INCOME TAX AUTHORITIES: CHAPTER 16

Important Sections-

Section Particular
116 Classes of Income Tax Authorities
2(7A) Definition of AO
117 Appointment by CG of ITA
119 Instruction to Subordinate Authorities
119A Tax Payer’s Charter
124 Jurisdiction of AO
127 Power to Transfer cases
129 Change of incumbent of an office
130 Faceless jurisdiction of income-tax authorities
131 Power regarding discovery, production of evidence, etc.
132(1) When can a search be conducted
132(3) Prohibitory Order
132(8A) Can last max upto 60 days from date of order
132(9B) Provisional attachment of property
132(9D) Reference to Valuation Officer
132A Powers to requisition books of account, etc
132B Application of seized or requisitioned assets
133 Power to call information
133A Power of survey
133B Power to collect certain information
133C Power to call for information by prescribed income-tax authority
134 Power to inspect registers of companies
135A Faceless collection of information
138 Disclosure of information respecting assessees
INCOME TAX AUTHORITIES: CHAPTER 16

CBDT

PDGIT PCCIT

DGIT CCIT

PDIT PCIT

DIT CIT CIT(A)

ADD. Add.
DIRECTOR Comm.

JOINT Joint
DIRECTOR Comm.

DPY. Dpy.
DIRECTOR Comm.

ASST Asst.
DIRECTOR Comm

ITO

TRO

inspector
 INCOME TAX AUTHORITIES: CHAPTER 16
Section 117

- Primarily CG appoints ITA

- It may authorise CBDT/PDGIT/DGIT/PCCIT/CCIT/PDIT/DIT/PCIT/CIT to appoint below
the rank of Asst. Commissioner or Dpy. Commissioner.
- ITA authorised by CBDT may appoint executive staff.

Section 119

CBDT is empowered

- To issue order/instructions/circulars to subordinates for proper administration.

- Issue general or special order for any class of case/ income stating directions not
prejudicial to the assessee. (Only if CBDT is of opinion that it is necessary in the public
interest so to do and it will be published and circulated in the prescribed manner for general
information)
- Relax certain provisions of section 139, 234A etc.
- To authorise ITA [not CIT(A)] by general/special order to admit an application to admit an
application or claim for any exemption, deduction, refund or any other relief under this
Act after the expiry of the period specified, if CBDT considers desirable or expedient so to
do for avoiding genuine hardship.

CBDT shall not pass any order/instruction/directions –

- to require any income-tax authority to make a particular assessment or to dispose of

a particular case in a particular manner
- to interfere with the discretion of the Commissioner (Appeals) in the exercise of
his appellate functions

Section 124

Jurisdiction of AOs

AO has jurisdiction over an area and shall have jurisdiction over-

any person carrying OR where his business

on a business or or profession is carried
profession, if the on in more places than AND in respect of any
place at which he one, if the principal other person residing
carries on his business place of his business within the area
or profession is situate or profession is situate
within the area within the area
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Question of AOs’ jurisdiction – to be decided by PDGIT/DGIT/PCCIT/CCIT/PCIT/CIT

Question is one relating to areas within the jurisdiction of different PDGIT/ DGIT/ PCCIT/CCIT/
PCIT/CIT - They shall decide mutually, if no agreement then by CBDT or by such
PDGIT/DGIT/PCCIT/CCIT/PCIT/CIT as Borad specify in Official Gazette.

Can assessee questions AO’s jurisdiction? [section 124(3)]

Yes, but within the time limits-

Where return is filed under section 139(1) Within 1 month from service of notice u/s
142(1) or 143(2) OR
Completion of assessment,
Whichever is earlier
Where no return is filed Within time allowed in notice u/s 142(1)/
148/144
Where search is initiated or requisition is Within 1 month from service of notice u/s
made 153A(1) or 153C(2) OR
Completion of assessment,
Whichever is earlier

>>AO if not satisfied with correctness of claim of assessee, shall refer the matter to
PDGIT/DGIT/PCCIT/CCIT/PCIT/CIT for determination.

Section 127

Power to transfer cases

Who has the power?

PDGIT/DGIT/PCCIT/CCIT/PCIT/CIT to transfer case from one AO to another subordinate after giving
reasonable opportunity of being heard after recording reason to do so, wherever possible.
When no opportunity of being heard shall be given?
When the transfer happens in the same city, locality or place.
Reissue of notice required?
No

Section 129

Change of incumbent of an office

- In such case the proceedings will begin from where it was left by predecessor
- Assessee may demand rehearing or reopening of previous proceeding or part of it.

POWERS OF INCOME TAX AUTHORITIES {SECTION 131 TO SECTION 136}

Section 131

Power regarding discovery, production of evidence, etc.

 INCOME TAX AUTHORITIES: CHAPTER 16
AO/JC/CIT(A)/PCCIT/CCIT/PCIT/CIT/ DRP have power vested with Civil Court . (section 131(1))

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any officer of a banking company and
examining him on oath;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.

