Law: Income Tax Act, 1961

Section: 116,119

Income-tax------Central Board of Direct Taxes---Powers of CBDT---Scope of powers--¬Board cannot clarify its instructions to a private person---Indian Income Tax Act, 1961, Ss. 116 & 119. A conjoint reading of the provisions of sections 116(a) and 119 of the Income Tax Act, 1961, makes it clear that the Central Board of Direct Taxes being the highest executive authority, exercises its power and supervision and control over the whole Department and it also possesses rule-making power and power to issue orders, instructions and directions to all officers and persons employed in the execution of the Act subject to two exceptions, namely, that it cannot interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions and it cannot direct the Income-tax Authority to make a particular assessment or to dispose of a particular case in a particular manner. Being the executive head the Board can definitely issue orders/instructions or directions by way of issuing circulars but the law does not give the Board power to clarify the inner meaning of a circular or order to an individual. In order to clear an ambiguity in orders or instructions or directions, the Income-tax Authorities may approach the Board and the Board may clear the ambiguity but it definitely does not mean that on the request made by a private individual the Board can clarify the intention in issuing any direction, order, etc. The appellant was a company, which deducted income-tax from the salary of its employees and deposited the same in accordance with law. In addition to salary, allowances and other taxable perquisites of the individual employees of the factory, the company had provided them with the services of sweepers by way of reimbursement of wages of sweepers engaged by the individual employees. For the financial year 1991-92, the appellant-company was called upon to add the sweepers' wages in the taxable salary of the concerned employees and also was directed to pay tax, which the appellant had failed to deduct during the financial year 1990-91. The appellant addressed a letter to the Chairman of the Board on March 6, 1992,requesting the Board to…

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