Written by Himanshu Baberwal and Ashma Malhotra Dt. November 27th, 2020
The Prime Minister of India, Shri Narendra Modi on 13th August 2020 launched e-Assessment Scheme, 2019. Thus, any scrutiny assessment carried out on or after 12-09-2019 are governed by this e-Assessment Scheme, 2019. The CBDT has renamed this scheme to ‘Faceless Assessment scheme’. In this initiative, the CBDT has made it mandatory for the tax officers to take recourse of electronic communications for all limited and complete scrutiny.
As part of the e-governance initiative, the CBDT has been empowered under Section 143(3A) to make a scheme for the purposes of making an electronic assessment of total income or loss of the Assessee under Section 143(3) or Section 144, so as to impart greater efficiency, transparency and accountability by:
- Eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible.
- Optimising utilisation of the resources through economies of scale and functional specialisation.
- Introducing a team-based assessment with dynamic jurisdiction.
The assessment under the Income-tax Act can be classified into the following categories.
- Scrutiny Assessment [Section 143(3)]
- Best Judgement Assessment [Section 144]
- Income Escaping Assessment [Section 147]
- Assessment in case search or requisition [Section 153A]
But following assessments have been kept out of the purview of this scheme:
- Income Escaping Assessment [Section 147]
- Assessment in case search or requisition [Section 153A]
What are e-Assessment Centres and Units?
For the purpose of this scheme, the board may set-up the following centres:
- National e-Assessment Centres
- Regional e-Assessment Centres
- Assessment Units
- Verification Units
- Technical Units
- Review Units
National e-Assessment Centre
The purpose of this centre is to facilitate the conduct of e-assessment proceedings in a centralized manner, which shall be vested with the jurisdiction to make the assessment in accordance with the provisions of this scheme.
All communication among the other units or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this scheme shall be through the National e-Assessment Centre.
Regional e-Assessment Centres
Its major function is to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make the assessment in accordance with the provisions of this scheme.
Assessment Unit has to Identify issues, seek information and analyse material to frame draft assessment orders. It shall perform the function of making assessment, which includes identification of points or issuing material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making assessment.
Verification Units has to conduct E-verification u/s 133C along with this it as to Conduct enquiry, examination of books of account, examination of witnesses and recording of statement. It can also Conduct Physical Enquiry only in instances covered by Pr.CCIT NeACs order 12(vi) of the scheme.
It shall perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, audit, transfer pricing, data analytics, management or any other technical matter which may be required in a particular case or a class of cases, under this scheme.
Review of Draft Assessment Order- whether material evidence brought on record, points of facts and law incorporated, application of judicial decisions considered, arithmetic correctness etc.
What is the procedure for e-Assessment?
Notice: The National e-Assessment Centre shall serve a notice on the assessee under section 143(2) specifying the issues for selection of his case for e-assessment.
Response: The assessee is required to file his response to the National e-Assessment Centre within 15 days from the date of receipt of such notice.
Intimation: The National e-assessment centre shall intimate assessee that assessment in his case shall be completed under this scheme where assesse has furnished his return of income under section 139 or in response to notice issued under section 142(1) or under section 148(1) and a notice has been issued for scrutiny assessment under section 143(2) by the Assessing officer or prescribed Income-tax authority.
Allocation to Assessment Unit: The case shall be assigned by the National e-Assessment Centre to a specific assessment unit in any one Regional e-Assessment Centre through an automated allocation system. Such allocation of the case shall be made randomly by the system using Artificial Intelligence and Machine Learning.
Request by Assessment Unit for assistance: In assigned cases, Assessment Unit, may make a request to NeAC for
- Obtaining further information, documents or evidence from the assessee or any other person
- Conducting of enquiry or verification by Verification Unit
- Seeking technical assistance from the Technical Unit.
Sending report by National e-Assessment Centre: The National e-Assessment Centre shall send the report received from the verification unit or the technical unit to the concerned assessment unit.
