BA LLB 5th Year (9th Semester)

Law of Taxation Assignment

On

What are the Different Statutory Agencies to Regulate the Income

Tax

Submitted To:
Dr. Ashok Kumar Mishra

Submitted By:
Atif Khan
2021-342-021
Abstract:
Tax is the duty and financial levy imposed by the government on individuals or legal person.
It serves for financing public expenditure and fulfil socio economic goals. Its main purpose is
to generate revenue and fund such revenue for public necessity like infrastructure, defense,
public health care, education etc.
Taxes are broadly categorized as Direct and indirect taxes. Direct taxes are like income tax
and tax on property where the burden falls directly on the payer, on the other hand indirect
taxes are like GST, and VAT where the burden falls over the consumer.
This paper is going to remain his focus on income tax Authorities mentioned under section
236 of income tax bill of 2025. Income tax authorities wield the extensive power crucial for
the effective administration, assessment and enforcement of direct tax laws. Headed by the
Central Board of Direct Taxes which set policy and issues binding instruction, and the
hierarchy of officers exercise both administrative and quasi-judicial functions.
 Table of content

1. Introduction 0-1

Classes of Income Tax Authorities

1. The Central Board of Direct Taxes
2. Directors General of Income Tax or Chief Commissioners of Income Tax
3. Directors of Income Tax or Commissioners of Income Tax or Commissioners
of Income Tax (Appeals)
4. Additional Directors of Income Tax or Additional Commissioners of Income
Tax or Additional Commissioners of Income Tax (Appeals)
2 5. Joint Directors of Income Tax or Joint Commissioners of Income Tax
01-02
6. Deputy Directors of Income Tax or Deputy Commissioners of Income Tax or
Deputy Commissioners of Income Tax (Appeals)
7. Assistant Directors of Income Tax or Assistant Commissioners of Income Tax
8. Income Tax Officers
9. Tax Recovery Officers
10. Inspectors of Income Tax

3 Appointment of Income Tax Authorities 02-03

Central Board of Direct Taxes

4 1) Composition 03-05
2) power

5 Conclusion 05-06

6 References 06-07
Introduction:
The Indian constitution grants (under entry 82 of the union list schedule vii) central
government of India to impose taxes on all types of income other than the Income from
agricultural income.
The revenue generated by taxes are the main source of nations money, income tax is the
primary source for funding the government operations and provide service to its citizens.
To maintain the regulatory for taxation, government of India establish several authorities.
These income tax authorities are assigned to prevent assessment of assesses, tax evasion, tax
fraud etc. these authorities make sure the implementation of Income tax act effectively and
manage the income tax department.

Classes of Income tax Authorities:

Section 116 of the income tax act (section 236 of income tax bill of 2025) provides the
hierarchy and classification of income tax authorities.1
 At the top of it The Central Board of Direct Taxes comes, CBDT is the apex policy-
making and administrative authority for direct taxes in India. It is a statutory body
functioning under the Department of Revenue, which is part of the Ministry of
Finance, Government of India. Its work briefly divided into three core areas, first:
policy making and legislation, second: administration and enforcement and third:
taxpayer facilitation and international relations. CBDT act as both the legislative
advisor and the chief administrator of the income tax department ensuring that the
direct tax system be fair, efficient and aligned with the Indian economic goals.
 The Director General of Income Tax (DGIT) and the Chief Commissioner of Income
Tax (CCIT) (often designated as Principal Chief Commissioner of Income Tax - Pr.
CCIT) are the highest-ranking field officers of the Income Tax Department (ITD) in
India, just below the Central Board of Direct Taxes (CBDT). Both posts are of
equivalent rank and are filled by senior officers of the Indian Revenue Service (IRS).
The core difference lies in their function and jurisdiction: CCITs are focused on
geographical administration and revenue collection, while DGITs oversee specialized,
national-level functions.
 The Directors of Income Tax (DIT) and the Commissioners of Income Tax (CIT)
(often designated as Principal Commissioner of Income Tax - Pr. CIT) are senior-
level officers in the Income Tax Department (ITD), positioned below the Chief
Commissioners/Directors General. They hold the rank of Joint Secretary in the
Government of India. The CIT are known as the supervisory, revisionary authority
and give statutory approvals on the other hand the DIT works in specialized, non-
territorial directorates and focuses on specific national functions of department.
 The Additional Commissioner of Income Tax (Addl. CIT) and the Additional Director
of Income Tax (Addl. DIT) are next senior-level officers in the Indian Revenue
Service (IRS). They hold a crucial position in the Income Tax Department's hierarchy,
typically ranking above the Deputy/Assistant Commissioners and below the

