The challnges to professionals in the face of faceless assessments And appeals – Chiselling the skills and acquiring new ones
The bouquet of the latest Circulars of the CBDT has heralded the entire Nation into a New Era of transparent tax administration . Besides, it is a clarion call to the taxmen, the assessees and the tax professionals to migrate themselves to an era of wider and deeper knowledge, greater dynamism and a high level of professionalism and integrity. This is a no mean achievement for all the stake-holders, given the present global scenario of unpredictability and instability in all spheres of life. It throws up a challenge that is immediate and at once inescapable.
Ever since the present Government assumed office, there has been a significant emphasis on revamping the tax administration and to infuse greater transparency in its affairs. The e-filing initiatives have caught up in the direct and indirect tax regimes and by now it is complete in all respects –from the ITRs, Appeals to numerous Forms and Applications enabled in online mode.
E-assessment in Income tax has been the buzz word for the last couple of years with minimisation of human interface and its attendant subjectivities and dubious practices. Now comes the ‘Faceless Assessment and Appeals’ closely accompanied by the immediate relocation of many Tax Executives to the Faceless Assessment Centres. This seems to be just the beginning, with a lot to follow and be followed up.
The details of the Faceless procedures are discussed in the relevant Circulars and let us try to appreciate the extent to which a total Faceless tax administration impacts the areas of personal skill set and the management skill set of the tax professionals in the tax advisory and appellate services. From what we understand from the totally electronic communication of Notices, faceless responses, e-filing-portal-centric service of assessment orders and Appeals against the aggrieved ones, the following re-orientation of personal and office management emerges to be adopted by the Tax Professionals with no delay:
Before discussing the challenges to be met by the Faceless Assessment and Appeal Scheme, let us understand the basic Architecture of the Scheme:
1.)The National e-assessment Centre is the originator of the Notice u/s.143(2) for the assessment in a selected case and allots the assessment task to a Regional e-assessment centre.
2.) The latter considers the assessee’s replies and the materials and prepares a Drat Assessment Order and escalates it to NeAC. If NeAC agrees to the draft order, it becomes final and is served on assessee. In case the ReAC needs Technical help, such assistance is enabled by NeAC to the ReAC.
3.) If NeAC feels that the draft order needs review, it is sent to Review Unit. Review unit may approve the order and return to NeAC.
4.) In case of modifications proposals to the draft order by Review unit, NeAC entrusts further verification to a different ReAC and the assessee needs to respond to such fresh Notices from a different ReAC. Once such ReAC is satisfied, the draft order is put up to NeAC and the final order is served.
5.) In the meanwhile, if any verification of assessee’s records is considered necessary by e-assessment units, the task is entrusted by NeAC to Verification unit and the verification includes electronic exchange of information as well as video conferencing hearings.
6.) This way, the final order is prepared and sent to the assessee by the National Centre. The initiation of consequent Penalties is the same as in the physical and e-proceedings regime, but initiated by the NeAC. There is no human element anywhere in the entrustment of cases to ReAC and transfer from one Centre to another. The jurisdictional AO follows up later.
The foregoing is only a broad overview of the new dispensation and is not exhaustive. There are many dimensions in the procedure depending on the factual situations of the assessment proceedings, the extent and nature of verification etc.
In the light of the above assessment procedure, which is a step ahead and above the existing e-assessment procedure, with no issues of territorial jurisdiction during the assessment and a total faceless procedure, it is incumbent of the tax professionals to strengthen their skills and reorganize their office administration immediately. The following are some essential requirements. Not all of them are altogether new, but some issues need a revisit and fresh consideration at this juncture:
I. Knowledge update and constant study is the foremost requisite :
a. It is always true that Tax professionals are required to keep themselves up-to-date. But, the need for the same is greater now than ever before in the happening sector of Tax compliance. A constant watch on the revolutionary and extensive changes in the tax laws, the Judgments and the Departmental Circulars / Notifications on matters of procedure provides the key to success.
Besides the extensive literature to be covered by a Tax professional, an analytical and incisive approach for its study are the need, as the turnaround time laid down for response to Notice is fixed at 15 days in the CBDT Notification No. 60/2020 dt.13.8.2020.
b. The availability of GST related data on the income-tax e-filing portal and the data-mine of financial transactions effected by an assessee housed in Form.26AS play a vital role in preparation of the case for filing of ITR as well as representing the assessee in scrutiny and assessment proceedings. A clear-cut analysis of the available data (readily available to the assessee, to the tax advisor even before filing the ITR and of course to the tax collector, at all times) is a pre-requisite and any negligence in its consideration in entirety proves adverse to the interests of the assessee. An inter-disciplinary approach has to be adopted by the tax professional considering the data pertaining to statutes other than Income Tax.
II. Consideration of 3600 View:
As Form.26AS is a vital document showing the voluminous fiscal data of an assessee, the impact of each of its components on the computation of income and compliance of the income Tax Act needs to be understood fully. A thorough understanding of the transactions, their nature and impact from the accounting and taxation angles are to be evaluated and explained to the assessee at the earliest opportunity, i.e., filing of ITR.
III. Tech-savvy modus of work:
Young professionals have a technological edge. Those who are middle-aged and above have to upgrade fast and also nurture tech-savvy human resources in their offices for optimum operational efficiency.
IV. Faster turnaround time in respect of client-request and the assessment related tasks:
As the CBDT Notifications sets out a short time for the initial response and the nature of submission of data being in the electronic mode requires adequate preparation and checks for data-accuracy, the speed of reaction and response count in the successful completion of assessment.
V. Drafting and presentation skills:
Needless to say, the drafting and presentation skills of the professional convey the appropriate answers to the issues raised in the assessment. The skill and clarity of presentation play vital role in successful attainment of the assignment.
VI. Integrity and Reliability:
The fact that the Taxman has access to accurate data of an assessee aggregated from different platforms, integrity of the assessee and the professional by ensuring the filing of correct data and appropriate explanation of the impact on income computation, in the faceless assessment lays a foundation of mutual faith and goes a long way in fair presentation of the case resulting in fair assessment.
These are the immediate thought on the subject and we need to revisit the issue and the whole spectrum of faceless assessment emerges only after some time and we shall always be on the look-out for effective and efficient service to the clients directly and to the Economy ultimately.
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