 127

Authorities empowered to transfer cases from one Assessing Officer to another:

The power to transfer a case from one Assessing Officer to another subordinate Assessing Officer or Officers is vested with the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Commissioner or Principal Commissioner of Income-tax. However, this power can be exercised only after giving the

assessee

a reasonable opportunity of being heard and after recording reasons for doing so, wherever possible.

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Change of income tax authorities- Sec 129

Stage from which the succeeding Income-tax authority would continue:

In cases where an income-tax authority succeeds another income-tax authority, who ceases to exercise jurisdiction, then, the succeeding income-tax authority may continue the proceedings from the stage at which the proceedings was left by his predecessor.

Opportunity to be reheard:

The

assessee

concerned may demand that before continuance of proceedings as in (i) above, the previous proceedings or any part thereof be reopened or be reheard before passing of any assessment order against him.

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POWERS OF INCOME TAX AUTHORITIES

(SECTIONS

131 TO

136)

Discovery

, production of

evidence,

etc

: Section 131

Income-tax Authorities to have powers vested in a Civil Court in certain

matters: Section

131(1

)

Powers under section 131(1) to be exercised in certain cases, even if no proceeding is

pending: Section

131(1A)/(2

)

Power to impound or retain books of

accounts: Section

131(3

)

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Search and Seizure (Section 132)

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.

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Authorities

empowered to issue

authorisation

: Section

132(1)

Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner;

Principal Director or Director or Principal Commissioner or Commissioner; and

Such Additional Director or Additional Commissioner, Joint Director or Joint Commissioner as are empowered by the CBDT to do so.

Who can

Authorise

Search?

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When search can be authorised

?

Such

authorisation

could take place if the authority believes, on the basis of information in his possession:

that the person to whom a summons under section 131(1) or notice under section 142(1) was issued to produce or cause to produce books of account or other documents has omitted or failed to do so; or

that a person to whom a summons or a notice has been or might be issued, does not or would not produce any books of account or other documents called for or which will be useful or relevant to any proceeding under the Income-tax Act, 1961; or

Slide17

Cont….

that a person who is in possession of any valuable articles or things, including money, bullion or

jewellery

etc. (which has not been disclosed or would not be disclosed by the person concerned for income-tax purposes).

However, the reason to believe, as recorded by the income-tax authority, shall not be disclosed to any person or any authority or the Appellate

Tribunal.

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Power of

Authorised

officer in course of search

Enter & search any Building, place, vessel, vehicle, or aircraft where he has suspect that books of accounts, money,

etc

are kept.

Power to break lock of any door, box, locker,

etc

if keys are not available.

Search any person who has got out of, or is about to get into, or is in the building, vessel, place, vehicle, etc.

Slide19

Cont….

Require any person who is in control of any books of accounts maintained in the electronic form to provide password.

Seize any books of accounts, docs, money, bullion,

jewellery

,

etc

found under

serch

however, stock cannot be seized.

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Deemed/Constructive Seizure

Where it is not possible/ practical to take physical possession of any asset due to volume, weight, nature,

etc

then

authorised

officer may serve an order on the owner or the person who is in immediate possession there of, that he shall not remove /deal with/ part with such asset without the approval of

Authorised

officer.

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Prohibitory order/Order of restraint

Where it is not practical to take physical possession of any books of accounts or other asset for reason other than mentioned in deemed seizure, the

authorised

officer may serve an order on the owner of the person who is in immediate possession that he shall not remove/ deal with/ part with such asset without approval of

Authorised

officer.

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Presumption under Search

Now there is a rebuttable presumption to the effect that the books of account or other documents and assets found in the possession of any person in the course of a search belong to such person and also that the contents of such books of account and other documents are true and that the signature and every other part of such books of account and other documents are in hand-writing of the persons who can reasonably be assumed to have signed or written the books of account or other documents.

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Making copies and taking extracts of books of account

permitted: Section

132(9

)

The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorized officer or any other person empowered by him in this behalf, at such place and time as the authorized officer may appoint in this behalf.

Slide24

Time limit for handing over books of account etc. to jurisdictional

Authorised

Officer: Section 132(9A)

Where the authorized officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of point (ii) above, the books of account or other documents, or any money, bullion,

jewellery

or other valuable article or thing seized under that sub-section shall be handed over by the

Authorised

Officer to the

Authorised

Officer having jurisdiction over such person within a period of 60 days from the date of which the last of the authorizations for search was executed and thereupon the powers exercisable by the authorized officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.

