Background

1. CBDT vide its notification 2/2016 dated 3-Feb-2016 has prescribed Procedure, Formats and Standards for ensuring secured transmission of electronic communication. The text of the notification is attached for ready reference.

  • the Income Tax Act 1961, (the Act)
  • the information Technology Act, 2000 [the IT Act, 2000]
  • the Income Tax Rules, 1962 [the Rules]

2. The text of various sections / rules mentioned below is re-produced below in Appendix.

Personal Opinion-:

Impact on All

3. It will bring transparency and speed in the assessment procedure. It will especially reduce the travelling time / meeting time / waiting time of both AOs and CAs increasing their efficiencies.

4. There will be permanent / reliable repository [ on cloud ] to store / retrieve the submissions.

5. The geographical location of any concerned person will become completely irrelevant.

6. Undoubtedly, it will put burden on both, AO and Assessee, to respond in time without much of the excuses on qualitative aspects.

7. It will facilitate the scheme of section 282B – Document allotment number.

8. On a lighter note, it will be difficult to give reason

  • by assessee that “Boss is out of station / assessee is out of station etc  or
  • by AO that he was on official duty…”.

Impact on IT Dept.

9. These can be directly accessed / cross checked

  • by higher authorities [JCIT / CIT] in administering the work of assessment and
  • by higher judicial / quasi-judicial authorities [CIT(A) / DRP / ITAT] in discharging their duties.

10. The Dept can implement best order practices

  • by prescribing SOP based on type of industry, materiality, track of legislative enactments, judicial pronouncements
  • acting pro-actively to take steps when assessment is in progress.

Impact on Assessee.

11. Assessee will automatically get the record of proceedings. Assessee can also keep a track as to how his authorized representative is rendering the services.

12. The CA can get work done from other staff who may not have that good re-presenting skills but who can prepare the submissions.

13. It will facilitate to take help of another senior / expert in between the process.

Legislative framework-:

14. Section 282(1) of the Act provides that the service of a notice or summon or requisition or order or any other communication under the Act (hereafter in this section referred to as “communication” may be made by delivering or transmitting a copy thereof, to any person.

15. Section 282(2) read with rule 127 authorizes CBDT / DGIT(systems) to draft the procedure for this communication with its qualitative aspects.

Definitions for this procedure

  • “electronic communication” means electronic mail or electronic mail message or the displayof an electronic record on the website of the Income Tax Department as may be specified.
  • “electronic mail” and “electronic mail message” (hereinafter referred to as “email”), “electronic record” shallhave the meanings as assigned to them in the IT Act, 2000.

16. All other expressions shall have the meaning as defined in the Act.

Actual Procedure

17. The procedure, formats and standards for ensuring secured transmission of electroniccommunication is specified as under:

  1. AO will start with the email id available
  2. Assessee may request AO to use a different email id
  3. Email id to be used by AO defined.
  4. AO shall issue all notices questionnaire as pdf attachment
  5. Assessee will reply – all documents in pdf
  6. size of attachments
  7. Audit trail – to be done by ITD
  8. how to compose subject of email
  9. Passing assessment order

AO will start with the email id available

a. The email address of the assessee to be used for the purpose of electronic communication shall be as specified in rule 127.

Assessee may request AO to use a different email id

b. The assessee may furnish a letter to the AO providing any other email address. The email address so provided shall be the primary email addressfor the purpose of issuing electronic communication under this notification once such letteris received by the AO. Otherwise, the existing email as per (a) above would be the primaryemail.

Email id to be used by AO defined.

c. The email address to be used by the AO for the purpose of electronic communication underthis notification shall be his official designation based email address under the domain@incometax.gov.in (hereinafter referred to as “designation email”).

AO shall issue all notices questionnaire as pdf attachment

d. The AO shall issue all statutory notices/questionnaires including notice u/s 143 / 142 from his designation email address to theassessee’s email address.

e. For the purpose of electronic communication, the AO shall attach the scanned copy of thenotices bearing his/her signature in PDF format to the emailbeing sent to the assessee.

