Powers and functions of CBDT, CIT, and AO

The apex body of the department is the Central Board of Direct Taxes (CBDT). CBDT functions as a division of the Ministry of Finance under the Department of Revenue. Its functions include formulation of policies, dealing with natters relating to levy and collection of direct taxes, and supervision of the functioning of the entire Income Tax Department. CBDT also proposes legislative changes in direct tax enactments and changes in rates and structure of taxation in tune with the policies of the Government.

The Board comprises of the Chairman and six Members. The Chairman is the co-ordinating head and each of the members has been assigned a specialized function. They are assisted by Joint Secretaries, Directors, Deputy Secretaries, Under Secretaries and ministerial staff for carrying out their day-to-day functions.

The Investigation Directorates and the Central Charges of the department, which are headed by the Directors General of Income Tax (Investigation) and the Chief Commissioners of Income Tax (Central), function under the supervisory umbrella of Member (Investigation) in the CBDT. The Chairman and other Members have been assigned territorial zones for the purpose of supervising and monitoring the work of field formations.

For the effective discharge of its functions, the CBDT is assisted by a number of attached offices known as Directorates. These directorates have been assigned specific functions like vigilance, inspection, judicial, recovery, maintenance of statistics, printing and publications, publicity, conducting of departmental examinations, imparting of training to officers and staff, etc. These functions are performed by the directorates at the all-India level.

The Chairman and members of the CBDT are selected from the Indian Revenue Service (IRS), whose members constitute the top management of the IT Department. The Chairman and every member of CBDT are responsible for exercising supervisory control over specialized functional categories at field offices of IT Department. Various functions and responsibilities of the CBDT are distributed amongst Chairman and six members, with only fundamental issues reserved for collective decision by the CBDT. The areas for collective decision by the CBDT include policy regarding discharge of statutory functions of the CBDT and of the Union Government under the various direct tax laws.

Taxation law is not only very complex as it requires specialized knowledge and expertise to implement, but also it necessitates various kinds of deterrent actions to ensure compliance by taxpayers.

• Assessment: Assessment is done to ensure correct estimation of total taxable income of an assessee (i.e. taxpayer) and it determines amount of tax to be payable by (or to be refunded to) assessee.
• Fines and Penalty: These are financial punishments for non-compliance with any specific provision of the Income-tax Act.
• Surveys: ITD can survey any business premises for physical verification of records and other valuables.
• Search and Seizure: ITD can search residential and business premises of any taxpayer to check records and valuables to ensure that no evasion of tax is taking place.
• Prosecution: Certain actions of taxpayers, for example wilful evasion of tax, are considered as criminal offence by the Income-tax Act and hence these offences result in prosecution.

Functions

• Administrative planning of the Income Tax Department.
• Act as advisor and conscience keeper of the Indian Revenue Service.
• Handle senior appointments.
• Represents the Finance Ministry at important tax-based conferences at UN and OECD.
• Transfers and postings of officers in the cadre of Chief Commissioner of Income-tax and Commissioner of Income-tax.
• Matters dealt with in the Foreign Tax and Tax Research Division, except matters under Section 80-O of the Income-tax Act, 1961.
• Ensure that the Cabinet decisions are implemented
• Advise the Finance Minister of India.
• All matters relating to Central and Regional Direct Taxes Advisory Committees and Consultative Committee of the Parliament.
• Public Grievances.
• Provide an element of continuity and stability to administration during crises.

CIT

• The existing role and functions of CIT(CO) had been defined with reference to erstwhile Regional Computer Centres (RCCs) and they were also acting as Nodal points for distribution of hardware etc. in the initial phases of Computerisation in the Department. Post consolidation of Regional Data Bases stabilized Taxnet and PDC, BCP & DR Sites becoming fully operational, redefining and recasting the role and functions of CIT (CO) had become imperative. Deliberations in the Directorate were ongoing to recast the same so as to align it in the new environment.
• Accordingly a Committee was constituted with DIT(S)-I, DIT(S)-II and DIT(5)-V as Members and CIT (CO), Kolkata as invitee. Report of the Committee deliberated on the Role and Functions of CIT( CO) in the new environment and also received inputs from field formations.
• Based on the report of the Committee, the Functions and Role of CIT(CO) were re-defined and recast so as to ensure, they were relevant and meaningful in the new environment. The same has since been approved by the Board.
• Revised role and functions of the CIT (CO) is annexed for kind information and necessary action.
• This issues with the approval of DGIT (Systems).

Assessing Officer

Tax returns that are either processed or unprocessed by CPC may need more detailed inquiry in order to be sure about the correctness of returned income and also to discover intentional/unintentional errors if any.

The process of in-depth interrogation of return of income is called ‘assessment’. An officer of the Income-tax Department who has been given this task of assessment is known as ‘Assessing Officer (AO)’. An Assessing Officer is an income tax officer who has the power to make an assessment of a taxpayer who is liable to tax under the Act.

The Assessing Officer appointed by the Central Board of Direct Tax to your return may vary depending on the size of your income/nature of your business (CBDT or Board).

Powers of assessing officer Under Section 131

The Income Tax Authorities (income tax officer / assessing officer) will have the same powers as are given to a court of law under the code of civil procedure 1908 (5 of 1908) when trying a suit in regards to the following matters –

• Discovery and inspection
• Requesting the attendance of any person, including any officer of a banking company, and examining him on oath
• Assembling the production of books of accounts and other documents
• Issuing commissions

The safety valve here is that any tax authority will not

• Take any books of accounts or other documents without recordings of his reasons for doing so.
• Keep in his custody any such books or documents for more than fifteen days (exclusive of holidays) without obtaining the approval of Chief Commissioner or Director General or Commissioner or Director.