The Department has assessed our trustee under section 161 and has now issued a notice to me as beneficiary on the same income. Which section stops it doing both, and is it section 167?
It is not section 167. Section 166 is the enabling provision: 'Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income.' Section 167 is headed 'Remedies against property in cases of representative assessees' and does something quite different: it gives the Assessing Officer the same remedies against all property of any kind vested in or under the control or management of a representative assessee as he would have against the property of any person liable to pay tax, and in as full and ample a manner, 'whether the demand is raised against the representative assessee or against the beneficiary direct'. It is a recovery-reach provision in the Revenue's favour, not a taxpayer protection. The bar on taxing the same income twice comes from elsewhere: from section 161(2), from the Central Board of Direct Taxes' own instruction of 24 February 1967, and from the case law on the exercise of the option.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 1988-04-01, reported as Income-tax Act, 1961, ss.166 and 167, as printed identically on departmental pages stamped Year 2000 and Year 2023. It bears on section 166, section 167, section 161, section 161(2), section 160, section 162, section 164 of the Income Tax Act 1961, in Charitable Trusts & Exemption, Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters.
This distinction has to be got right because an argument built on the wrong section fails on the first reading of it. Section 166 gives the Department the option — it is the express provision that lets the Revenue go to the beneficiary instead of the trustee, and the Supreme Court in ITO v. Ch. Atchaiah made the general point that under the 1961 Act an option exists only where Parliament has provided one expressly, which is precisely what section 166 does. Once the option has been exercised, three things restrain the Department. Section 161(2) says that a person assessable under Chapter XV in a representative capacity 'shall not, in respect of that income, be assessed under any other provision of this Act'. The Central Board's letter of 24 February 1967 — which the Gujarat High Court reproduced in Ganesh Chhababhai Vallabhai Patel v. CIT and which the departmental section 166 page itself points to as 'Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967' — directs that once the choice is made to tax either the trustee or the beneficiary, it is not open to the Department to go behind it and assess the other at the same time. How far that instruction can be pressed was not established on this pass: no decision on the binding force of a Board circular was read for this entry, and the Gujarat High Court in Ganesh Chhababhai Vallabhai Patel, applying Hindustan Aeronautics Ltd. v. CIT, held that a circular cannot be enforced against the interpretation given by the Supreme Court or a High Court to a provision of law. Plead the instruction, but plead section 161(2) as the primary ground. Section 167, by contrast, works entirely for the Revenue at the recovery stage: it puts every asset vested in or controlled or managed by the representative assessee within reach, and its concluding words make clear that the reach exists whichever way the demand was raised. If you are a trustee whose beneficiary has been assessed direct, section 167 is the provision under which trust property can still be proceeded against, and it is a reason to take the section 162 retention and certificate seriously.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
Read aloud by your device. Press again to stop.
Section 166, as printed identically on the Year 2000 and Year 2023 departmental pages under the heading 'Direct assessment or recovery not barred': 'Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income.' Section 167, as printed identically on the Year 2000 and Year 2023 pages under the heading 'Remedies against property in cases of representative assessees': 'The Assessing Officer shall have the same remedies against all property of any kind vested in or under the control or management of any representative assessee as he would have against the property of any person liable to pay any tax, and in as full and ample a manner, whether the demand is raised against the representative assessee or against the beneficiary direct.' The Year 2000 section 166 page carries footnote 61, 'See also Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967'; the Year 2000 section 167 page carries footnote 62, 'Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988'.
Section 166 preserves the Department's power to assess the beneficiary direct and to recover the tax from him, notwithstanding the preceding sections of Chapter XV. Section 167 is not a limitation on that power but an extension of the Revenue's reach at the recovery stage: the Assessing Officer has the same remedies against all property vested in or under the control or management of a representative assessee as against the property of any person liable to pay tax, whichever of the two the demand was raised against. The prohibition on assessing the same income twice is found in section 161(2), in the Central Board's instruction of 24 February 1967 and in the case law on the exercise of the option — not in section 167.
Not applicable — this is a statement of statutory text taken from four year-stamped departmental pages. No judicial reasoning is involved.