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Provisional attachment of

property: Section

132(9B

)

For the purpose of protecting the interest of the revenue and safeguarding recovery in search cases, the authorized officer during the course of search or seizure or within a period

of sixty days from

the date on which the last of the

authorisations

for search was executed is satisfied for reasons to be recorded in writing, it is necessary so to do, he may with the prior approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the

assessee

Slide26

Rules providing for procedure to be followed by

Authorised

Officer

The

Board may make rules in relation to any search or seizure under this section; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the

Authorised

Officer

:

for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available;

for ensuring safe custody of any books of account or other documents or assets seized.

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Power to call for information [Sections 133]

The

Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals)] may call for following information from the following persons for the purposes of this Act-

Firm

-

The names and addresses of the partners of the firm and their respective

shares

Hindu undivided family

-

The names and addresses of the manager and the members of the family.

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Cont………………

A trustee, guardian or agent-

The names of the persons for or of whom he is trustee, guardian or agent, and of their addresses.

Any

assessee

-

A statement of the names and addresses of all persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage, or any annuity, not being any annuity taxable under the head "Salaries" amounting to more than one thousand rupees, or such higher amount as may be prescribed], together with particulars of all such payments made.

Slide29

Cont………

Any dealer, broker or agent or any person concerned in the management of a stock

or commodity exchange-

A statement of the names and addresses of all persons to whom he or the exchange has paid any sum in connection with the transfer, whether by way of sale, exchange or otherwise, of assets, or on whose behalf or from whom he or the exchange has received any such sum, together with particulars of all such payments and receipts.

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Cont…….

Any person, including a banking company or any officer

thereof -

Information in relation to such points or matters, or statements of accounts and affairs verified in the manner specified by the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), giving information in relation to such points or matters as, in the opinion of the Assessing Officer, the Deputy Commissioner (Appeals

),

the Joint Commissioner or the Commissioner (Appeals

),

will be useful for, or relevant to, any enquiry or proceeding under this Act.

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Power of Survey: Section 133A

Power to enter a place within jurisdiction to inspect books of account, to verify cash, stock

etc

: Section

133A(1

)

Permitted time for conduct of survey

:Section

133A(2

)]

Powers of an income-tax authority while conducting survey

: Section

133A(3

)

Slide32

Cont……..

Exercise of power of survey for verification of TDS/TCS

: Section

133A(2A

)

Permissible and impermissible acts while conducting survey

:Section

133A(3

)

Power to collect information and record statements

: Section

133A(5

)

Power to enforce

compliance: Section

133A(6

)

Slide33

Power to collect certain

information: Section 133B

Under this section, an income-tax authority may enter any building or place (at which

a

business or profession is carried on) within its jurisdiction or any building or place (at which a business or profession is carried on) which is occupied by any person in respect of whom the said authority exercises jurisdiction for the purpose of collecting any information which may be useful for or relevant for the purposes of the Act. It is not necessary that such a place should be the principal place of the business or profession.

The authority may require any proprietor, employee or any other person who may at the time and place be attending in any manner to or helping in carrying on such business or profession to furnish such information as may be prescribed.

An income-tax authority may enter any place of business or profession referred to above only during the hours at which such place is open for business.

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Cont……

Such authority shall on no account remove or cause to be removed from the building or place wherein he has entered any books of account or other valuable articles or things.

In this section, income-tax authority means a Joint Commissioner, an Assistant Director or Deputy Director or an Assessing Officer, and includes an Inspector of Income-tax who has been

authorised

by the Assessing Officer to exercise the power conferred under this section

in

relation to the area in respect of which the Assessing Officer exercises

jurisdiction or any part thereof.

Slide35

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.

Slide36

Other powers

: Sections

135 and

136

The Principal Director General or Director General or Principal Director or Director, the Principal Chief Commissioner or Chief Commissioner or Commissioner or Principal 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.

Slide37

Disclosure of information respecting

assessees

: Section 138

Under section 138(1)(a), the CBDT, or any other income-tax authority specified by it by a general or special order, may furnish or cause to be furnished, any information received or obtained by any income-tax authority, in the performance of his functions under the Act which may be necessary for the purpose of enabling any officer, or authority or body performing any function:

under any law relating to the imposition of any tax, duty or

cess

or to dealings in foreign exchange

under any other law as the Central Government may notify in the Official Gazette in the public interest.

Slide38

Cont…..

