Mansi Mehta & Latha Sherlekar

Mansi Mehta & Latha Sherlekar

In 2006, the Indian Government introduced electronic filing of Income-tax returns for the first time in case of corporates which subsequently made mandatory for all tax payers. Since then there is constant digitization of processing of tax returns.

Until now, the Tax Returns are initially processed by Centralized Processing Centre (CPC), located at Bangalore. If there is any discrepancy in the claims made, Taxpayer is intimated through e-communications. E-Filing project user manual released by the Central Board for Direct Taxes (CBDT) provides step by step guidance on the process to file online responses. Till date, it was possible to file online responses for demand adjustments, short credit for tax etc. done by CPC. However, the cases requiring intervention of the jurisdictional officer normally takes considerable amount of time for disposing rectification applications against erroneous adjustments. In the process of digitalization, the Income-tax Act is also amended to include issuance of notice, summons, requisition, order or any other communication via email as a valid transmittal mode.

With respect to the cases selected for assessment, the return is transferred to the jurisdictional tax officer for a detailed scrutiny. Often, during a scrutiny proceedings, lots of paperwork is required to be done by the Tax Payers coupled with personal appearance which is time consuming.

Overall, most Tax Payers perceive a scrutiny process as a ‘hardship’ in addition to the existing challenges of their businesses. On the other hand, the tax officers face difficulties in timely processing of pending cases and are able to scrutinize only 1% of returns filed.

Stemming up from here, the Government is committed to improve Tax Payers’ experi

ence while appearing for scrutiny proceedings by building a user friendly interface.  In October 2015, CBDT launched a pilot project for online assessment called E-Assessment Proceeding wherein the Tax Payer was assessed vide online communications through e-portal, SMS and E-Mail. Initially the project comprised of non-corporate assesses from five major cities Delhi, Mumbai, Bengaluru, Chennai & Ahmedabad. Later it was extended to Kolkata and Hyderabad. The success of the pilot project in financial year 2015-16 ushered the implementation of the E-assessment option nationwide in financial year 2016-17 onward.

Assessment-proceedings aims at non-personal interface between individual assesse and the tax department thereby eliminating chances of corruption and ease of responding to tax proceedings via e-communication. This would ultimately expedite culmination of assessment proceedings

Features of Paperless or E-assessments

1. Tax Payer has an option to either opt for -assessment or manual assessment;

2. Once an option of e-assessment is exercised, it is possible to switch to manual assessment at any stage. In case of technical issues for issuing the notices filing the responses digitally, either the Taxman or the Tax Payer can switch to the personal proceedings.

3. All notices will be received at the registered email address of the Tax Payer;

4. Time Saver and Convenient process as the Tax Payer can upload the responses on the Income-tax Portal at any time.

5. Responses to be copied to for audit trail purposes and the record of all communication will be available under ‘My Account’

6. Attachment Size are 10 MB per file.

7. Faster culmination of the assessment proceedings

8. Tax Officer will pass the order and email in .PDF format

All income-tax assessments (direct tax including transfer pricing and rectification applications) can be easily done paperless and via email. The e-assessment process will limit the interactions between the Taxmen and the Tax Payer whereby increasing the transparency. Given all the benefits of paperless assessments, it is an option worth exercising. The success of this initiative will depend on the objective and timely two way communication.

Currently, many Tax Payers are reluctant to opt for e-assessments worrying that it will be difficult to make a complex representation. While doing so, they are fail to appreciate the convenience offered by the paperless proceedings and costs saved in record keeping and appointing representations. One may appreciate that it is possible to file responses digitally in support of the claim without resorting to the lengthy arguments. With an access to technology, today’s Tax Payers are far different than what it was a decade ago. Most of them are becoming tech-savvy.

Going forward, one may not be surprised to see tele-proceedings or a video proceedings. Being paperless is efficient, hassle-free, economic and futuristic all at the same time. Electronic communication should behind a transaction trail which is impossible to be tempered and adequate security measures should be adopted. E-assessment process will knock out corruption and would become Tax Payer’s first choice if best practices are adopted by Taxmen as well as the Tax Payer. While paperless assessment process is very appealing, whether it is painless as well needs to be perceived.

Mansi Mehta is a Senior Manager and Latha Sherlekar is an Assistant Manager with Deloitte Haskins & Sells LLP.

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December 2020