The Assessing Officer shall have the same remedies against all property of any kind vested in or under the control or management of any representative assessee as he would have against the property of any person liable to pay any tax, and in as full and ample a manner, whether the demand is raised against the representative assessee or against the beneficiary direct.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppIt is not section 167. Section 166 is the enabling provision: 'Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income.' Section 167 is headed 'Remedies against property in cases of representative assessees' and does something quite different: it gives the Assessing Officer the same remedies against all property of any kind vested in or under the control or management of a representative assessee as he would have against the property of any person liable to pay tax, and in as full and ample a manner, 'whether the demand is raised against the representative assessee or against the beneficiary direct'. It is a recovery-reach provision in the Revenue's favour, not a taxpayer protection. The bar on taxing the same income twice comes from elsewhere: from section 161(2), from the Central Board of Direct Taxes' own instruction of 24 February 1967, and from the case law on the exercise of the option. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 166, section 167, section 161, section 161(2), section 160, section 162, section 164 of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, ss.166 and 167, as printed identically on departmental pages stamped Year 2000 and Year 2023. This distinction has to be got right because an argument built on the wrong section fails on the first reading of it. Section 166 gives the Department the option — it is the express provision that lets the Revenue go to the beneficiary instead of the trustee, and the Supreme Court in ITO v. Ch. Atchaiah made the general point that under the 1961 Act an option exists only where Parliament has provided one expressly, which is precisely what section 166 does. Once the option has been exercised, three things restrain the Department. Section 161(2) says that a person assessable under Chapter XV in a representative capacity 'shall not, in respect of that income, be assessed under any other provision of this Act'. The Central Board's letter of 24 February 1967 — which the Gujarat High Court reproduced in Ganesh Chhababhai Vallabhai Patel v. CIT and which the departmental section 166 page itself points to as 'Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967' — directs that once the choice is made to tax either the trustee or the beneficiary, it is not open to the Department to go behind it and assess the other at the same time. How far that instruction can be pressed was not established on this pass: no decision on the binding force of a Board circular was read for this entry, and the Gujarat High Court in Ganesh Chhababhai Vallabhai Patel, applying Hindustan Aeronautics Ltd. v. CIT, held that a circular cannot be enforced against the interpretation given by the Supreme Court or a High Court to a provision of law. Plead the instruction, but plead section 161(2) as the primary ground. Section 167, by contrast, works entirely for the Revenue at the recovery stage: it puts every asset vested in or controlled or managed by the representative assessee within reach, and its concluding words make clear that the reach exists whichever way the demand was raised. If you are a trustee whose beneficiary has been assessed direct, section 167 is the provision under which trust property can still be proceeded against, and it is a reason to take the section 162 retention and certificate seriously. If it applies to you, the first step is this: Plead section 161(2), not section 167, when the same income is being assessed twice. Section 167 is a Revenue provision and citing it as a protection will be read as a misreading of the Chapter.
Section 166, as printed identically on the Year 2000 and Year 2023 departmental pages under the heading 'Direct assessment or recovery not barred': 'Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income.' Section 167, as printed identically on the Year 2000 and Year 2023 pages under the heading 'Remedies against property in cases of representative assessees': 'The Assessing Officer shall have the same remedies against all property of any kind vested in or under the control or management of any representative assessee as he would have against the property of any person liable to pay any tax, and in as full and ample a manner, whether the demand is raised against the representative assessee or against the beneficiary direct.' The Year 2000 section 166 page carries footnote 61, 'See also Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967'; the Year 2000 section 167 page carries footnote 62, 'Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988'. The matter was decided on 1988-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Section 166 preserves the Department's power to assess the beneficiary direct and to recover the tax from him, notwithstanding the preceding sections of Chapter XV. Section 167 is not a limitation on that power but an extension of the Revenue's reach at the recovery stage: the Assessing Officer has the same remedies against all property vested in or under the control or management of a representative assessee as against the property of any person liable to pay tax, whichever of the two the demand was raised against. The prohibition on assessing the same income twice is found in section 161(2), in the Central Board's instruction of 24 February 1967 and in the case law on the exercise of the option — not in section 167.
Not applicable — this is a statement of statutory text taken from four year-stamped departmental pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "The Assessing Officer shall have the same remedies against all property of any kind vested in or under the control or management of any representative assessee as he would have against the property of any person liable to pay any tax, and in as full and ample a manner, whether the demand is raised against the representative assessee or against the beneficiary direct."
