In its quest to enhance transparency, promote Ease of doing business and Foreign Direct Investment in India, bring accountability in tax administration and eliminate face-to-face-interactions between taxpayers and Tax Department, the Central Government has introduced the scheme of electronic or online or face-less, paper-less & jurisdiction-less assessment known as e-Assessment. In September 2019 the Central Board of Direct Taxes (CBDT) laid down the framework to carry out e-assessment by introducing two new sub-sections, (3A) and (3B) in section-143 of the Income Tax Act. This scheme applies to all assessments under the Act, except search cases and income escaping assessment.
This scheme envisaged team-based assessment with dynamic jurisdiction whereby the taxpayer will not be aware of the officer who would be carrying out his assessment located in any part of the Country. The selection & assessment of cases under this scheme shall be based on the use of latest technologies like Artificial Intelligence, Machine Learning, Advanced Data Analytics, Complex Algorithms based Automated Allocation System, Automated Examination Tool, Hash Function, Video Telephony.
The National E-Assessment Centre (NEC) shall serve a notice to the taxpayer u/s 143(2) of the Act. The notice shall specify the issues for selection of the case for assessment.
The taxpayer shall file his response with the NEC within 15 days from the date of receipt of the notice.
The NEC, through automated allocation system, shall assign the case selected for e-assessment to a specific ‘assessment unit’ in anyone ‘Regional e-Assessment Centre’.
The assessment unit may request NEC for:
a) Obtaining further information, documents or evidence from the taxpayer;
b) Conducting certain enquiry or verification by the verification unit; and
c) Seeking technical assistance from the technical unit.
Based on the request from the assessment unit, the NEC shall:
a) Issue a notice to the taxpayer for obtaining information, documents or evidence; or
b) Assign the requisition to a verification unit or technical unit (as requested by the assessment unit) through the automated allocation system.
After taking into account all the relevant matters, the assessment unit shall make a draft assessment order. The order shall be in writing, either accepting or modifying the returned income of the taxpayer, as the case may be. A copy of such order is required to be sent to the NEC.
The draft order shall also contain details of penalty proceedings if any.
The NEC shall examine the draft assessment order per the risk management strategy specified by the CBDT, including by way of an automated examination tool, and it may:
a) Finalize the assessment as per draft assessment order and serve the order with a penalty notice (if any) and demand notice to the taxpayer; or
b) Provide a show-cause notice to the taxpayer, if any modification is proposed; or
c) Assign the draft order to a review unit in any one REC, through the automated allocation system to review the order.
Thereafter, the review unit shall review the draft assessment order, and it may:
a) Concur with the draft assessment order and intimate the NEC about such concurrence; or
b) Suggest such modification, as it may deem fit, to the draft assessment order and send its suggestions to the NEC.
In the case of concurrence from the review unit, the NEC shall forward the order/ show cause notice, as the case may be, to the taxpayer. However, in case of receipt of suggestions (if any) from the review unit, the NEC shall communicate the same to the assessment unit.
The assessment unit after taking into consideration the suggestions made by the review unit shall send the final draft assessment order to the NEC.
The NEC shall serve such order to the taxpayer, along with penalty notice (if any) and demand notice or serve a show-cause notice, as the case may be.
The taxpayer may furnish the response to the NEC within the date and time specified, in respect of the show-cause notice.
The NEC shall forward such response to the assessment unit. In case of no response from the taxpayer, the assessment shall be finalised as per the draft order. And order along with penalty/ demand notice shall be sent to the taxpayer.
In case a modification is proposed, the NEC shall, after giving appropriate opportunity, finalise the assessment and serve a copy of the assessment order with a penalty (if any) and demand notice.
After completion of the assessment, the NEC shall transfer all electronic records to the jurisdictional AO for:
-Imposition of penalty,
-Recovery of demand,
-Rectification of mistake,
-Giving appeal effect orders,
-Submission of remand reports,
-Prosecution proceedings, etc.
The NEC, at any stage of the proceedings, may transfer the case to the jurisdictional AO, if it considers necessary.
In case of non-compliance of any notice by the taxpayer, orders or directions issued under the assessment proceedings, the recommendation for initiation of any penalty proceedings against the defaulter, may be sent to the NEC by any unit set up under this scheme.
On receipt of such recommendation, the NEC shall serve a show-cause notice to the taxpayer as to why penalty should not be imposed on him under the law.
On receipt of response of the show cause notice, NEC shall forward the same to the unit which had made a recommendation for the penalty.
The said unit may take either of the two actions:
a) Make a draft order of penalty and send a copy of such draft to National e-Assessment Centre; or
b) Drop the penalty after recording reasons, under intimation to the National e-Assessment Centre
The NEC shall levy the penalty as per the said draft order of penalty by the unit and serve a copy of the same on the taxpayer.
An appeal against the assessment order passed by NEC under this scheme can be filed before the Commissioner (Appeals) having jurisdiction over the jurisdictional AO.
No Personal Appearance or Authorized Representative Required
Neither the taxpayer or his authorized representative is required to appear before any tax authority, NEC or units set up under the scheme, in relation to any proceedings under this scheme.
In case the taxpayer has been given an opportunity of being heard, he or his authorized representative is entitled to make oral submissions before the tax authorities. Such hearing shall be conducted through video conferencing, including the use of any telecommunication application software that supports videotelephony.
To ensure that all taxpayers benefit from this scheme, CBDT shall establish the necessary video conferencing facilities.
For a detailed understanding of e-Assessment procedures, contact DSRV and Co. LLP, a leading CA firm in Gurgaon (India).