Addl CITs cannot be designated as AOs – No CBDT Order available; CIT(A) invalidates assessments for lack of jurisdiction*

CHANDIGARH, FEB 02, 2008 : ADDITIONAL Commissioners of Income Tax as assessing officers? Not a rare sight, indeed! It is a common practice in the Income Tax Department. And the reasons could be anything from dearth of staff, burdensome workload to the sensitive nature of cases. But whatever could be the reasons, their jurisdiction has come under the radar of questioning! The spinal question is : Do they have legitimate jurisdiction to do such assessments? If yes, where is the CBDT order and the procedure laid down for allowing such delegation of such powers?

And these questions have come up in an order passed by a senior CIT (A)-II, Chandigarh. The CIT(A) has dwelt at length on this issue of legality ofAddl. and Jt. Comms. working as assessing officers. Having perused the findings elaborated in the order, the following facts come to light :

++ Section 2(7A) which defines assessing officer lays down that an additional commissioner or joint commissioner can exercise powers of or carry out functions of an A.O. only if they are authorized or directed to do so under Sec. 120(4)(b) read with Sec. 120(1) of the Act. Thus additional commissioners and Jt. Commissioners can exercise powers and carry out functions of assessing officer only if they are duly authorized u/s 120(4)(b) read with Sec. 120(1) without which they cannot act as assessing officers in normal course.

++ Sec120(1) is a general provision which simply states that any income tax authority can exercise such powers and functions as have been conferred onit under this Act in accordance with directions issued by the Board forexercise of powers and performance of functions by such authorities including any functions of a authority of lower rank assigned to a higher authority.

++ Sec.120(4)(b) is a specific provision which provides that the Board may empower the Director General or Chief Commissioner or Commissioner to issue orders to assign functions of assessing officer to Addl. Commissioners or Jt. Commissioners as the case may be.

++ Thus keeping the above provisions in mind, it is apparent that as per the section 2(7A) as amended by Finance Act, 2007 which defines Assessing Officer, Jt. Commissioners and Addl. Commissioners are separate entities who can only exercise powers and perform functions of A.O. if there is an order to that effect by the Board u/s 120(4)(b) r.w. Sec. 120(1) or by an order of C.C. or Comm. who is duly empowered by Board u/s 120(4)(b).

++ Moreover if they are to be given exclusive jurisdiction over the case to be assessed by them, then the cases should be transferred to them from the assessing officers u/s 127.

There is no doubt that notifications have been issued by Commissioners u/s 120(4)(b) empowering Jt. Commissioners to exercise powers of assessing officers but these are no longer applicable to Addl. Commissioners as they are a separate entity which is clear from their separate mentioning in Sec.2(7A) and Sec.120(4)(b) and definition of Jt. Commissioner as per Sec. 2(28C) which defines it as a person appointed to be Jt.Commissioner or Addl. Comm. u/s 119(1) of the Act is no more relevant for definition of Assessing Officer in Sec. 2(7A) subsequent to its amendment. Thus notifications u/s 120(4)(b) empowering JCs to act as assessing officers are no longer applicable to Addl. CIT in view of the above discussion and a fresh notification similar to one issued for JCs will have to be issued to empower them to exercise powers and functions of assessing officers or alternatively the Board can issue orders with respect to Addl CITs u/s 120(4)(b) r.w. Sec.120(1).

Thus in light of the above statutory provisions, the Commissioner (A) invalidated assessment orders passed by Jt. Comm. And Addl. Comm. under authorization by CCIT or CIT who were not empowered by the Board to issue such directions under Sec.120(4)(b) .

Thus the assessments have been declared invalid for want of jurisdiction. There is no doubt that such assigning of powers has to made in view of workload and for reasons of efficiency but there is no justification in doing so without following the proper course which has been clearly provided in the statute itself otherwise such practices tend to make statutory provisions redundant. Officials should not adopt practices as per their whims and fancies. Moreover such practices lead to a waste of time and money as the entire process has to be restarted and will amount to duplication as can be seen in the instant case, observes the Order.

Will the CBDT examine and come out with a clear-cut Instruction on this issue?