Playing chess on snake and ladder Board – Faceless assessment

Objective

Author in this article discusses potential problems in the proposed faceless assessment. IT has been on the cards of the Government for quite a few times.

Structure-:

The article gives authors own analysis. This article is based on a judicial pronouncement and is divided into the following parts.

Background

Take away points

Why personal hearing – whether physical or through camera

Analogy of chess – snake and ladder

Situation before Enactment

Enactment

Situation after Enactment

Legality of this assessment

Relating to contentious points in the law

Relating to current known flaws in the system

Preparedness of assessee and AO

Technical problems in communication

Suggestions

Leading from the front

Institutional arrangements

Bibliography and material referred to above-:

Background

Following are the relevant paragraphs of Budget speech of 5-July-2019 of the Honourable Finance Minister.

Faceless e-assessment

124. The existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials. To eliminate such instances, and to give shape to the vision of the Hon’ble Prime Minister, a scheme of faceless assessment in electronic mode involving no human interface is being launched this year in a phased manner. To start with, such e- assessments shall be carried out in cases requiring verification of certain specified transactions or discrepancies.

125. Cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a  Central Cell, without disclosing the name, designation or location of the Assessing Officer. The Central Cell shall be the single point of contact between the taxpayer and the Department.

This new scheme of assessment will represent a paradigm shift in the functioning of the Income Tax Department.

Take away points

Assessees are not the guinea pigs for CBDT to experiment upon.  People are still struggling with the GST online portal for FY 2017-18 .

Otherwise also there are practical problems in the way the system is processing the data.

As of today, the system and / or people concerned are not ready to do the assessment in a faceless manner as envisaged by the FM.

It will give rise to litigation and agony among the people. The troubles will be much more than the teething problem.

The author has in a separate article has explained the importance of personal meeting. The same may be referred at https://taxguru.in/income-tax/electronic-assessment-practical-aspects.html.

Some suggestions are given to make the faceless assessment effective and successful.

why personal hearing – whether physical or through camera

A personal hearing has following characteristics which will not be there in case of faceless assessment as proposed in current format.

• Help the authority to identify the relevant portion in the hip of documents
• Clear up his doubts
• to watch the demeanor i.e. the body language of the people.

Following are broad aspects thereof

Physical movement

Facial expression – Facial expression is integral when expressing emotions through the body. Combinations of eyes, eyebrow, lips, nose, and cheek movements help form different moods of an individual

Body postures Sitting or standing postures, head nodding, foot kicking

Gestures – Gestures are movements made with body parts (e.g. hands, arms, fingers, head, legs) and they may be voluntary or involuntary. Arm gestures can be interpreted in several ways.

Handshakes – Handshakes are regular greeting rituals and are commonly done on meeting, greeting, offering congratulations or after the completion of an agreement. They usually indicate the level of confidence and emotion level in people.

Other subcategories

Oculesics – It is the study of eye movement, eye behavior, gaze, and eye-related nonverbal communication.

Haptics – is the study of touching and how it is used in communication.[13] As such, handshakes, holding hands,back slapping, high fives, brushing up against someone or pats all have meaning.

Proxemics – the study of measurable distances between people as they interact with one another.

Tone of voice – Tone of voice is a combination of spoken language and body language. The manner in which something is said can affect how it should be interpreted. Shouting, smiling, irony and so on may add a layer of meaning which is neither pure body language nor speech.

For further details, one may refer https://en.wikipedia.org/wiki/Body_language

In this aspect, a relevant observation of supreme court is worth re-producing.

In Union of India Vs. Shiv Raj – [(2014) 6 SCC 564], a three-Judge Bench of the Supreme Court reiterated the principle laid down in Gullapalli Nageswara Rao’s case. This is evident from paragraphs 17 to 20 of the judgement, which are reproduced below : This Court in Gupllapalli Nageswara Rao, held : (AIR p. 327, para 31)

“31. …Personal hearing enables the authority concerned to watch the demeanor of the witnesses and clear up his doubts during the course of the arguments, and the party appearing to persuade the authority by reasoned argument to accept his point of view. If one person hears and another decides, then personal hearing becomes and empty formality. We therefore, hold that the said procedure followed in this case also offends another basic principle of judicial procedure.”

