The CBDT vide its Press release dated 18th July 2020, has announced an e-campaign on voluntary compliance of Income Tax for F.Y. 2018-19 from 20th of July,2020 to 31th of July, 2020. This can be viewed as a further step by the CBDT to strengthen its E-assessment Scheme and to launch a more tax payer friendly regime. The campaign emphasizes on voluntary compliance by tax payer and is claimed to have been started with an aim to free the taxpayer from rigors of notices and assessments and also to increase the transparency and accountability in tax administration. Although the objects of the scheme are laudable, yet it is required to ponder upon how far the campaign would be able to achieve its objective or would it just remain a silent spectator to the present agony being faced by the taxpayers especially in the midst of the COVID-19 Pandemic.
The Income Tax department receives information relating to assesses from various sources such as TDS/TCS/SFT/GST/customs etc. On the basis of data analysis performed on this information the department identifies the cases which are picked up for assessment. Such an information will be now made available on the portal to the assesses. The campaign provides a time frame of 11 days to the assesses who are non fillers or have discrepancies in their returns to validate online such an information received by CBDT. On the portal the following options will be available to the assessee for filling the response
(i) Information is correct,
(ii) Information is not fully correct,
(iii) Information related to other person/year,
(iv) Information is duplicate/included in other displayed information, and
(v) Information is denied
The consequences which would follow after filing of the responses are as follows
Information is correct– If the assessee finds that the information is correct, he can file a revised return/belated return after taking into consideration such an information. On filing such a return which is consistent with the said information, the department shall consider the revised/belated return and there shall be no further assessment/notices in respect of the said income. However, there won’t be any bar on the department to reopen the assessment u/s 147 if any fresh tangible material is later received by the department.
In the remaining cases, where the assessee fully/partially disagrees with the information he can submit his response accordingly. However, the manner in which the response will be dealt by the Department in such cases is not forthcoming from the press release. The objectives of the campaign would remain farfetched if in the case the department fails to take cognizance of the responses filled by the assessee. A Mechanism should be implemented so as to provide for proper and judicious disposal of the responses filed by the assesses. The assessee should also be provided an opportunity of being heard before his response is rejected. Moreover, it should also be provided that the cases would not be picked up for assessments on the same point unless such responses are dealt with, otherwise the cases would be nevertheless picked up for assessment u/s 143(3)/144 as the case may be, which would make the entire campaign an idle ceremony. Safeguards should also be provided against any fishing or roving enquiry which may be initiated on the basis of response filed by the assessee.
One more question which remains to be answered is , once the department has accepted the response filed by the assessee and decided not to take the case in scrutiny, can the department later reopen the assessment u/s 147 on the basis of same information? In the authors opinion, even though in such a case no assessment has been made in the case of the assessee but the assessee has duly submitted his response on the information which has been accepted by the department. Hence, an opinion has been framed by the department regarding the taxability of the assessee based on the information available and the response submitted. Hence, No notice can be issued u/s 147 on the basis of the same information as then it would be considered to be a mere change of opinion on the part of the AO, and no reassessment can be made on the basis of such a change in opinion.
The campaign provides only 10 days to the assessee for filing its response based on the information available on portal. Filling of such response after taking into consideration the information would require some time on the part of the assessee as he has to first compile his data and then reconcile it with the information on portal. The difficulties of the assessee have further increased as the majority of the cities are under lockdown due to the COVID-19 pandemic. Hence, it can not be considered to be a sufficient opportunity to the assessee and thus the campaign is in the violation of principles of natural justice.
The campaign has been introduced by a press release. However, there is no corresponding provision in the rules/ the act for the campaign. In such a case, it would be apposite to include such a campaign in the statute by amendment and also to incorporate the necessary safeguards as considered in the above paragraphs.
Though the campaign tries to encourage voluntary compliance on the part of the assessee thus saving them from rigors of the assessment yet it needs to be strengthened on many scores. Nevertheless, the assesses should take the maximum advantage of the campaign and correct any errors or omissions on their part.
The entire process can be summarized as follows