Section 120 deals with Jurisdictions of Income Tax Authorities. Income tax authorities shall exercise all or any of powers and functions conferred upon it by CBDT. CBDT can in accordance with section 120(1) issue directions to such income tax authorities. Also if CBDT directs, all such high-rank authorities can exercise powers and perform functions of such lower ranked authorities. This section requires CBDT to consider matters in issuing such directions –
- Territorial Area
- Persons or classes of persons
- Incomes or classes of incomes
- Cases or classes of cases
Central Board of Direct Taxes (CBDT) may authorize any Principal Director General or Director General or Principal Director or Director of income tax to perform such functions of any other income tax authority. CBDT can empower the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Such empowered authority can issue orders in writing to the effect that the powers and functions conferred on or assigned to the Assessing Officer under this Act in respect of any specified area or person or class of person or persons or incomes or classes of income or cases or classes of cases shall be exercised or performed by an Additional Commissioner or Additional Director or a Joint Commissioner or Joint Director.
CBDT or any other such authorized authority in this behalf can confer jurisdiction with more than one income-tax authority in relation to any case.
Jurisdiction of Assessing Officers [Section 124]
- An Assessing officer shall exercise his jurisdiction over persons who carry business in his area of jurisdiction. He shall also exercise his jurisdiction over persons who have businesses over many places but their principal place of business is in his area of jurisdiction.
- Where there arises a question whether an Assessing Officer has jurisdiction to assess any person, it shall be determined by the Principal Director or Director General or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In case such high ranking authorities are also not in agreement, Board can determine their jurisdiction by way of notification in the Official Gazette.
- Where a person has filed return of income after the expiry of one month from the date on which AO has served notice under section 142(1) or section 143(2) or after the completion of the assessment, whichever is earlier; such person will have no right to question the jurisdiction of such AO. Also, where assessee doesn’t file return after expiry of such time given to him in the notices, AO’s jurisdiction cannot be questioned.
- Where the assessee has questioned jurisdiction of AO, AO shall first determine the correctness and if not satisfied with it, he shall determine it under rules mentioned above before making the assessment.
- Every AO shall have all powers conferred by this Act on income accruing or arising or received within the area over which direction is issued under section 120(1) and 120(2).
Power to transfer cases [Section 127]
This section provides power to high rank authorities to transfer cases from one Assessing Officer to another. However, before transferring such cases, Assessee must be given a reasonable opportunity of being heard. Also wherever possible, such authority shall maintain reasons in writing for doing so.
Now suppose the Assessing Officer to whom the case is being transfered is under another such high ranking Authorities above Assessing Officer. There is no issue if such high ranking authorities are at agree. Such high ranking authorities under which the new AO is subordinate shall pass the order.
But, in case such high ranking authorities are at disagreement, the Board or authority authorized by board shall pass the order.
Some important Points –
- Where there is transfer between AO within the same city or locality or place, then Assessee may not be given an opportunity of being heard.
- Such transfer can be made at any stage of the proceedings and it is not necessary to re-issue any notices that have already been issued.
Change of Income Tax Authority [Section 129]
This section deals with cases where an income tax authority is succeded by another income tax authority. As per this section, the succedding income tax authority may continue the proceedings from the stage at which the proceedings were left by his predecessor. However, an assessee can demand that before continuance of proceedings as above, the previous proceedings or any part thereof be reopened or be reheard before passing of any assessment order.