News & Blog

Income Tax Authority and its Powers under Income Tax Act

News & Blog

Income Tax Authority and its Powers under Income Tax Act
Income Tax Authority and its Powers under Income Tax Act

GET IN TOUCH

Income Tax Authority and its Powers under Income Tax Act

Background

The government of India imposed the Income Tax Act in the year 1961. 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 incometax authorities for the purposeful existence of the Act are

  1. CBDT or the Central Board of Direct Taxes which has been constituted under the Central Board of Revenue Act 1963
  2. Director general of income tax
  3. Chief commissioner of income tax
  4. Directors and commissioner of income tax
  5. Additional directors and additional commissioners of income tax
  6. Joint directors and joint commissioners of income tax
  7. Deputy directors and deputy commissioners of income tax
  8. Assistant directors and assistant commissioners of income tax
  9. Income tax officers
  10. Income tax inspectors

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

The supreme body with reference to the direct tax setup in India is the Central Board of Direct Taxes. This board comprises of a leading Chairperson and a body of 6 members.

THE CBDT OR CENTRAL BOARD OF DIRECT TAXES

Consolidate under the Department of Revenue in the Ministry of Finance the CBDT holds the highest position on the direct tax world in the country. It lays down the policies and planning’s for all direct tax related matters in India. With the help of the Income Tax Department it makes sure that direct taxes are properly administered on the workforce of the country. The Chairperson along with the 6 members of the body of the CBDT are all ex officio Special Secretaries in the government and function as a division of the ministry that deals with levy and collection of all direct taxes in India.

APPOINTMENT OF CBDT MEMBERS AND CHAIRPERSON

A person who desires to work with the CBDT board as the chair person or the body needs to clear IRS i.e. Indian Revenue Services. The central government has full rights to decide who the members shall be. The office memorandum of the government states the following requirements for the post of members of the CBDT

  1. Officer shall be an office holder in the central government with a minimum of one year regular service in level 15
  2. Officer shall have minimum of 15 years of experience in administration and running direct tax administration in the central government along with 10 years of experience in field of CBDT
  3. High professional merit and excellence
  4. High impeccable reputation of integrity
  5. Maximum age limit of 56 although exemptions provided in case of absorption
  6. The person shall have at least 1 year of residual service on the date of occurrence of vacancy

All the posts for income tax authorities and filled by the central government as per the income tax ordinance. The government has to decide as to who is fit, has proper professional skills and experience to hold office

POWER OF INCOME TAX AUTHORITIES

The Income Tax Act prescribes certain powers to each level of income tax authorities for proper functioning of the direct tax organization in India. The powers can be categorized as

POWER OF DIRECTOR GENERAL

  1. POWER TO DISCOVER AND PRODUCE EVIDENCE

As per the civil procedure of 1908 the director general can ask any assessing officer, chief commissioner, commissioner, or the joint commissioner to suit for the following

  • Discovery
  • Inspection
  • Examination of individual on oath
  • Issue of commissions
  • Compelling the individual to produce book of accounts and related document
  1. POWER TO SEARCH AND SEIZURE

In an unlikely scenario of tax evasion the government has given rights to the income tax authority to search and seize the evaded revenue under default in taxes.

  1. TAKE POSSESION OF BOOK OF ACCOUNTS
  2. TO MAKE AN INQUIRY
  3. TO SURVEY

POWERS OF INCOME TAX COMMISSIONERS

  1. HEAD INCOME TAX ADMINISTRATION

At any given time they are designated with areas to foresee the functioning of direct taxes

  1. POWER TO TRANSFER ANY CASE

He enjoys the power to transfer a certain case from one assessing officer to another

  1. POWER WITH REGARDS TO ORDERS

He enjoys the powers to grant approval to an order issued, or even revise an order passed by assessing officers

  1. JUDICIAL AND ADMINISTRATIVE POWERS

POWER TO JOINT COMMISIONNERS

Main duty is to detect tax invasion and supervise the subordinate officers. They also get power to adopt fair market value as full consideration and are given power to inspect company registers

POWER TO INCOME TAX OFFICERS

They are provided the

  1. POWER OF SEARCH, SEIZURE.
  2. POWER TO ASSESS AND CALL FOR INFORMATION from any individual
  3. POWER OF SURVEY

POWER OF INCOME TAX INSPECTOR

They are given functional powers by the person under whom they are appointed. They work specific to the task given to them by their seniors.

