In order to bring in greater transparency and accountability, the Union Budget 2018 introduces team-based assessment to determine tax payable or refunds to be issued to an assessee from 1 April.
Finance Act 2018 has come out with a new scheme for scrutiny assessment to improve effectiveness of tax administration. The Section 143(3) of the I-T Act empowers the Assessing Officer to make an assessment of total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment.
E- Assessment under Income Tax Act , 1961 is a new scheme for the purpose of making assessments so as to impart greater transparency and accountability, by eliminating the interface between the Assessing Officer and the assessee, optimal utilisation of the resources, and introduction of team-based assessment. An e-assessment of tax returns was introduced on pilot basis in 2017 and extended to 102 cities with the objective of reducing the interface between the department and the taxpayers.
Jurisdiction means power or legal authority. The word jurisdiction is derived from Latin terms Juris and dicto which means I speak by the law. In general, it describes any authority over a certain area or certain persons. It is an authority granted to a formally constituted legal body to deal with and make pronouncements on legal matters.
Section 124 of the said Act, reads as
“where the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he would have jurisdiction in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situated within the area. “
The Assessing Officer is the authority, who initiates the assessment, receives returns from assessees within his jurisdiction and makes an assessment under Chapter 14. At any given point of time, only one Assessing Officer can have regular jurisdiction over an assessee and on transfer, only the officer to whom the files are transferred can make assessments. However, the Jurisdiction is not a matter of choice of either the Assessing Officer or the assessee. Assessee cannot be given the discretion to choose his officer. (B R Industries Ltd. V. CIT – 255 ITR 593). Further, Issues relating jurisdiction are fundamental to the validity of an assessment order, it can be raised by the assessee before the Assessment Officer and before the expiry of the prescribed time. However, the Objection cannot be raised for the first time in appeal against the assessment after the assessment has been made.
There can be a concurrent jurisdiction with reference to different functions with more than one officer for the same assessee. For Instance, Assistant Commissioner (TDS) has the power to call for records and authorize survey. (Reckitt Colman of India Ltd. V. ACIT (TDS) 252 ITR 550)
An assessee is required to furnish the correct details of his income from all sources by filing prescribed Return of Income through online mode within the due date. The Income tax department examines the return of income for its correctness. The process of examining the return of income is called as “Assessment”. The Assessment also includes re-assessment and best judgment assessment under section 144 of the Act. However, the term ‘assessment’ has not been defined in the Income Tax Act, 1961. Jurisdiction may be assigned by Commissioners of Income Tax to Assessing Officers with reference to specified areas, persons or class of persons or income or classes of incomes. Section 124(1) [with the proposed amendment, said position will be changed].
There are five types of assessments. Namely –
This is a preliminary assessment. Where a return has been filed u/s. 139 or in response to a notice u/s 142(1), the Assessing Officer can complete the assessment proceedings without passing a regular assessment order or call the assessee.
This is a detailed assessment. At this stage, a detailed scrutiny of the return of income will be carried out by the concerned officer. This scrutiny is carried out to confirm the correctness and genuineness of various claims, deductions, etc. An assessment under this provision can be either limited or comprehensive one.
This assessment is carried out by an assessing officer who applies his discretionary power also known as Best Judgment Assessment. An assessment will be carried out on the basis of all relevant material he has gathered. Best judgment assessment attracts only in certain cases where the assessee fails to comply with the requirements as specified in section 144.
If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, then, subject to the provisions of the Act, he may:
This assessment is carried out only in the case of a person where a search is initiated under Section 132 or books of account or any other documents are requisitioned under Section 132A.
A new system of assessment proceedings pan India basis i.e. “Jurisdiction-Free Assessment” for scrutiny related assessments, where system envisages allocation of a particular taxpayer’s profile to any assessing officer across the country via special software. For e.g. Bangalore based assessee can be assessed by an Assessing Officer deputed at Chennai or Hyderabad or even at Himachal Pradesh or vice versa.