Assessee will reply – all documents in pdf

f. In response to the notice, assessee shall, using his primary email address, submit the detailscalled for, to the designation email address of the AO.

  • All supporting documents shall be submitted as attachment in Portable DocumentFormat (PDF) to the email being sent to the AO.

Size of attachments

  • In case the total size of the attachments exceeds 10 MB then the assesse shall splitthe attachment and send in as many emails as may be required to adhere to thelimit of attachment size of 10 MB per email. However, in each such attachment,assessee shall specifically clarify the corresponding Notice Number and date in thefooter to which the attachment relates and number the pages in continuation for allattachments to ensure proper linkage. e.

g. Any email, in response to the notice issued by the AO, received from the primary emailaddress of the assessee shall be considered as a valid response to the notice.

Audit trail – to be done by ITD

h. For the purpose of keeping an audit trail of notices/questionnaire issued by AO to assesseeand the assessee’s response with supporting documents as attachments, a copy of theemail shall be marked to e-assessment@incometax.gov.in with the subject line as under:

how to compose subject of email

  • Subject in email From AO to assessee – should be in the format: “PAN (eg-XXXXX1234X)- AY (eg-AY201314)- Notice u/s -N” (N is the serial number of thenotice. eg. Notice u/s -1, Notice u/s -2 etc.).
  • Subject in email from assessee to AO- should be in the format: “PAN (eg-XXXXX1234X) – AY (eg- AY201314)-Reply-N” (N is the serial number of the noticeeg.Reply-1, Reply-2 etc.).

email delivery failure

i. In case of non-delivery of email on the primary email address, the notices shall be sent toother email addresses of the assessee available with the department as mentioned in Rule 127.

j. In a case where a notice is not sent by email due to any reason including technical reasonssuch as email failure or mailbox full etc., but sent by other valid mode of service asprescribed in the IT Act 1961, the same shall constitute valid service. The AO shall recordreasons in writing for not serving notice by email.

  • A copy of the email error message as received by the AO will be forwarded to theemail ID e-assessmentPincometax.gov.in with the Subject line in email as: “PAN (eg-XXXXX1234X)- AY (egAY201314)-Error”

k. In a case where a reply by taxpayer is not sent by email due to technical reasons such asemail failure or mailbox full etc., but sent or delivered physically to the AO, the same shallbe treated as adequate compliance.

  • A copy of the email error message as received by the taxpayer will be forwarded tothe email ID e-assessment@incometax.gov.in with the Subject line in email as: “PAN(eg-XXXXX1234X)- AY (egAY201314)- Error”

where assessee can see these emails

l. All emails sent or received as per this procedure shall be stored in the ITD database and thecommunication status shall be displayed the assesse’s “My Account” on the E-filingportal – https://incometaxindiaefiling.gov.in which can be accessed by the assessee afterlogin (if the taxpayer has registered with the E-Filing website,

Passing assessment order

m. For the purpose of this notification, the time and place of Dispatch and receipt of electronicrecord or electronic communication shall have the same meaning as provided in Section 13of the IT Act, 2000.

n. The AO shall pass the order and attach the scanned copy of the order u/s 143(3) bearinghis/her signature in PDF format to the email.

o. The AO shall place a hard copy of all emails and supporting documentson the relevantassessment file for record purposes.

The aforementioned procedure is applicable to the assessment proceedings in respect ofselect non-corporate assessees’ as a part of the pilot project on paperless assessment proceedingsand can be extended to other assessees’ or other proceedings as may be notified by the Boardsubsequently.

Appendix

Text of various sections and rules as mentioned above.

the Income Tax Act 1961, (the Act)

[Service of notice generally.

282.(1)  The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as “communication”) may be made by delivering or transmitting a copy thereof, to the person therein named,—

(a) by post or by such courier services as may be approved by the Board; or

(b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or

(c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or

(d) by any other means of transmission of documents as provided by rules made by the Board in this behalf.

(2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named.

Explanation.—For the purposes of this section, the expressions “electronic mail” and “electronic mail message” shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000)]

the Income Tax Rules, 1962 [the Rules]

[Service of notice, summons, requisition, order and other communication.

