INTRODUCTION
The income tax department on October 7, 2019 launched its faceless e-assessment scheme for taxpayers. Under the scheme, there would be no physical interface between an assessing officer and an Assessee.
The plan was first introduced in the Union Budget 2019 by finance minister Nirmala Sitharaman. Sitharaman told the parliament that the existing system of scrutiny assessments in the Income Tax Department involves a high level of personal interaction between the taxpayer and the department, which leads to certain undesirable practices on the part of tax officials. While the word corruption was not used specifically, it’s clearly the target here.
'To eliminate such instances, and to give shape to the vision of the Prime Minister, a scheme of faceless assessment in electronic mode involving no human interface is being launched this year in a phased manner,' she added.
To begin with, 58,322 income tax cases will be taken up by the National e-Assessment Centre. Further, a total of 2,686 officials of the I-T department have been deputed for implementation of the scheme.
STRUCTURE
NEAC will be the top body to send all notices and communication electronically. Under it would be eight regional e-assessment centers (ReACs) in Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Pune, Bengaluru and Hyderabad.
Under these centers, there would be four units - technical, review, assessment and verification. The assessment unit would identify issues, seek information and analyze material to frame draft assessment orders.
The verification unit would conduct inquiry, examine books of account, examine witnesses and record statements through video conferencing.
The technical unit would provide advice on legal, accounting, forensic, information technology, valuation, transfer pricing, and data analytics issues.
The review unit would review the draft assessment order - whether material evidence is brought on record, points of facts and law are incorporated, application of judicial decisions is considered and the arithmetic correctness.
NEAC would assign cases to the assessment unit, verification unit and technical unit through an automated allocation system. It would then select draft assessment orders for review and allocate it to the review unit through an automated allocation system.
NEAC would provide an opportunity to the taxpayer concerned before finalizing the order. After finalizing the assessment order, it would transfer all electronic records to the jurisdictional assessing officer for post-assessment work such as collecting penalty.
HOW IT WILL WORK
Taxpayers will receive notices on their registered email address and in their accounts held on the IT department's portal "www.incometaxindiaefiling.gov.in." A real-time alert by way of SMS will also be sent to their registered mobile numbers intimating receipt of such notice.
Each notice or any form of communication from the IT department will hold a document identification number (DIN).
All replies to the notices from the IT department have to be made electronically in the account in the e-filing portal and not personally or through post (unless it is an exceptional case).
Assesses have 15 days to respond to the notices.
The response shall be considered successfully submitted when the individual receives the acknowledgement from the National e-assessment Centre.
After receiving a reply from the taxpayer, NEAC will allocate the case to an assessing officer at the regional level through an automated system.
Regional assessments requiring assistance from the verification unit or technical assistance from the technical unit shall go through the automated allocation system.
If the regional assessment unit requires further information or document from the Assessee, the request will first be made to the National e-assessment centre.
A draft assessment order will be sent from the regional unit to the National e-assessment centre.
A personal hearing would be allowed in certain cases.
Hearings of the cases will be conducted exclusively through video links or any other such facility that does not require the Assessee or his/her representative to be physically present.
The new system is hoped to reduce harassment of taxpayers and ensure that all tax proceedings including scrutiny are done on a centralized basis without direct interaction with the assesses.
TECHNOLOGY TO BRING ANONYMITY IN PROCEEDING
In order to ensure that vested interests do not obstruct the due course of law, the Income-tax Department proposes to align its operations with contemporary technology techniques being-
(a)'Automated allocation system' for randomized allocation of cases using inter alia artificial intelligence and machine learning;
(b)'Automated examination tool' for a standardized examination of orders using inter alia artificial intelligence and machine learning;
(c)'Mobile app' providing a host of utilities to the Assessee or the Tax Payer
(d)'Video Conference' for audio and video communication interface between Revenue authorities and taxpayer
PROCEDURE AFTER E ASSESSMENT
The National e-assessment Centre shall, after completion of the assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over such case., for —
(a) imposition of penalty;
(b) collection and recovery of demand;
(c) rectification of mistake;
(d) giving effect to appellate orders;
(e) submission of remand report, or any other report to be furnished before CIT(A) or courts
(f) proposal seeking sanction for launch of prosecution and filing of complaint before the Court;
Exceptions are carved out for certain types of proceedings such as search and seizure cases, re-assessments, best judgement assessments, etc., where the assessment would be done through personal hearing process.
PROCEDURE FOR PENALTY
Any unit may, in the course of assessment proceedings, for non-compliance of any notice, direction or order issued under this scheme on the part of the taxpayer or any other person, send recommendation for initiation of any penalty proceedings under the income tax law, against such taxpayer or any other person, as the case may be, to the National e-Assessment Centre, if it considers necessary or expedient to do so
The National e-Assessment Centre shall, on receipt of such recommendation, serve a notice on the taxpayer or any other person, as the case may be, calling upon him to show cause as to why penalty should not be imposed on him under the income tax law
The response to show - cause notice furnished by the taxpayer or any other person, if any, shall be sent by the National e-Assessment Centre to the concerned unit which has made the recommendation for penalty
The said unit shall, after taking into consideration the response furnished by the taxpayer or any other person, as the case may be:
a) Make a draft order of penalty and send a copy of such draft to National e-Assessment Centre; or
b) Waive the penalty after recording reasons, under intimation to the National e-Assessment Centre
The National e-Assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the same on the taxpayer or any other person, as the case may be
PROCEDURE FOR APPEAL
An appeal against an assessment order made by the National e-Assessment Centre under this scheme can be filed before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer.