1
Section 116 of Income Tax Act of, 1961/ Section 236 of Income Tax Bill, 2025
 Commissioners/Directors. They share the same role but next to commissioners and
directors.
 The Joint Commissioner of Income Tax (Jt. CIT) and the Joint Director of Income
Tax (Jt. DIT) are next senior-level officers in the Income Tax Department (ITD), the
Jt. CIT share the role of assessment and enquiry, tax evasion detection and Jt. DIT
they are placed in specialized, functional directorates with national scope and assist
the Add./Directors/ Director General in investigation, operations, search or seizure.
 The Deputy Director of Income Tax (DDIT), Deputy Commissioner of Income Tax
(DCIT), and Deputy Commissioner of Income Tax (Appeals) are all officers holding
the Senior Time Scale rank in the Indian Revenue Service (IRS). They occupy a
crucial role as frontline managers and key decision-makers in the Income Tax
Department. The Deputy Commissioner play the role of assessing officer and the
Deputy Director they specialized on specific national operations and supportive
functions.
 The Assistant Commissioner of Income Tax (ACIT) and the Assistant Director of
Income Tax (ADIT) are officers who belong to the Junior Time Scale of the Indian
Revenue Service (IRS). This is often the entry-level designation for officers recruited
through the Civil Services Examination after their probationary period. They are
crucial for the day-to-day execution of the Income Tax Act. They are generally
assigned jurisdiction over cases with certain limit of income.
 The Income Tax Officer is a foundational and critical rank within the Income Tax
Department of India. The ITO is a Gazette Officer of the Government of India,
typically recruited either directly through the Staff Selection Commission (SSC) CGL
Exam or by promotion from the rank of Inspector of Income Tax. The ITO is legally
vested with the power to act as the Assessing Officer for taxpayers (individuals,
HUFs, firms, etc.) with cases falling within their specified jurisdiction.
 The Tax Recovery Officer is a specialized income tax authority under the Income Tax
Act, 1961, whose sole function is the coercive collection of outstanding tax arrears.
They are positioned as enforcement agents for the Income Tax Department.
 The Inspector of Income Tax is a vital, non-gazette rank within the Income Tax
Department, recruited primarily through the Staff Selection Commission, Combined
Graduate Level Examination. They are the field-level operational staff who support
the statutory Income Tax Authorities in their duties.

Appointment Income Tax Authorities:

Section 117 of the Income Tax Act, 1961, clearly defines the legal source and method for
appointing all tax officials, from the highest policymaker to the field-level assessor. The
process is based on a structured system of central control with necessary delegation.2
The Central Government holds the absolute primary authority for appointing Income Tax
Authorities. This ensures that the senior leadership of the tax administration is directly
accountable to the Union Executive. The Central Government directly appoints all high-
ranking officials up to and including the rank of Assistant Commissioner of Income Tax and
all ranks above it (e.g., Commissioners, Chief Commissioners, Directors General, etc.). These

2
Section 117 of income tax act of, 1961/ Section 237 of income tax bill, 2025
officers form the core statutory authority structure responsible for policymaking,
administration, and major quasi-judicial functions.
And to maintain administrative efficiency and allow senior authorities to staff their respective
formations swiftly, the Central Government can authorize the delegation of appointment
power for officials below the rank of a Deputy Commissioner or Assistant Commissioner.
The power to appoint these junior officers is entrusted to senior authorities, including the
Central Board of Direct Taxes (CBDT), a Director-General, a Chief Commissioner, or a
Director.
Even when the appointments are delegated to the central board of direct tax and other senior
officer such chief commissioner those appointment must strictly follow the rules and
regulations of the central government.

