TaxTMI 
TaxTMI 
Administrative Hierarchy under the Income Tax Law : Clause 238 of Income Tax Bill, 2025 Vs. Section 118 of Income Tax Act, 1961
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....in of command and administrative efficiency within the tax department. As the Income Tax Bill, 2025 proposes to replace the existing 1961 Act, a detailed analysis and comparison of Clause 238 and Section 118 is essential to understand the continuity, changes, and implications for tax administration and stakeholders. Objective and Purpose Legislative Intent The primary objective behind both Clause 238 and Section 118 is to empower the CBDT with the authority to determine the subordination and reporting relationships among income-tax authorities. This is crucial for: * Ensuring administrative discipline and hierarchical clarity. * Facilitating smooth functioning and coordination between various authorities. * Enabling flexible struct....
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....owered to issue directions. * Mode of Direction: Both require a notification, with Section 118 specifically mentioning "notification in the Official Gazette." * Scope: Both allow specification of any income-tax authority or authorities and their subordination to other authorities. * Flexibility: The language is open-ended, allowing the Board to issue such directions as may be necessary from time to time. Interpretative Issues * Notification Requirement: Section 118 mandates publication in the Official Gazette, ensuring formal public notice and legal enforceability. Clause 238 omits the explicit reference to the "Official Gazette," though under general principles of statutory interpretation and administrative law, such notifications....
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....Official Gazette in Clause 238 could lead to interpretative issues regarding the validity and enforceability of such notifications, unless clarified by rules or judicial interpretation. * Potential for Overlap: The broad discretion could lead to overlapping jurisdictions or confusion unless notifications are drafted with precision. * Transparency and Challenge: Lack of clear publication requirements may affect transparency and the ability of stakeholders to challenge or be aware of changes in the administrative hierarchy. Practical Implications For Taxpayers and Practitioners * Clarity in Jurisdiction: The notification mechanism ensures that taxpayers and practitioners know which authority is responsible for assessment, appeal, or e....
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....ange in the scope of the power. * Procedural Modernization: The omission of the explicit reference to the "Official Gazette" in Clause 238 may be intended to accommodate future modes of publication such as electronic gazettes or digital notifications, aligning with the government's Digital India initiative. * Potential for Broader Interpretation: The language in Clause 238 is marginally more succinct, possibly allowing for a more flexible approach to notification and publication, but at the risk of ambiguity unless clarified by subordinate legislation or judicial interpretation. International and Inter-Statute Comparison Similar powers are found in tax statutes of other jurisdictions, where the central tax authority is empowered t....