Tax Recovery Officer to have powers of Assessing Officer
This has a fairly long history. By Taxation Laws (Amendment) Bill 2005, it was proposed to add the following to the definition of "Tax Recovery Officer" in section 2(44) of the Income Tax Act,
"and also to exercise or perform such powers and functions which are conferred on, or assigned to, an Assessing Officer under this Act and which may be prescribed".
The Bill was referred to the Standing Committee of Parliament. Taxindiaonline was invited by the Parliamentary Committee to give suggestions on the Bill. In the meeting we had with the Committee, in Parliament, we submitted to the Hon'ble MPs,
Why create a diarchy? The Assessing Officer knows more of a Case; he can examine issues from a different observation-post. TRO works in a different protocol. The Department would need, if the amendment is brought about, to sort out disputes inter se the TRO and the AO. It would be a waste of resources. Better not to go ahead with this change.
The committee asked the Ministry to respond and the Ministry responded with,
"Clause 2 of the Bill seeks to enable a Tax Recovery Officer (TRO) to exercise limited functions of an Assessing Officer (AO) as may be prescribed. Such limited functions shall be like carrying of rectification of apparent mistakes, giving effects to order of appellate authorities, etc. Such power will enable a TRO to expeditiously determine the demand to be collected by him in cases where a claim is made before him that demand referred to him for collection needs some adjustments. The delay in giving appeal effects, etc. in such cases, may not be solved administratively, because TRO has to refer the matter back to the Assessing Officer. Therefore, it is appropriate to assign such powers to TRO himself. Further, as a TRO will have to act upon in respect of application made to him, there will be no problem in fixing responsibility for delay in disposing off such application by him. There is also no legal conflict in assigning the limited functions of AO to TRO."
During oral evidence, the Ministry submitted,
"It was felt by the Committee that most probably the role which we are assigning to the TRO may not be in line with the functional requirement of the work. It was also felt that the TRO is given only the work of recovery, and, with much more functional specialization, he may be able to perform better. But our experience has been that sometimes, the TRO is not effective. The point is that when he proceeds to recover the demand dues, the point that comes is that some rectification is pending or sometimes it is found that some other appeal effect is not given. We want to give limited powers to the TRO. We are not giving all the powers of the Assessing Officer but only a limited power."
The committee in its report to Parliament observed,
By way of conferring additional powers of the Assessing Officer on the TRO--which are proposed to be limited to rectification of mistakes in the assessment orders, giving effect to orders of appellate authorities etc., it is intended to enable speedy and effective settlement of the demands/applications of the assessees. Though the proposal enabling for speedy settlement of assessment related issues would be tax payer friendly, the Committee feel that for achieving the intended purpose it may be essential to comprehensively address the prevailing norms, procedures and regulations relating to the functioning of the 'Tax Administration'.
The Committee, therefore, desire that the administrative instructions/regulations relating to the additional powers proposed to be conferred on the TRO are clear and specific on confining such powers to rectification of mistakes in assessment orders, effecting orders of Appellate Authorities etc. The Committee also expect the Government to ensure that the proposal would, in no way, affect the co-ordination in the hierarchy of Income Tax authorities.
The Committee find that the Government are bringing in amendments to the Income Tax Act very frequently, which cause difficulties in comprehending the law by various people concerned. The Committee, therefore, urge the Government to come out with a comprehensive simplified single legislation at the earliest.
The Government went ahead with the proposal and so as per the Act, TROs can also exercise specified powers of the AO. This was brought in with effect from 13.7.2006 by the Taxation Laws (Amendment) Act, 2006. But what powers and functions of the AO that TRO can exercise or perform, have not been specified by the Rules, which is done now. A new Rule 117C is inserted in the Income Tax Rules, by which the TRO is given the power to rectify any mistake apparent. At least so far, the Government is fair. It has kept the promise given to the Parliamentary Committee.
NOTIFICATION NO. , Dated : October 16, 2007