127 .(1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as “communication”) may be delivered or transmitted shall be as per sub-rule (2).

(2) The addresses referred to in sub-rule (1) shall be —

(a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282—

(i) the address available in the PAN database of the addressee; or

(ii) the address available in the income-tax return to which the communication relates; or

(iii) the address available in the last income-tax return furnished by the addressee; or

(iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs:

Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication;

(b) for communications delivered or transmitted electronically—

(i) mail address available in the income-tax return furnished by the addressee to which the communication relates; or

(ii) the e-mail address available in the last income-tax return furnished by the addressee; or

(iii) in the case of addressee being a company, e-mail address of the company as available on the website of Ministry of Corporate Affairs; or

(iv) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such income-tax authority.

(3) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the procedure, formats and standards for ensuring secure transmission of electronic communication and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to such communication.]

the information Technology Act, 2000 [the IT Act, 2000]

Definitions .

2 . (1) In this Act, unless the context otherwise requires,—

(a)“access” with its grammatical variations and cognate expressions means gaining entry into, instructing or communicating with the logical, arithmetical, or memory function resources of a computer, computer system or computer network;
(b)“addressee” means a person who is intended by the originator to receive the electronic record but does not include any intermediary;
(c)“adjudicating officer” means an adjudicating officer appointed under sub-section (1) of section 46;
(d)“affixing  [electronic] signature” with its grammatical variations and cognate expressions means adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of  [electronic] signature;
(e)“appropriate Government” means as respects any matter,—
(i)enumerated in List II of the Seventh Schedule to the Constitution;
(ii)relating to any State law enacted under List III of the Seventh Schedule to the Constitution,
the State Government and in any other case, the Central Government;
(f)“asymmetric crypto system” means a system of a secure key pair consisting of a private key for creating a digital signature and a public key to verify the digital signature;
(g)“Certifying Authority” means a person who has been granted a licence to issue a  [Electronic] Signature Certificate under section 24;
(h)“certification practice statement” means a statement issued by a Certifying Authority to specify the practices that the Certifying Authority employs in issuing [Electronic] Signature Certificates;
3[(ha)“communication device” means cell phones, personal digital assistance or combination of both or any other device used to communicate, send or transmit any text, video, audio or image;]
(i)“computer” means any electronic magnetic, optical or other high-speed data processing device or system which performs logical, arithmetic, and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system or computer network;
4[(j)“computer network” means the inter-connection of one or more computers or computer systems or communication device through—
(i)the use of satellite, microwave, terrestrial line, wire, wireless or other communication media; and
(ii)terminals or a complex consisting of two or more inter-connected computers or communication device whether or not the inter-connection is continuously maintained;]
(k)“computer resource” means computer, computer system, computer network, data, computer database or software;
(l)“computer system” means a device or collection of devices, including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, which contain computer programmes, electronic instructions, input data and output data, that performs logic, arithmetic, data storage and retrieval, communication control and other functions;
(m)“Controller” means the Controller of Certifying Authorities appointed under sub-section (1) of section 17;
(n)“Cyber Appellate Tribunal” means the Cyber 1[***] Appellate Tribunal established under sub-section (1) of section 48;
2[(na)“cyber cafe” means any facility from where access to the internet is offered by any person in the ordinary course of business to the members of the public;
(nb)“cyber security” means protecting information, equipment, devices, computer, computer resource, communication device and information stored therein from unauthorised access, use, disclosure, disruption, modification or destruction;]
(o)“data” means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalised manner, and is intended to be processed, is being processed or has been processed in a computer system or computer network, and may be in any form (including computer printouts magnetic or optical storage media, punched cards, punched tapes) or stored internally in the memory of the computer;
(p)“digital signature” means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3;
(q)“Digital Signature Certificate” means a Digital Signature Certificate issued under sub-section (4) of section 35;
(r)“electronic form” with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, microfilm, computer generated micro fiche or similar device;
(s)“electronic Gazette” means the Official Gazette published in the electronic form;
(t)“electronic record” means data, record or data generated, image or sound stored, received or sent in an electronic form or microfilm or computer generated micro fiche;
[(ta)“electronic signature” means authentication of any electronic record by a subscriber by means of the electronic technique specified in the Second Schedule and includes digital signature;
(tb)“Electronic Signature Certificate” means an Electronic Signature Certi-ficate issued under section 35 and includes Digital Signature Certificate;]
(u)“function”, in relation to a computer, includes logic, control, arithmetical process, deletion, storage and retrieval and communication or telecommunication from or within a computer;
[(ua)“Indian Computer Emergency Response Team” means an agency established under sub-section (1) of section 70B;]
(v)“information” includes data,  [message,] text, images, sound, voice, codes, computer programmes, software and databases or microfilm or computer generated micro fiche;
[(w)“intermediary”, with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes;]
(x)“key pair”, in an asymmetric crypto system, means a private key and its mathematically related public key, which are so related that the public key can verify a digital signature created by the private key;
(y)“law” includes any Act of Parliament or of a State Legislature, Ordinances promulgated by the President or a Governor, as the case may be, Regulations made by the President under article 240, Bills enacted as President’s Act under sub-clause (a) of clause (1) of article 357 of the Constitution and includes rules, regulations, bye-laws and orders issued or made thereunder;
(z)“licence” means a licence granted to a Certifying Authority under section 24;
(za)“originator” means a person who sends, generates, stores or transmits any electronic message or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary;
(zb)“prescribed” means prescribed by rules made under this Act;
(zc)“private key” means the key of a key pair used to create a digital signature;
(zd)“public key” means the key of a key pair used to verify a digital signature and listed in the Digital Signature Certificate;
(ze)“secure system” means computer hardware, software, and procedure that—
(a)are reasonably secure from unauthorised access and misuse;
(b)provide a reasonable level of reliability and correct operation;
(c)are reasonably suited to performing the intended functions; and
(d)adhere to generally accepted security procedures;
(zf)“security procedure” means the security procedure prescribed under section 16 by the Central Government;
(zg)“subscriber” means a person in whose name the [Electronic] Signature Certificate is issued;
(zh)“verify” in relation to a digital signature, electronic record or public key, with its grammatical variations and cognate expressions means to determine whether—
(a)the initial electronic record was affixed with the digital signature by the use of private key corresponding to the public key of the subscriber;
(b)the initial electronic record is retained intact or has been altered since such electronic record was so affixed with the digital signature.