[Underline mine]

Analogy of chess – snake and ladder

Making an assessment is comparable with a game of chess between assessee and assessing officer. The game of chess is itself a difficult game.

The AO is already burdened with many things other than making assessments.

Of course, the centralized assessment system will help the AO in above aspects.

Currently the quality of orders passed is not upto the mark and can be traced by the percentage of cases decided in favour of assessee and against revenue by tribunals across the country.

The information technology literacy of the AO is also not sufficient to handle this mammoth task.

This is evident from the quantum of problems the AO is facing while uploading the order, giving effect of tax credit etc.

IF two competent people decide to play chess on the board of snake and ladder, no doubt it is possible. But if the competency level is low, it is definitely going to add to the misery to both aseeseess and AO.

Situation before Enactment

the IT department is conducting e-assessment for 1-2 years. As of now, except for assessments relating to search, survey or those of re-assessment, the submissions to be made are online only. The Authorised Representatives are meeting the AO to explain the submission.

Enactment

There will be a centralised cell, a nodal agency which will monitor all the communication. It will allocate the cases randomly to AOs.

Situation after Enactment

Legality of this assessment

The legality may sustain because the requirements for personal hearing or an open court are for a court and assessing officer is not a court but a quasi-judicial authority. Though the following sections deal with a court being an open court, it invariably includes right to represent in person.

Section 327 of the Code of Criminal Procedure, 1973 (CrPC) and Section 153-B of the Code of Civil Procedure, 1908 (CPC) are relevant in this regard. the same are re-produced at the end of the article.

Refer SC decision delivered on 26-SEpt-2018 which allowed live streaming of the judicial proceeding. Though not directly on the issue, it has relevant contents of personal hearing.

Relating to contentious points in the law

Section 80HHC is a classic example of interpretational issues where perhaps every assessee had to go to some judicial forum to get the deduction.

Relating to current known flaws in the system

section 161, 164 – contain specific provisions where a private trust having only one beneficiary who is an individual is to be treated as an individual. The system does not have a mechanism to give effect to this legislative mandate.

section 115BBDA – dividend above 10 lacs in the hands of residents is taxable. System is taxing it in the hands of non residents as well

Online rectifications are being rejected forcing the assessee to prefer an appeal before CIT(A).

Refunds are not being issued even after an assessment is done.

when a refund is issued, they are either without interest or that of an incorrect amount.

this is the situation when initially the system was run on a pilot mode basis in 8 cities and then has been made applicable to the rest of India.

Preparedness of assessee and AO

The grass root level scenario is that, AO are finding it difficult to read the submission on the screen. they are taking out the print outs thereof.

IF that is the case, consider a situation where the submission runs into a few hundred pages.

one file can not exceed 5mb. thus the submission will be divided not only subject wise but in between as well where-ever the size exceeds 5mb.

IT will be very difficult for the AO to firstly arrange the files chronologically and then read the same.

Even If heavy indexing is provided, it will be impossible to expect that the AO will come to understand all the arguments and the inter-relation thereof, just by reading the same,

This provision has not been made mandatory even for tribunal where the judges are much more learned than AOs.

Even at tribunal, a personal hearing through conference is provided whereby the assessee or the AR can explain his argument / view-point.

Technical problems in communication

The email of notice may go in spam. THe assessee may not realise the same. In many cases, the email id is that of the CA or Advcate which will make the matter more complicated.

Secondly, the notice will be generated in the income tax portal as well. Thus the assessee or the CA will have to keep on looking for updates in the portal.

There are incidences where the notice has been received manually but there is no such notice on the portal.

we are facing difficulties in getting the orders passed on the portal, like some time either order is missing or unable to download or form 7 i.e. notice of demand is missing etc.

Recently Pune tribunal was posed with the questions relating to non receipt of notice and thus the consequential validity of the assessment and anti-dating of an order by CIT(A).

Details are there at the end of the article.