Issue of notice for best judgement assessment: The National e-Assessment Centre shall serve a notice under Section 144 to provide assessee an opportunity to show-cause, on a date and time to be specified therein, why the best-judgment assessment in his case should not be completed.
Draft Assessment Order: After taking into account all the relevant material available on the record, the assessment unit shall make a draft assessment order in writing. Where an intimation is received from the National e-Assessment Centre regarding assessee’s failure, the assessment unit shall make in writing a draft assessment order to the best of his judgement, either accepting the returned income or sum payable by or refundable to assessee or modifying it. A copy of such order shall be sent to National e-Assessment Centre. The assessment unit shall also provide the details of penalty proceedings to be initiated in such a draft assessment order, if any.
National e-Assessment Centre to review the Draft Assessment Order: National e-Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board and through an automated examination tool.
Review Unit to review the Draft Assessment Order: Where National e-Assessment Centre assigns the draft assessment order to a Review Unit, it shall, after conducting the review of the draft assessment order, suggest such modifications as it may deem fit or concur with the draft order and intimate the same to the National e-Assessment Centre.
However, where the review unit has suggested any modification, the National e-Assessment Centre shall assign the case to an assessment unit, other than the assessment unit which has made the draft assessment order, through an automated allocation system. Assessment unit shall, after considering the suggestions, send a final draft order to National e-Assessment Centre. Thereafter, the National e-Assessment Centre shall finalise the final assessment order or provide an opportunity of being heard to the assessee.
Assessee to file a response for the show-cause notice: Where a modification is proposed in the income returned by the assessee, the National e-Assessment Centre shall provide an opportunity to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order.
Where no response to the show-cause notice is received from the assessee, the National e-Assessment Centre shall finalize the assessment as per the draft assessment order. If a response is received by the National e-Assessment centre, the same shall be forwarded to the Assessment Unit.
Revision of Draft Assessment Order: The Assessment Unit shall make a revised draft assessment order after taking into account the response furnished by the assessee and forward it to the National e-Assessment Centre.
Finalisation of Assessment Order: The National e-Assessment Centre upon receiving the revised draft assessment order, shall finalize the draft order if matter proposed is not prejudicial to the assessee.
Transfer of records to jurisdictional AO: The National e-Assessment Centre shall transfer all the electronic records of the case to the jurisdictional Assessing Officer after the completion of assessment for the purpose of such actions as may be required under the act.
The Principal Chief Commissioner or the Principal Director General, in charge of national e-assessment centre, may transfer the case to the assessing officer having jurisdiction over such cases at any stage of the assessment with the prior approval of CBDT.
Conclusion and Benefits of Faceless Assessment in Upcoming Days for the Tax Payers and the push to “Initiative of Digital India”.
Previously, the taxpayers had to visit the department’s office for scrutiny, which resulted in an increase in corruption cases, especially in higher number cases. This is where faceless assessment comes in. It is an electric mode through which the assessee does not have to face any official and report his grievance. The Assessee will get the response for his query on his registered email Id. All the responses will be available online and the need to contact an official will be removed.
The government has employed state-of-the-art digital technology for a risk management system for the assessment. Automated Examination Tool, Artificial Intelligence, and Machine Learning will ensure that there is no human intervention or less interference from the Income Tax Department. The faceless tax assessment will provide more transparency and efficiency to the system. Now that more than 99% of the ITRs are filed online, the system will help in assessing the scrutinized ITRs easily.
Challenges/Problems which may be faced in Faceless Assessment
Although the faceless assessments program has been launched with a view to provide ease to the taxpayer and the tax authorities, a taxpayer may face challenges such as:
- Taxpayers who are not tech-savvy may be reluctant to respond online or they will have to appoint a professional to assist in the online responses. Further, since there is no face-to-face interaction, the online submission should be well drafted, precise for the tax officer to understand taxpayer’s submissions and claims correctly.
- Technical glitches, non-availability of internet connection, power failure, speed of the network, etc. could result in delays.
Himanshu Baberwal and Ashma Malhotra