It was decided by the CBDT Circulars & Instructions on 1988-04-01 and is reported as Income-tax Act, 1961, ss.166 and 167, as printed identically on departmental pages stamped Year 2000 and Year 2023. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 166, section 167, section 161, section 161(2), section 160, section 162, section 164, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Section 166 preserves the Department's power to assess the beneficiary direct and to recover the tax from him, notwithstanding the preceding sections of Chapter XV. Section 167 is not a limitation on that power but an extension of the Revenue's reach at the recovery stage: the Assessing Officer has the same remedies against all property vested in or under the control or management of a representative assessee as against the property of any person liable to pay tax, whichever of the two the demand was raised against. The prohibition on assessing the same income twice is found in section 161(2), in the Central Board's instruction of 24 February 1967 and in the case law on the exercise of the option — not in section 167. It arises in Charitable Trusts & Exemption, Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters, on section 166, section 167, section 161, section 161(2), section 160, section 162, section 164 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask the Department to state, in terms, whether it has exercised the section 166 option in favour of the trustee or the beneficiary, and put the answer on record before filing anything else. Rely on the Central Board's instruction of 24 February 1967 as described by the Gujarat High Court in Ganesh Chhababhai Vallabhai Patel v. CIT, but as a supporting ground and not the primary one: the same judgment holds that a circular cannot be enforced against the interpretation given by the Supreme Court or a High Court, and this library has not read the text of the instruction itself. If the trustee has already been assessed and paid, produce the challan and the order with the beneficiary's objection; the argument is that the choice has been made and acted on, not merely that two notices exist. As a trustee, do not assume that a direct assessment on the beneficiary takes trust property out of reach — section 167 says the opposite. Protect yourself under section 162 by retaining and, if there is disagreement, by obtaining the Assessing Officer's certificate. Do not confuse the option under section 166 with a right to choose the more favourable assessee. It is the Department's option, and the taxpayer's protection lies in the fact that it can only be exercised once.
Still good law. Both sections are printed word for word identically on departmental pages stamped Year 2000, Year 2023 and Year 2025, which is the best evidence obtainable on this pass that they stand unamended over that span. No page stamped Year 2026 was located for either section, no Finance Act text was read, and no judicial treatment was checked. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
'decided_on' is 1 April 1988, the commencement date recorded in footnote 62 on the Year 2000 section 167 page — 'Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988' — being the substitution of 'Assessing Officer' for 'Income-tax Officer'. It is not a decision date; 'bench' is 'Not applicable — statutory text' and 'favours' is null. THE BRIEF THAT COMMISSIONED THIS ENTRY IS WRONG AND I FLAG IT: it describes section 167 as 'the bar on double recovery'. It is not. The heading printed on both departmental pages I read is 'Remedies against property in cases of representative assessees', and the text extends the Assessing Officer's remedies against property, expressly 'whether the demand is raised against the representative assessee or against the beneficiary direct'. Nothing in it bars anything. An entry written on the brief's description of section 167 would have told a reader to plead, as a shield, a section that is a sword. Sources: section 166 transcribed from /w/section-166 (Year: 2000), /w/section-166-61 (Year: 2023) and /w/section-166-64 (Year: 2025), all three identical and all three headed 'Direct assessment or recovery not barred'; section 167 transcribed from /w/section-167 (Year: 2000), /w/section-167-61 (Year: 2023) and /w/section-167-64 (Year: 2025), all three identical and all three headed 'Remedies against property in cases of representative assessees'. One cross-check worth recording: the Year 2000 section 166 page prints, as footnote 61, 'See also Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967', and the Gujarat High Court in Ganesh Chhababhai Vallabhai Patel v. CIT, read independently on indiankanoon this pass, describes and quotes a Central Board of Direct Taxes circular dated 24 February 1967 on exactly this point — two independent routes to the same instrument. I did NOT retrieve the text of that letter itself from any departmental source, and the departmental footnote continues with a pointer to a commercial publisher's guide which I did not and will not use; everything this entry says about the instrument's content comes from the Gujarat High Court judgment, not from the publisher. Every word of the statutory text quoted in this entry was transcribed this pass from incometaxindia.gov.in section pages, each of which was made to print its section HEADING and its "Year:" stamp alongside the text, and each of which named the Act as the Income-tax Act, 1961. No text in this entry comes from an indiankanoon bare-act page, from a commentary, or from memory. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Section 166 preserves the Department's power to assess the beneficiary direct and to recover the tax from him, notwithstanding the preceding sections of Chapter XV. Section 167 is not a limitation on that power but an extension of the Revenue's reach at the recovery stage: the Assessing Officer has the same remedies against all property vested in or under the control or management of a representative assessee as against the property of any person liable to pay tax, whichever of the two the demand was raised against. The prohibition on assessing the same income twice is found in section 161(2), in the Central Board's instruction of 24 February 1967 and in the case law on the exercise of the option — not in section 167.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
CPC charged surcharge at the top rate on my discretionary trust's small income. Is that right?
I credited commission in my books to a foreign selling agent who works entirely outside India, and remitted it later. Is that commission taxable in India in his hands?
My father's foreign trust can only be unwound if the settlor and the trustee act together. Does that still make it a revocable transfer taxable in his hands?
A discretionary trust distributed income to me during the year and the trustees have already been assessed on it. Can the Assessing Officer also assess me?