Suggestions

IT is more than necessary that the Government makes it home-work well before implementing the system. THe proposition is definitely laudable but wrong implementation may soil the end result.

Leading from the front

Assessees are not the guinea pigs for CBDT to experiment upon.  People are still struggling with the GST online portal for FY 2017-18 .

First and foremost, if CBDT is confident about the same, it should conduct at least 100 “moot faceless assessments” in each commissionerate to instill confidence into the assessees and the assessing officers.

Even over there, CBDT should firstly prove their preparedness for handling the faceless assessment.

Institutional arrangements

At Ahemdabad, a full dedicated bench of tribunal is functioning on conference call / e-hearing basis.

Initially, the assessments should be done on those grounds. Even in such cases, technology will be able to maintain anonymity of the AO.

Today, various associations, Institutions like ICAI, ICSI, Marhatta chamber of commerce etc. are well equipped with the conference call system.

These institutions can, in turn train the assesses to handle the online assessment.

Bibliography and material referred to above-:

Section 327 CrPC

“327. Court to be open.- (1) The place in which any Criminal Court is held for the purpose of inquiring into or trying any offence shall be deemed to be an open Court, to which the public generally may have access, so far as the same can conveniently contain them;

 Provided that the presiding Judge or Magistrate may, if he thinks fit, order at any stage of any inquiry into, or trial of, any particular case, that the public generally, or any particular person, shall not have access to, or be or remaining, the room or building used by the Court.

(2) Notwithstanding anything contained in sub-section (1), the inquiry into the trail of rape or an offence under section 376, section 376-A, section 376-B, section 376-C [section 376-D or section 376-E of the Indian Penal Code (45 of 1860)] shall be conducted in camera;

Provided that the presiding Judge may, if he thinks fit, or on an application made by either of the parties, allow any particular person to have access to, or be or remain in, the  room or building used by the Court;

[Provided further that in camera trial shall be conducted as far as practicable by a woman Judge or Magistrate.]

(3) Where any proceedings are held under sub-section (2), it  shall not be lawful for any person to print or publish any  matter in relation to any such proceedings, except with the  previous permission of the Court:]

[Provided that the ban on printing or publication of trail proceedings in relation to an offence of rape may be lifted, subject to maintaining confidentiality of name and address of the parties.]”

Section 153-B CPC

“153-B. Place of trial to be deemed to be open Court.– The place in which any Civil Court is held for the purpose of trying any suit shall be deemed to be an open Court, to which the public generally may have access so far as the same can conveniently contain them:

Provided that the presiding Judge may, if he thinks fit, order at any state of any inquiry into or trial of any particular case,  that the public generally, or any particular person, shall not have access to, or be or remain in, the room or building used by the Court.”

Recent Pune Tribunal decisions

In the case of Anil Kisanlal Marda with ITA No.1763/PUN/2013 dated 1-Jul-2019 had to deal with the following questions;

“1. Since the impugned appellate order is antedated, the same is bad in law and null and void and therefore the same may please be annulled.”

“2. Since the learned Assessing Officer has failed to issue and serve upon the appellant assessee the notice u/s.143(2) of the I.T. Act, 1961 within the prescribed time limit, the impugned assessment order framed by the learned Assessing Officer is bad in law, without jurisdiction and hence null and void and therefore the same may please be annulled.”

M/s. K.S. Cold Storage, ACIT, Circle-3(1),

9. First three grounds of the assessee’s appeal challenge the passing of the assessment order on the ground that no notice u/s.143(2) of the Act was validly served.

10. Briefly stated, the facts concerning this issue, as mentioned in the assessment order, are that statutory notice u/s. 143(2) was issued on 26-09-2011 and duly served fixing the date of hearing on 05-10-2011, which was not attended to by the assessee. Thereafter, a notice u/s. 142(1) was also issued on 20-04-2012. The assessment was finalised at a total income of Rs.1.28 crore and odd as against the returned loss of Rs.10.38 lac and odd. The assessee challenged before the ld. CIT(A) that the notice u/s. 143(2) was not served on partners. The ld. CIT(A) took up the matter with the AO who sent a copy of the notice u/s. 143(2) which was shown to have been received by one Shri Harish C. Pawar, Manager of M/s. K.S. Cold Storage on 28-09-2011. Since the notice was served and the assessment proceedings were also attended by the assessee, the ld. CIT(A) dismissed the assessee’s ground, against which the assessee has approached the Tribunal.