Therefore the powers given to the income tax authorities can be summed up under the following sections

SECTION POWER
Section 131 Power to discover, and production of evidence

a.       Compelling individual to produce book of accounts

b.      Enforce individual for attendance

c.       Issuing commission

d.      Inspect and discover

 

Section 132 Power of search and seizure

 

Section 132 A Possession of books of accounts

 

Section 133 Power to call for  information

a.       Can call any individual to produce details about partners and firms

b.      Hindu undivided families can be called upon for details

c.       Can ask any trustee, agent etc. to provide details of clientele

 

Section 133 A Power of survey for discovery of

a.       New assesses

b.      Information regarding purpose of assessment

c.       Verification of account books

 

Section 133 B Power to collect information

They have right to enter any place within the designated area of the officer for the purpose of resolving tax evasions

 

Section 134 Power to inspect company registers

Conclusion

It can be concluded that tax authorities in India pass well-reasoned independent orders and act as independent judiciary bodies. They work in accordance to the orders given from superior officials in their hierarchy.

Frequently Asked Questions (FAQ)

Who controls the Income Tax Department?

The income tax department of India is supremely headed by the CBDT i.e. Central Board of Direct Taxes.

What are the objectives of a survey conducted by the income tax authority?

The objectives of any survey are

  1. Discover new individuals for assessment
  2. Collect information related to assessment
  3. Check maintenance of books and registers

Who appoints the income tax authorities?

The central government has full rights to decide and appoint the individuals on the posts of tax authorities who have cleared the eligibility criteria.

What are the benefits of having an assessing officer?

The assessing officers are very vital to the organization. They are the primary point of initiation for any proceedings related to non-filing of returns, imposition of penalties etc.

What comprises the CBDT?

The CBDT comprises of a chair person and 6members of the body. All these people are primarily people who have cleared Indian Revenue Services.

What are the powers of the Income Tax authorities as defined by the Income Tax Act?

The basic functionalpowers of income tax authority are

  1. Collection of information
  2. Power of survey
  3. Power to call for information
  4. Power to possess book of accounts
  5. Power of search and seizure
  6. Power related to discover and produce evidences

All these powers have been given to prevent tax evasion and let the tax department benefit maximum from the direct tax payers

How is the jurisdiction of a tax authority defined?

The jurisdiction of tax authority can be defined by

  1. Territorial area
  2. Class of income
  3. Class of person
  4. Class of case

What are the functions of Income Tax Authorities?

The basic functions of theincome tax authorities are

  1. Matters related to collection or levy of Direct taxes in India
  2. Investigation of offences
  3. Enforcement of economic laws
  4. Matters related to tax deduction and exemption

Who is the head of CBDT?

The head of the central board of direct tax is the chair person who is the senior most government official under Indian Revenue Services. He/she is an ex-officio special secretary to the Indian Government and is also defined as the cadre controlling authority of the IRS i.e. Indian Revenue services.

Who is the head of income tax department of India?

The income tax department is headed by none other than the central board of direct taxes and is the responsibility of the finance ministry of the country.

Can an IAS officer be a CBDT member?

The government has defined the criteria for eligibility as IRS officers only as this office needs keep knowledge on finance and related laws and Acts.

Registrationseva.com can help in all kind of Registration in a very less time and at affordable price. You can reach to us at info@registrationseva.com or post your query here.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

We take processes apart, rethink, rebuild, and deliver them back working smarter than ever before.