(2) Any reference in this Act to any enactment or any provision thereof shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provision of the corresponding law, if any, in force in that area.

Time and place of despatch and receipt of electronic record .

13 . (1) Save as otherwise agreed to between the originator and the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the originator.

(2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely :

(a)if the addressee has designated a computer resource for the purpose of receiving electronic records,—
(i)receipt occurs at the time when the electronic record enters the designated computer resource; or
(ii)if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee;
(b)if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resource of the addressee.

(3) Save as otherwise agreed to between the originator and the addressee, an electronic record is deemed to be despatched at the place where the originator has his place of business, and is deemed to be received at the place where the addressee has his place of business.

(4) The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may be different from the place where the electronic record is deemed to have been received under sub-section (3).

(5) For the purposes of this section,—

(a)if the originator or the addressee has more than one place of business, the principal place of business, shall be the place of business;
(b)if the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business;
(c)“usual place of residence”, in relation to a body corporate, means the place where it is registered.

Punishment for sending offensive messages through communication service, etc .

66A . Any person who sends, by means of a computer resource or a communication device,—

(a)any information that is grossly offensive or has menacing character; or
(b)any information which he knows to be false, but for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity, hatred or ill will, persistently by making use of such computer resource or a communication device; or
(c)any electronic mail or electronic mail message for the purpose of causing annoyance or inconvenience or to deceive or to mislead the addressee or recipient about the origin of such messages,

shall be punishable with imprisonment for a term which may extend to three years and with fine.

Explanation.— For the purposes of this section, terms “electronic mail” and “electronic mail message” means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message.

( Author CA. Yogesh S. Limaye can be reached at yogesh@salcoca.com)

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