>> Above powers may be exercised even if no proceeding is pending in following two cases –

- Authorised or Authorising officer has reason to suspect any income is concealed or likely to
be concealed. (section 131(1A))
- For facilitating information in relation to an agreement for exchange of information u/s 90 or
90A to tax authorities outside India. (section 131(2))

>> Section 131(3) – There is no restriction on time period for retaining books EXCEPT 2
RESTRICTIONS FOR AO/ASST. DIRECTOR/DEPUTY DIRECTOR.

1. Record reason of retaining

2. Max period 15 days, beyond that, prior approval of
PDGIT/DGIT/PCCIT/CCIT/PDIT/DIT/PCIT/ CIT required

Section 132

Search and Seizure

- Authorisation is necessary for search and it could take place if the officer has reason to
believe basis the information in his possession-

(a) any person to whom a summons u/s 131(1) or 142(1) was issued to produce, or cause to
be produced, any books of account or other documents has omitted or failed to produce, or
cause to be produced, such books of account or other documents as required by such
summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will
not, or would not, produce or cause to be produced, any books of account or other
documents which will be useful for, or relevant to, any proceeding under the Act
 INCOME TAX AUTHORITIES: CHAPTER 16
(c) any person is in possession of any money, bullion, jewellery or other valuable article or
thing and such money, bullion, jewellery or other valuable article or thing represents either
wholly or partly income or property which has not been, or would not be, disclosed for the
purposes the Act
Reason to believe, as recorded by the income-tax authority under this sub-section, shall not be
disclosed to any person or any authority or the Appellate Tribunal.
POWERS OF AUTHORISED OFFICERS
(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to
suspect that such books of account, other documents, money, bullion, jewellery or other
valuable article or thing are kept;
(even if Authorised officer has no jurisdiction, power shall be exercisable if delay would be
prejudicial to revenue).
(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle where the
keys are not available;
(iii) search any person who has got out of, or is about to get into , or is in, the building, place,
vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person
has secreted about his person any such books of account, other documents, money,
bullion, jewellery or other valuable article or thing;
(iv) require any person who is found to be in possession or control of any books of account or
other documents maintained in the form of electronic record to afford the authorised
officer the necessary facility to inspect such books of account or other documents;
(v) seize any such books of account, other documents, money, bullion, jewellery or other
valuable article or thing found as a result of such search BUT NOT STOCK IN TRADE(though
he can make inventory of the same)
(vi) place marks of identification on any books of account or other documents or make or
cause to be made extracts or copies therefrom;
(vii) make a note or an inventory of any such money, bullion, jewellery or other valuable article
or thing

>> Deemed seizure - where it is not possible or practicable to take physical possession of any
valuable article or thing and remove it to a safe place due to its
- volume,
- weight or
- other physical characteristics or
- due to its being of a dangerous nature,
the authorised officer may serve an order on the owner or the person who is in immediate
possession or control thereof that he shall not remove, part with or otherwise deal with it,
except with the previous permission of such authorised officer. NOT APPLICABLE On STOCK In
TRADE
>> Prohibitory Order [section 132(3)] if seizure does not happen, besides the reason mentioned
above, an order shall be served restraining a person to not deal with the money/bullion etc except
with the previous permission of such officer. Max time period :: 60 days from date of order

>> Rebuttable Presumptions [section 132(3)]

 INCOME TAX AUTHORITIES: CHAPTER 16
Where any books of account, other documents, money, bullion, jewellery or other valuable article or
thing are or is found in the possession or control of any person in the course of a search, it may be
presumed—
(i) that such books of account, other documents, money, bullion, jewellery or other valuable
article or thing belong or belongs to such person;
(ii) that the contents of such books of account and other documents are true; and
(iii) that the signature and every other part of such books of account and other documents which
purport to be in the handwriting of any particular person or which may reasonably be
assumed to have been signed by, or to be in the handwriting of, any particular person, are in
that person's handwriting, and in the case of a document stamped, executed or attested, that
it was duly stamped and executed or attested by the person by whom it purports to have been
so executed or attested.

>> when the BOA, documents etc seized shall be returned? [section 132(8)]
These shall not be retained by the authorised officer for a period exceeding thirty days from
the date of the order of assessment under section 153A unless the reasons for retaining the
same are recorded by him in writing and the approval of the
PDGIT/DGIT/PCCIT/CCIT/PDIT/DIT/PCIT/ CIT for such retention is obtained.
>Provided PDGIT/DGIT/PCCIT/CCIT/PDIT/DIT/PCIT/ CIT cannot authorise the retention of the
books of account and other documents for a period exceeding thirty days after all the
proceedings under the Act in respect of the years for which the books of account or other
documents are relevant are completed.
>Person legally entitled to such books/documents on such approval given, may make an
application to the Board stating therein the reasons for such objection and requesting for the
return of the books of account or other documents and the Board may, after giving the
applicant an opportunity of being heard, pass such orders as it thinks fit [sub section 10]

>> Books/ Assets seized to be handed over by Authorised officer having no jurisdiction over the
person to Assessing Officer having jurisdiction over the person – within a period of sixty days
from the date on which the last of the authorisations for search was executed [Section
132(9A)]

