If a statute requires a particular action to be taken  by a particular officer having jurisdiction over the assessee, then the same officer can exercise the discretion. An officer superior to him can not exercise the discretion on his behalf. In case an assessment is sought to be reopened under section 148, then reasons are to be recorded in writing after gathering all the tangible material which gives rise to positive concealment of income and which is relevant to the assessee whose case is being reopened. The reasons are to be recorded by the officer who has jurisdiction over the assessee and after recording reasons approval of competent authority has to be obtained. After obtaining approval notice u/s 148 has to be issued. The officer who has recorded the reasons and officer who has issued the notice must be the same officer. It is only the discretion of the officer who has jurisdiction over the assessee who can do the job. Their can never be sharing of jurisdiction.  It is his satisfaction that matters. On receipt of information from any source the Assessing Officer is duty bound to collect the evidences and only after verifying everything he has to start the proceedings as per Section 147 to Section 151

In case of Pankaj Bhai Jaysukhlal Shah Vs, ACIT  425 ITR 70 the Honourable Gujrat High Court has held that in case Notice under Section 148 was issued by one officer and reasons were recorded by different officer, the same is not in conformity with the provisions of the Act and all proceeding pursuant to Notice under section 148 were quashed. Copy of judgment is attached.

Their can never be any sharing of jurisdiction as held in the case of Anirudh Singh Karansinghji Dadeja v. State of Gujrat 5 SCC 302. The relevant Section  of TADA is reproduced as under :

“Congnizance of offence.

20A. (1) Notwithstanding anything contained in the Code, no information about the commission of an offence under this Act shall be recorded by the police without the prior approval of the District Superintendent of Police. (2) No court shall take cognizance of any offence under this Act without the previous sanction of the Inspector- General of Police, or as the case may be, the Commissioner of Police”.

In the above case the DSP instead of exercising his own discretion took approval from State Government which was no where prescribed in statute book. Hence the charges framed under TADA were dropped.

Their Lordships of the Hon’ble Supreme Court in Anirudhsinghji Karansinghji Jadeja and another v. State of Gujarat, (19955 SCC 302 have held that exercise of administrative discretion under direction or in compliance with instructions of some other person or authority amounts to failure to exercise the discretion altogether. Their Lordships have held as under:

In the system of Indian Democratic Governance as contemplated by the Constitution senior officers occupying key positions such as Secretaries are not supposed to mortgage their own discretion, volition and decision making authority and be prepared to give way or being pushed back or pressed ahead at the behest of politicians for carrying out commands having no sanctity in law. The Conduct Rules of Central Government Services command the civil servants to maintain at all times absolute integrity and devotion to duty and do nothing which is unbecoming of a Government servant. No Government servant shall in the performance of his official duties, or in the exercise of power conferred on him, act otherwise than in his best judgment except when he is acting under the direction of his official superior.  This Court has held that a statutory authority vested with Jurisdiction must exercise it according to its own discretion; discretion exercised under the direction or instruction of some higher authority is failure to exercise discretion altogether. Observations of this Court in the Purtabpur Company Ltd., AIR 1970 SC 1896, are instructive and apposite. Executive officers may in exercise of their statutory discretions take into account considerations of public policy and in some context policy of Minister or the Government as a whole when it is a relevant factor in weighing the policy but they are not absolved from their duty to exercise their personal Judgment in individual cases unless explicit statutory provision has been made for instructions by a superior to bind them. As already stated we are not recording, for want of adequate material, any positive finding that the impugned order was passed at the behest of or dictated by someone else than its author. Yet we have no hesitation in holding that the impugned order betrays utter non-application of mind to the facts of the case and the relevant law. The manner in which the power under S. 22 has been exercised by the competent authority is suggestive of betrayal of the confidence which the State Government reposed in the Principal Secretary in conferring upon him the exercise of drastic power like removal of President of a Municipality under S. 22 of the Act. To say the least what has been done is not what is expected to be done by a senior official like the Principal Secretary of a wing of the State Government. We leave at that and say no more on this issue

Similarly in the case of Chintpurni Medical College and Hospital vs. State of Punjab their was withdrawal of essentiality certificate by State Government which was not authorized to do so in case the same was obtained legally.

To sum up it is again stated that discretion must be exercised by right person and not by any other person howsoever senior he may be in hierarchy.  Take a small example that Finance Minister is the head and proposer of all fiscal laws in the country. He presents the budget and parliament makes the law and finally the President of India gives his assent.  Now it is not possible for Finance Minister to pass any assessment order under Income Tax Law though he occupies highest position. It is only the Income Tax Officer who can pass the assessment order. Not even Commissioner of Income Tax has powers to pass any assessment order.

I hope the above article will clear the doubts about exercise of jurisdiction by officers of department.

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Company: Rajeev S Jain & Associates
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I am a Chartered Accountant in Practice from last 30 years. Any one who wants to discuss something related to Income Tax can mail me at [email protected] or call on 9810581427. View Full Profile

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June 2021