The new system would do away with the Assessing Officers’ discretionary powers to call for additional documents, records, and most importantly, ask the taxpayer to appear in person. Further, the new system will –
1. Minimize interaction between the taxpayer and the assessing officer;
2. Curb corrupt practice in the Department;
3. Ensure a transparent and no-harassment culture;
4. Deal with all kinds of tax–related matters such as filing of returns for scrutiny etc.
5. Identities of the taxpayer and his assessing officer will be kept as confidential.
The e-assessment system was introduced in 2016 on a pilot basis in New Delhi and Mumbai. In 2017, it was extended to 102 cities with the objective of reducing the interface between the department and the assessees. It is expected that the same will dissolve the 18 assessment zones which account for all direct tax collection in coming days.
To implement the new system, an amendment is required to Section 143 of the Income Tax Act, 1961, hence, the said Amendment. By implementing e-assessment proceedings, no doubt, India is moving towards borderless compliance within the country.
As per CBDT Circular, Sub-section (23C) of Section 2 of the Income-tax Act, 1961 (Act), applicable from 01.06.2016, provides that “hearing” includes communication of data and documents through electronic mode. Accordingly to facilitate conduct of assessment proceedings electronically, vide letter dated 23.06.2017, in file of even number, Board had issued a revised format of notice(s) under section 143(2) of the Act. Para 3 of these notice(s) provided that assessment proceedings in cases selected for scrutiny would be conducted electronically in `E-Proceeding’ facility through assessee’s account in E-filing website of Income-tax Department.
2. In accordance with the procedure outlined in revised 143(2) notice(s) for conduct of assessment proceedings electronically, it is hereby directed that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the `E-Proceeding’ functionality in ITBA/E-filing. . However, in cases where the concerned assessee objects to conduct of assessment proceedings electronically through the ‘E-Proceeding’ facility, such cases, for the time-being, may be kept on hold.
3. Further, considering the situation that some of the stations have limited bandwidth, being VSAT stations and stations with limited capacity where bandwidth is in the process of being upgraded, it has been decided that till 31.03.2018, such stations, in accordance with target stipulated in Central Action Plan for financial year 2017-18, may undertake and complete only ten percent scrutiny cases (which are getting barred by limitation on 31.12.2018) having the potential to effect recovery during the current year itself. The list of such stations shall be specified by the Pr. DGIT(Systems). Accordingly, at these stations, till 31.03.2018, the assessment proceedings in cases to be completed as per Central Action Plan target, may be conducted manually if e-assessment is not possible. It is reiterated that at other stations covered under para 2 above, subject to exceptions mentioned therein, the assessments would be conducted electronically only.
4. Some of the important procedural aspects while conducting assessment proceedings through ‘E-Proceeding’ are as under:
4.1 Enquiry before assessment in electronic mode: For enquiries before assessment in terms of section 142(1)(ii) of the Act, notice shall be issued electronically and delivered upon the assessee in his ‘E-Filing’ account. While filing the response electronically in compliance with notice under section 142(1)(ii) of the Act, the concerned assessee shall verify it in the manner prescribed under Rule 14 of Income-tax Rules, 1962.
4.2 Use of digital signature by Assessing Officer: All departmental orders/communications /notices being issued to the assessee through the `e-Proceeding’ facility are to be signed digitally by the Assessing Officer.
4.3 Time for compliance: Online submissions may be filed till the office hours on the date stipulated for compliance.
4.4 Availability of facility for electronic submission of documents in time barring situation or where case has been finally heard by the Assessing Officer: The facility for electronic submission of documents through ‘E-Proceeding’ shall be automatically closed seven days before the time barring date. In other situations, upon completion of proceedings, before passing the final order, concerned Assessing Officer, on his volition, shall close the e-submission facility after mentioning in electronic order sheet that ‘hearing has been concluded’. However, if required, in exceptional circumstances, the concerned Assessing Officer may enable further filing of submissions electronically under intimation to the Range Head in ITBA.
4.5 In assessment proceedings being carried out through the ‘E-Proceeding’ facility, a particular proceeding may take place manually in following situation(s):
i. where manual books of accounts or original documents have to be examined;
ii. where Assessing Officer invokes provisions of section 131 of the Act or a notice is issued for carrying out third party enquiries/investigations;
iii. where examination of witness is required to be made by the concerned assessee or the Department;
iv. where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assesse requests for personal hearing to explain the matter.
4.6 Maintenance of ‘Record’ in the context of ‘E-Proceeding’: In cases being assessed through ‘E-Proceeding’, from now on, as far as possible, case-records as well as note sheet of proceedings shall be maintained electronically.
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