>> Provisional Attachment of Property [Section 132(9B)]

-Any time during search or within a period of sixty days from the date on which the last of the
authorisations for search was executed,
-authorised officer with reasons in recording & satisfied that for the purpose of protecting the
interest of revenue, it is necessary so to do
-with the previous approval of the PDGIT/DGIT/PDIT/DIT
- Every attachment will cease to have effect after the expiry of six months from date of order of
provisional attachment. [sub section 9C]

>> Reference to Valuation Officer [Section 132(9D)]

-Reference can be made any time during the search or within a period of sixty days from the date on
which the last of the authorisations for search was executed.
-Valuation officer shall submit the report within a period of sixty days from the date of receipt of
such reference.
 INCOME TAX AUTHORITIES: CHAPTER 16

Section 132A
Powers to requisition books of account, etc

In consequence of information in possession, on the same grounds like of search, PDGIT/DGIT/

PCCIT/ CCIT/ PDIT/ DIT/ PCIT/ CIT may authorise any Additional Director, Additional Commissioner,
Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or
Deputy Commissioner or Income-tax Officer [ called requisitioning officer] to require the officer/
authority under any other law to deliver such books of account, other documents or assets to the
requisitioning officer.
The other officer may return the same on requisition if he is of the opinion that it is no longer
necessary to retain the same in his or its custody.
Once the same are delivered to requisitioning officer, provision of section 132(4A) to Section
132(14), shall be applied on such books/assets etc.

Section 132B
Application of seized or requisitioned assets

>Money seized may be applied for discharging the liabilities [Section 132B(1)(ii)]

>Assets other than money may also be applied to discharge liabilities [Section 132B(1)(iii)] under
authorisation of PCCIT/CCIT/PCIT/CIT.

>Release of seized asset after meeting existing liabilities in certain cases [Proviso to section 132B(1)(i)]

 Concerned person can make an application to the AO within 30 days from the end of
the month in which asset was siezed, for release of asset.
 The nature and source of acquisition of any such asset is explained to the satisfaction of
the AO.
 He then after settling the amount of any existing liability may release the asset with the
prior approval of the PCCIT/CCIT/PCIT/CIT
 Further, such asset or any portion thereof as is referred to above shall be released within a
period of 120 days from the date on which the last of the authorisations for search under
section 132 or for requisition under section 132A, as the case may be, was executed
 INCOME TAX AUTHORITIES: CHAPTER 16
>Return of excess assets seized

After adjusting all the liability as shown in flowchart, any excess shall be paid/returned to assessee.

Interest to be paid at the rate of 1 /2% p.m. or part of the month on excess. This interest shall be
payable from the expiry of the period of 120 days from the execution of the last of the
authorizations for search till the date of completion of assessment under section 153A.

Section 133A
Power of Survey

Where can survey be conducted- A place where a business or profession or an activity for
charitable purpose is carried on, whether such place be the principal place or not of such business
or profession or of such activity for charitable purpose.
Also, where any books of account or other documents or any part of cash or stock or other valuable
article or thing relating to business or profession or activity for charitable purpose are or is kept.

Permitted entry time - only during the hours at which such place is open for the conduct of business
or profession and, in the case of any other place, only after sunrise and before sunset. No retriction
on exit.

Power under survey –

-inspect such books of account or other documents as he may require and which may be available at
such place and place marks of identification on the books of account or other documents inspected
by him and make or cause to be made extracts or copies therefrom.
Also, ITA can impound and retain in his custody for such period as he thinks fit any books of account
or other documents inspected by him. Maximum period allowed – 15 days. Beyond15 days only after
approval of PDGIT/DGIT/ PCCIT/ CCIT/ PDIT/ DIT/ PCIT/ CIT.
- check or verify and make inventory of the cash, stock or other valuable article or thing which may be
found therein. NO SEIZURE ALLOWED.
-record the statement of any person which may be useful for, or relevant to, any proceeding under
this Act.

TDS/TCS Survey-
Purpose>> verifying that tax has been deducted or collected at source in accordance with the
provisions under Chapter XVII-B or Chapter XVII-BB
Entry time – after sunrise and before sunset
Can verify books and other documents but cannot impound them.

Survey in connection with any function, ceremony or event-

Considering the nature and scale of expenditure incurred by an assessee, in connection with any
function, ceremony or event, the ITA is of the opinion that it is necessary or expedient so to do, he
may, at any time after such function, ceremony or event, require the assessee by whom such
expenditure has been incurred or any person who, is likely to possess information as respects the
expenditure incurred, to furnish such information as he may require as to any matter which may be
useful for, or relevant to, any proceeding under this Act.
Also record the statements of the assessee or any other person and any statement so recorded may
thereafter be used in evidence in any proceeding under this Act.
 INCOME TAX AUTHORITIES: CHAPTER 16
Approval for Survey-

For period 01.04.2020- 31.10.2020

From 01.11.2020 –

No action under this section shall be taken by an income-tax authority without the approval of the
PDGIT/DGIT/PCCIT/CCIT.