TRANSFER OF CASE TO AO DURING PROCEEDING
The National e-assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case.
OTHER ASPECTS
A person is not required to appear either personally or through authorized representative in connection with any proceedings under this scheme before the income tax authority at the National e-Assessment Centre or Regional e-Assessment Centre or any unit set up under this scheme.
In a case where a modification is proposed in the draft assessment order, the taxpayer will be given an opportunity to make submissions against such modifications. The taxpayer or his authorized representative is also entitled to a personal hearing before income tax authority in any unit under this scheme. Such hearing would be conducted exclusively through video conferencing, including through video telephony, in accordance with the procedure laid down by the CBDT.
An income tax authority has the power to examine a taxpayer or record the statement of any taxpayer under this scheme. The income tax authority would do the same through video conferencing or video telephony.
For the purpose of facilitating the scheme, the CBDT shall establish suitable facilities for video conferencing and video telephony at such locations as may be necessary.
DIFFICULTIES IN E ASSESSMENT
Generally, an assessment would involve a submission comprising 300+ printed pages. Huge workload would be expected as the same would have to be converted into digital format. Since it is a new beginning, we may expect technical glitches like unexpected rush and crashing of servers. The assesses will find the compliance cumbersome while uploading their documents. Automated systems are not free from errors therefore technical glitches and bugs would have to be fixed as soon as possible in real-time too.
Precautions are to be taken like ensuring that fields used in the return are consistent as it is totally automated. Clerical errors without having a bearing on the tax payable may trigger penalty proceed.
Ensure that mobile number and the e-mail id are updated, as the assesses would be notified through an SMS/e-mail.
Awareness of Assessee is most important in this scheme because in most of the cases Assessee does not understand the messages as well as mails from department.
Many times see fake mails received in name of Income Tax department it may also create harassment or fear to Assessee.
In most of the cases it seen that department asks documents from Assessee as well as same documents from the respective department like Bank statement, Challan Deposits etc. It is lengthy work for Department as well as Assessee.
A person who has filed his returns in the electronic mode is expected to stay updated on any communication received. Had he not been savvy, he would not have been able to file his returns on the portal.
The assessing officers will face difficulties and will not be able to make proper assessment without looking into books of accounts of taxpayers.
Low levels of digital connectivity and awareness in India’s hinterland, requiring taxpayers to respond within 15 days to demand notices through the e-filing system, is a tall ask.
Given the complex tax laws, it will take a lot of toeing and froing and uploading of voluminous documents, before a taxpayer can convince the assessing unit of his tax claims.
There are also enough exceptions built into the new rules that offer ample scope for a determined assessing officer to side-line the ‘faceless’ process.
ROLE OF PROFESSIONAL
The new era of system increase the opportunity for professionals like Chartered Accountants and Tax advocates. In present scenario survival is only based on technology. If Professionals are updated in technology they can is survive in present era.
In India Government is going from Paperless to faceless but what about Assessee, Professionals know how many Assessee regular check the mails and understand the messages received. Adhering to time limits is most important in Faceless E assessment as these are time bound obligations, so it’s the need of the hour for professionals to educate their clients regarding the messages and mails.
In many caseit is found that Assessee wait for last date for completion of Assessment so that it may be easily completed with lesser paper work but now this will totally close, E assessment work on TAT basis and Both Assessing officer and Assessee need to complete documentation timely and order timely. Professionals required to give proper response during proceeding.
Professionals need to update the record of Assessee and during the time of audit and filing of return keep all record properly so that proper response may be given at the time of proceeding.
In present condition Audit is most important base for scrutiny of cases. So During the course of audit all aspects regarding for compliances should be reported in form 3CD.
Professionals need to guide their client with respect to proper compliance of all Laws because in present condition all Departments are interconnected for sharing information.
After taking up the assignment of e-Assessment, Professionals need to keep regular track of the status of the caseso that delay of submission does not occur.
In e Assessment most important part is reply of Notice because what Assessee wants to explain and what Assessing officer interprets should be same, sopresentation of reply is a very important aspect.
In E assessment Process all submission made through online process which will require High speed Internet connectivity and upgraded systems for professionals.
Professionals need to update themselves about the law from time to time for proper response of notices.
Anyone whose case is selected for scrutiny will be able to file all the documents online. Now the officer who is going to assess the case will also be selected randomly.The number of cases that are selected for scrutiny is based on certain criteria, including cases where there are serious discrepancies. Now the Role of Professionals is of Bridge amongst Income Tax Department and Assessee and they should keep thorough knowledge of Taxation and help the Assessee to comply the norms of Taxation.
Taking a big leap towards transparent tax administration, the income tax department rolled out faceless e-assessment scheme that eliminates physical interface between an assessing officer and an Assessee.'This is aimed at moving to faceless scrutiny and elimination of human interface,'
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