Central Board of direct taxes:

The Central Board of Direct Taxes is a statutory body constituted under the Central Board of
Revenue Act of 1963. It functions under the Department of Revenue within the Ministry of
Finance, Government of India, ensuring it operates as an integral part of the nation's financial
administration. Initially, the single Central Board of Revenue handled both Direct Taxes (like
Income Tax) and Indirect Taxes (like Customs and Excise). As the tax administration became
too complex, the Board was split into two, Central Board of Direct Taxes: Manages Income
Tax, Corporate Tax, etc. Central Board of Excise and Customs now Central Board of
Indirect Taxes and Customs: Manages GST, Customs Duty, etc.3
The Central board of direct tax exercises two primary sets of functions: Administrative and
Legislative. The CBDT is the head of the entire Income Tax Department. It has the power to
control and supervise all officers of the Income Tax Department, from the Principal Directors
General down to the Income Tax Officers and Inspectors. This ensures uniform application of
tax law across the country. It is responsible for setting annual tax collection targets and
monitoring the performance of all field officers. It issues administrative Instructions and
Circulars to clarify tax provisions; these are legally binding on the subordinate Income Tax
Authorities.
The Central board of direct tax is empowered to frame rules necessary for the smooth
administration and implementation of the provisions of the Income Tax Act, 1961. These
rules provide the detailed procedure and machinery for carrying out the broad principles laid
down in the Act (e.g., specific rules for valuation, depreciation, or filing forms). Crucial
Check: The rules made by the CBDT are subject to the control and approval of the Central
Government (Ministry of Finance) before they become legally effective, ensuring they align
with government policy.

3
Power of income tax authorities, an article at (writing law) published by Subhashini Parihar
Composition of Central Board of Direct Taxes:
The Central Board of Direct Taxes comprises a chairman and six other members. The
chairman is the head of the Board. The other six members must be ex officio special secretary
to the government of India.4
The six members of the Central Board of Direct Taxes deal with:
a) Income Tax & Revenue
b) Administration
c) Legislation
d) Audit and Judicial
e) Investigation
f) TPS & System

Powers of the Central Board of Direct Taxes:

The Central Board of Direct Taxes has been empowered with the following powers by the
Income Tax Act of 1961:5

1. Power to appoint income tax authorities: Section 117 of the Income Tax Act gives the
Board the power to appoint income tax authority below the rank of Deputy Commissioner or
Assistant Commissioner if authorized by the central government.
2. Power to control and supervise: Section 118 of the Income Tax Act empowers the Board to
control all the Income Tax Authorities subject to an overall framework of the Central
Government.
3. Power to issue instructions and circulars: Section 119 of the Income Tax Act empowers the
Board to issue instructions and circulars to its subordinate officials for the proper
administration and implementation of the Income Tax Act. The Board has the power to give
the following instructions:
 Relaxation of certain provisions [sec 119(2) (a) of the Income Tax Act]
 Extension of time limit [sec 119(2) (b) of the Income Tax Act]
 Relaxation for claiming deduction [sec 119(2) (c) of the Income Tax Act]
4. Power to decide the powers and functions: Section 120 empowers the Board to decide on
and issue the powers and functions of the other income tax authorities.
5. Power to issue general or special orders: The Board can issue general or special orders to
relax the provisions of sections 115P, 115S, 139, 143, 144, 147, 148, 154, 155, 234A, 234B,
271 and 273 in order to properly and effectively manage the work of assessment and
collection of revenue.

4
Para 1 of an official gazette of income tax India.
5
Para 7 of Notes uploaded by Robin Singh, on [Link].
6. Power to transfer cases: Section 127 of the Income Tax Act empowers the transfer of a
case from one Assessing Officer to another Assessing Officer subordinate to him after giving
the concerned assesse a reasonable opportunity to be heard.

Conclusion:
The Income Tax Authorities in India constitute a meticulously structured and functionally
diverse hierarchy that serves as the administrative and enforcement backbone of the Income
Tax Act, 1961. This structure, starting from the field-level official and culminating at the
apex board, is designed to ensure compliance, efficiency, and revenue collection.
The entire hierarchy operates under the supreme authority of the Central Government
(Section 117), which delegates power while maintaining control over service conditions. The
Central board of direct taxes acts as the central nervous system, issuing binding rules and
circulars, and supervising the day-to-day functions of the department. This system
differentiates clearly between territorial officers (Commissioners/ACITs), functional officers
(Directors General/ADITs) and quasi-judicial officers CIT-Appeals/DCIT-Appeals). Which
carefully balanced structure of legislative authority (CBDT), administrative control
(CCIT/CIT), assessment power (ACIT/ITO), and specialized enforcement (DGIT/DIT) is
what enables the comprehensive and effective implementation of direct tax laws across the
nation.

References:
[Link] powers-and-functions-of-income-tax-authorities-under-the-income-tax-
act-1961.
[Link]
[Link]