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 Section 166 and section 167 of the Income-tax Act, 1961, as amended up to 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 to which section 166's own footnote points 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 has not been established: 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.
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Section 166 is headed 'Direct assessment or recovery not barred' and reads: '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 reads: '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.' Section 166 carries the footnote 'See also Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967'; section 167 carries the footnote '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. 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.
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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 Section 166 and section 167 of the Income-tax Act, 1961, as amended up to 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 to which section 166's own footnote points 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 has not been established: 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 is headed 'Direct assessment or recovery not barred' and reads: '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 reads: '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.' Section 166 carries the footnote 'See also Letter F. No. 45/78/66-ITJ (5), dated 24-2-1967'; section 167 carries the footnote '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. 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 Section 166 and section 167 of the Income-tax Act, 1961, as amended up to 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. In force. Both sections are printed word for word identically in every text compared for this entry, spanning 2000 to the current one, which is the best evidence obtainable here that they stand unamended over that span. No text later than that has been located, no Finance Act text has been read, and no judicial treatment has been checked. So the label reflects the currency of the words and nothing more. That is a real limit on a page of this kind, because the live questions under these two sections are questions of application: when the option under section 166 is taken to have been exercised, what evidences the exercise, and how far the Board's instruction of 24 February 1967 binds an officer who has assessed both. Two propositions on this page do not depend on authority. Section 167 is headed 'Remedies against property in cases of representative assessees' and extends the Assessing Officer's remedies; nothing in it bars anything, and it is not a double-recovery shield. And the prohibition on assessing the same income twice is in section 161(2), which is where the argument belongs. What would displace the entry: an amendment to either section, or a decision on the binding force of the 1967 instruction, which would settle how much weight the supporting ground carries. One further point about how the pair should be used. Section 166 is the provision the Department relies on to move between the trustee and the beneficiary, and section 161(2) is the provision that stops it doing both. Neither of them is section 167, and an argument that puts section 167 forward as a protection concedes ground before it starts. 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 the amendment footnote to section 167 — '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. A WIDESPREAD DESCRIPTION OF SECTION 167 IS WRONG AND IS FLAGGED HERE. It is often described as 'the bar on double recovery'. It is not. The heading printed on the section 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 that description would tell a reader to plead, as a shield, a section that is a sword — which is why the what-to-do steps say to plead section 161(2) instead. Sources. Section 166 has been taken from three texts of the section, all identical and all headed 'Direct assessment or recovery not barred'. Section 167 has been taken from three texts, all identical and all headed 'Remedies against property in cases of representative assessees'. One cross-check is worth recording. Section 166 carries, as a footnote, '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 for this entry, 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. The text of that letter itself has NOT been obtained from any departmental source, and the footnote continues with a pointer to a commercial publisher's guide which has not been used. Everything this entry says about the instrument's content comes from the Gujarat High Court judgment and not from any publisher's reproduction of it. Two points of orientation, because the two sections are routinely cited for each other's propositions. Section 166 opens 'Nothing in the foregoing sections in this Chapter shall prevent'. It is a saving provision: it removes an obstacle, and it confers no power that did not exist. What it saves is both the direct assessment of the beneficiary and the recovery of the tax from him, and the two are separate — a direct assessment does not by itself answer a question about recovery, and vice versa. Section 167 confers nothing on the assessee. It gives the Assessing Officer the same remedies against all property vested in or under the control or management of a representative assessee as against any taxpayer's property, and its closing words mean that reach survives the s.166 option either way. 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.
TaxSphere, “Statutory position — s.166 and s.167: the Department may assess the beneficiary direct, and s.167 is about remedies against property, NOT a bar on double taxation”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-166-and-167-direct-assessment-on-the-beneficiary-and-remedies-against-property/ (validity last checked 2026-09-08)
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