Incometax doubts

Hello,

Thank you for your insightful question regarding CBDT Circular No. 14 (XL-35) dated 11.04.1955. This circular remains relevant under the Income Tax Act, 1961, and continues to guide the conduct of tax authorities.

📜 Historical Context and Applicability

Although the circular was issued in 1955 under the Income Tax Act of 1922, it has been consistently upheld and applied under the 1961 Act. The Supreme Court and various High Courts have affirmed that circulars issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act, 1961 are binding on tax authorities, even if they deviate from the provisions of the Act. This principle was established in landmark cases such as Navnitlal C. Javeri v. K.K. Sen (1965) and Ellerman Lines Ltd. v. CIT (1979) .Tax Guru+3Indian Kanoon+3Indian Kanoon+3Indian Kanoon+2Indian Kanoon+2

🤝 Key Principles of the Circular

The circular emphasizes that tax officers should not exploit a taxpayer's ignorance to collect more tax than what is legitimately due. It outlines several duties for tax authorities:Indian Kanoon+3Abcaus+3Jurishour+3

• Proactive Assistance: Officers should assist taxpayers in identifying and claiming refunds or reliefs they are entitled to, even if not explicitly claimed by the taxpayer.Indian Kanoon+2Abcaus+2

• Guidance on Rights and Liabilities: Taxpayers should be advised on their rights and the procedures to claim refunds and reliefs when approached.Abcaus

• Rectification of Mistakes: Mistakes in assessments should be rectified promptly without waiting for the taxpayer to point them out.Abcaus

The overarching goal is to foster a relationship of trust and cooperation between taxpayers and tax authorities, ensuring that the tax system is fair and transparent .

⚖️ Legal Standing and Enforcement

While the circular is not legally enforceable in the same way as statutory provisions, it carries significant weight. Courts have consistently held that the revenue authorities are bound by such circulars, especially when they confer a benefit upon the taxpayer. For instance, in Sad Bhawna, Delhi vs DCIT (2023), the court reiterated that circulars issued by the CBDT are binding on the revenue .India Law Journal+3Indian Kanoon+3Indian Kanoon+3

🧾 Practical Implications for Salary-Earning Taxpayers

For salaried individuals, this circular implies that tax authorities should assist in identifying eligible deductions and exemptions, even if not claimed in the return. For example, if a taxpayer is eligible for a deduction under Section 80C but has not claimed it, the tax officer is expected to inform the taxpayer and facilitate the claim.

However, it's important to note that the responsibility for claiming deductions and exemptions lies with the taxpayer.While the circular encourages proactive assistance, it does not absolve taxpayers from their duty to be aware of their entitlements.

✅ Conclusion

CBDT Circular No. 14 (XL-35) of 1955 continues to be a guiding document under the Income Tax Act, 1961. It underscores the duty of tax authorities to assist taxpayers and ensures that the tax system operates with fairness and transparency. While not legally enforceable, the principles outlined in the circular have been upheld by courts and remain a cornerstone of taxpayer-rights advocacy.