There is widespread apprehension that the powers of the Central Board of Direct Taxes are proposed to be diluted by the Direct Taxes Code (DTC). There has been no comment on this aspect in your analysis of the provisions of the Code.
The Central Board of Direct Taxes (CBDT) is a statutory authority created under the Central Board of Revenue Act, 1963, as defined under Sec. 116 of the present Act, repeated in Sec. 284(34) of the Code with independent status to act impartially so as to be not influenced by the political changes. Being familiar with the requirements of both taxpayers and the officers, it is best equipped to be an independent regulatory authority. An independent board like Ceasar’s wife is expected to be above suspicion.
The provision in Sec. 127 of the Code is best understood and analysed in an article by T. C. A. Ramanujam and T. C. A. Sangeetha in Income Tax Reports (2009) 318 ITR (Journal) 1 at 9 as under:
“Sec. 127 of the DTC openly declares that the CBDT shall be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time. The Board shall be given an opportunity to express its views before any such direction is given. The decision of the Central Government whether a question is one of policy or not shall be final. This provision is a flagrant violation of the principle of the independence and integrity of the CBDT.
“Already, the Indian Revenue Service is considered not even a shadow of its counterpart the Internal Revenue Service of the U.S. An independent IRS is a sine qua non for an honest and efficient implementation of the tax policy. By making the CBDT openly subservient to the Central Government, the Code compromises such independence and integrity of the Board. Obviously, it looks as though CBDT was never consulted in drafting the Direct Taxes Code.”
Another comment in another article in the same issue by Dr. C. P. Ramaswami illustrates from one of the passages in “Yes Minister” the scope of possible conflict between Government policy and administrative responsibility in a lighter vein in the following words reproduced in Income Tax Reports (2009) 318 ITR (Journal) 15 at 23 as:
“Sir Humphrey Appleby: Yes, I do think there is a real dilemma here in that while it has been Government policy to regard policy as the responsibility of Ministers and administration as the responsibility of officials, questions of administrative policy can cause confusion between the administration of policy and the policy of administration, especially when responsibility for the administration of the policy of administration conflicts or overlaps with responsibility for the policy of the administration of policy.”
