Instructions to

subordinate authorities.

239(1)

The Board may issue such orders, instructions and directions to other income-tax authorities as it considers fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions.

239(2)

No orders, instructions or directions under sub-section (1) shall be issued to—

• (a) require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or
• (b) interfere with the discretion of the Joint Commissioner (Appeals) or Commissioner (Appeals) in the exercise of his appellate functions.

239(3)

Without prejudice to the foregoing power, the Board may,—

• (a) if it considers necessary or expedient so to do for the proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of section 263, 270, 271, 279, 280, 287, 298, 398(3), 406, 407, 423, 424, 425, 427, 428, 439, 448, 449 or otherwise), general or special orders in respect of any class of incomes or class of cases,–– (i) setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties; and (ii) any such order may, if the Board is of the opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;
• (b) if it considers desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Joint Commissioner (Appeals) or a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified in this Act for making such application or claim and deal with the same on merits as per law;
• (c) if it considers desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or VIII, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions:— (i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and (ii) the assessee has complied with such requirement before the completion of assessment in relation to the tax year in which such deduction is claimed.

239(4)

The Central Government shall cause every order issued under sub-section (3)(c) to be laid before each House of Parliament.

Explanation

Section Summary:

Section 239 of the Income Tax Act grants the Central Board of Direct Taxes (CBDT) the authority to issue orders, instructions, and directions to subordinate income-tax authorities for the proper administration of the Act. It also sets boundaries on the Board's powers to ensure fairness and prevent interference in specific cases or appellate functions. Additionally, it allows the Board to relax certain provisions to avoid genuine hardship for taxpayers, subject to specific conditions.

Key Changes:

1. Expanded Authority: The Board can now issue general or special orders to relax provisions under various sections (e.g., 263, 270, 271) for efficient tax administration or to alleviate genuine hardship.
2. Relaxation of Deadlines: The Board can authorize income-tax authorities to accept late applications or claims for exemptions, deductions, refunds, or reliefs if genuine hardship exists.
3. Public Interest Disclosure: Orders issued under this section can be published for public information if deemed necessary in the public interest.
4. Parliamentary Oversight: Orders issued under sub-section (3)(c) must be presented before both Houses of Parliament.

Practical Implications:

1. For Taxpayers:
   • Taxpayers facing genuine hardship (e.g., due to circumstances beyond their control) may benefit from relaxed deadlines or procedural requirements.
   • Deductions or reliefs that were previously denied due to procedural lapses may now be considered if the taxpayer rectifies the issue before assessment completion.
2. For Tax Authorities:
   • Authorities must follow Board-issued guidelines while maintaining fairness and avoiding interference in specific assessments or appellate functions.
   • They are empowered to handle late claims or relax requirements in hardship cases, provided the Board's conditions are met.
3. For Compliance Processes:
   • Taxpayers must ensure compliance with procedural requirements, even if relaxed, before the assessment is completed.
   • Authorities must document and justify any relaxation of rules to ensure transparency and accountability.

Critical Concepts:

1. Genuine Hardship: Refers to situations where taxpayers face significant difficulties due to circumstances beyond their control (e.g., natural disasters, severe illness).
2. Relaxation of Provisions: The Board can ease procedural requirements under specific chapters (e.g., Chapter IV or VIII) if taxpayers meet certain conditions.
3. Public Interest: Orders that impact a large group of taxpayers or have significant implications may be published for transparency.

Compliance Steps:

1. For Taxpayers:
   • If facing hardship, ensure documentation is prepared to demonstrate circumstances beyond your control.
   • Rectify any procedural lapses (e.g., filing required forms) before the assessment is completed.
2. For Authorities:
   • Follow Board-issued guidelines and instructions while maintaining fairness in assessments.
   • Document and justify any relaxation of rules or acceptance of late claims.

Examples:

1. Relaxation of Deadlines: A taxpayer misses the deadline to claim a deduction due to a severe illness. Under Section 239(3)(b), the Board may authorize the tax authority to accept the late claim if the taxpayer provides medical proof and rectifies the issue before the assessment is completed.
2. Relaxation of Procedural Requirements: A taxpayer fails to submit a required form for claiming a deduction under Chapter IV due to a natural disaster. The Board may relax this requirement if the taxpayer submits the form before the assessment is finalized and provides evidence of the disaster.

This section ensures a balance between efficient tax administration and fairness to taxpayers, particularly in cases of genuine hardship.