As per section 138(1)(b), if a person makes an application in accordance with Rule 113 of the Income-tax Rules, 1962 to the Principal Chief Commissioner or Chief Commissioner or the Commissioner or Principal Commissioner of Income-tax in the prescribed form for obtaining any information relating to any

assessee

received or obtained by any income-tax authority in the performance of his functions under the Income-tax Act, 1961, the Principal Chief Commissioner or Chief Commissioner or Commissioner or Principal Commissioner, may, if he is satisfied that it is in the public interest, furnish or cause to be furnished the information asked for. His decision in this regard cannot be called in question in any court of law. Nevertheless, section 138(2) empowers the Central Government to direct, having regard to practice and usage customary or otherwise, and any other relevant factors, that no information or documents shall be furnished or produced by a public servant in respect of such matters relating to a particular class of

assessees

or except to certain authorities which may be specified.

Slide39

Cases

Commissioner of Income-tax and

Anr

v. SV

Gopala

and Others [2017] 396 ITR 694 (SC)

The

CBDT had issued a Circular invoking the powers under Section 119 of the Income-tax Act, 1961. The Circular amended the provisions contained in Rule 68B of the Second Schedule to the Income-tax Act, 1961 relating to time limit for sale of attached immovable property.

The issue under consideration is whether the CBDT has the power to amend legislative provisions through a Circular

.

The Supreme Court observed that the CBDT does not have the power to amend legislative provisions in exercise of its powers under section 119 of the Income-tax Act, 1961 by issuing a Circular. The High Court had held so on similar grounds. The Supreme Court, accordingly, upheld the decision of the High Court quashing the circular for being ultra vires.

Slide40

Cont………….

U.P. Distillers Association (UPDA) v. CIT [2017] 399 ITR 143 (Del)

A search and seizure operation took place in the premises of the Secretary General of the

assessee

, that is, Uttar Pradesh Distillers Association, in February 2006. During the search, the Secretary General’s statement was recorded under section 132(4) of the Act. The statement was retracted after two years. In the meanwhile, the Commissioner of Income-tax (CIT) cancelled the

assessee’s

registration under section 12AA(3) on the basis of the search operation and the statement made. The order was upheld by the Appellate Tribunal. The

assessee

contended that Secretary General’s statement was made in the course of search in respect of his premises and not those of the

assessee

. Hence, the Secretary General’s statement was not attributable to the

assessee

nor could the materials indicated by him be the basis for cancellation of registration of the trust under section 12AA

Issue

:

The issue under consideration is whether the cancellation of registration under section 12AA as a charitable trust on the basis of search conducted in the premises of the Secretary General of the

assessee

-trust and the statement recorded by him under section 132(4) is valid.

The Delhi High Court, accordingly, held that cancellation of the trust’s registration under section 12AA on the basis of search conducted in the premises of the Secretary General and the statement recorded under section 132(4) from him, is valid.

Slide41

Cont……

Lodhi

Property Company Ltd. v. Under Secretary, (ITA-II), Department of Revenue (2010) 323 ITR 441 (Del.)

The

assessee

filed his return of income, which contains a claim for carry forward of losses, a day after the due date. The delay of one day in filing the return of income was due to the fact that the

assessee

had not reached the Central Revenue Building on time because he was sent from one room to the other and by the time he reached the room where his return was to be accepted, it was already 6.00 p.m. and he was told that the return would not be accepted because the counter had been closed. These circumstances were recorded in the letter along with the return of income delivered to the office of the Deputy Commissioner of Income-tax on the very next day. Later on, the CBDT, by a non-speaking order, rejected the request of the

assessee

for

condonation

of delay in filing the return of income under section 119.

Issue

:

The issue under consideration is whether the CBDT has the power under section 119(2)(b) to condone the delay in filing return of income.

The High Court held that the Board has the power to condone the delay in case of a return which was filed late and where a claim for carry forward of losses was made. The delay was only one day and the

assessee

had shown sufficient reason for the delay of one day in filing the return of income. If the delay is not condoned, it would cause genuine hardship to the petitioner. Therefore, the Court held that the delay of one day in filing of the return has to be condoned.

Slide42

Cont…..

Regen

Powertech

Private Limited v. CBDT and Another [2019] 410 ITR 483 (Mad)

The issue under consideration is whether the CBDT can refuse to condone delay in filing the return of income, where such delay was caused by circumstances beyond the control of the

assessee

.

The

High Court opined that the

assessee

could not be blamed for the delay in carrying out its audit, as it was beyond its control. Since there was some misunderstanding between the erstwhile auditor and the

assessee

, the return of income could not be presented before the due date. The

assessee

had also not been able to obtain the “No Objection Certificate” from the erstwhile auditor immediately.

The High Court held that application for

condonation

of delay could not have been rejected by the CBDT as the circumstances causing delay were beyond the control of the

assessee

.

The High Court opined that the CBDT should have exercised its discretion in a proper manner and condoned the delay.