Centre for Accountability and Systemic Change & Ors. 3 member bench of Supreme Court dated September 26, 2018 has held that

Question

Proceedings of “constitutional importance having an impact on the public at large or a large number of people” should be live streamed in a manner that is easily accessible for public viewing.

Indisputably, open trials and access to the public during hearing of cases before the Court is an accepted proposition. As regards the pronouncement of judgments by the Supreme Court, there is an express stipulation in Article 145(4) of the Constitution that such pronouncements shall be made in open Court. Indeed, no such express provision is found in the Constitution regarding “open Court hearing” before the Supreme Court, but that can be traced to provisions such as Section 327 of the Code of Criminal Procedure, 1973 (CrPC) and Section 153-B of the Code of Civil Procedure, 1908 (CPC) which read thus: 7 Section 327 CrPC “327. Court to be open.- (1) The place in which any Criminal Court is held for the purpose of inquiring into or trying any offence shall be deemed to be an open Court, to which the public generally may have access, so far as the same can conveniently contain them; Provided that the presiding Judge or Magistrate may, if he thinks fit, order at any stage of any inquiry into, or trial of, any particular case, that the public generally, or any particular person, shall not have access to, or be or remain in, the room or building used by the Court. (2) Notwithstanding anything contained in sub-section (1), the inquiry into the trail of rape or an offence under section 376, section 376-A, section 376-B, section 376-C [section 376-D or section 376-E of the Indian Penal Code (45 of 1860)] shall be conducted in camera; Provided that the presiding Judge may, if he thinks fit, or on an application made by either of the parties, allow any particular person to have access to, or be or remain in, the room or building used by the Court; [Provided further that in camera trial shall be conducted as far as practicable by a woman Judge or Magistrate.] (3) Where any proceedings are held under sub-section (2), it shall not be lawful for any person to print or publish any matter in relation to any such proceedings, except with the previous permission of the Court:] [Provided that the ban on printing or publication of trail proceedings in relation to an offence of rape may be lifted, subject to maintaining confidentiality of name and address of the parties.]” Section 153-B CPC “153-B. Place of trial to be deemed to be open Court.- The place in which any Civil Court is held for the purpose of trying any suit shall be deemed to be an open Court, to which the public generally may have access so far as the same can conveniently contain them: Provided that the presiding Judge may, if he thinks fit, order at any state of any inquiry into or trial of any particular case, that the public generally, or any particular person, shall not 8 have access to, or be or remain in, the room or building used by the Court.” 7. Notably, in Naresh Shridhar Mirajkar (supra), this Court, in no uncertain terms, expounded that open trial is the norm but, at the same time, cautioned that there may be situations where the administration of justice itself may make it necessary for the Courts to hold in-camera trials. Applying the underlying principles, it may be appropriate to have a proper and balanced regulatory framework before the concept of live streaming of Court proceedings of this Court or any other courts in India is put into action.

In Santhini v Vijaya Venketesh, 26 where this Court was re-considering the issue of permitting video-conferencing for matrimonial disputes, one of us (D Y Chandrachud, J.) in his dissenting opinion, discussed the importance of using technology to enhance the delivery of justice:

“89. Technology must also be seen as a way of bringing services into remote areas to deal with problems associated with the justice delivery system. With the increasing cost of travelling and other expenses, videoconferencing can provide a cost-effective and efficient alternative. Solutions based on modern technology allow the court to enhance the quality and effectiveness of the administration of justice. The use of technology can maximise efficiency and develop innovative methods for delivering legal services. Technology-based solutions must be adopted to facilitate access to justice… Repeated adjournments break the back of the litigant. We must embrace technology and not retard its application, to make the administration of justice efficient.”

Technology has made modernity possible. The interplay between technology and law has allowed dissemination of legal information with a veritable click of a button. We have designed processes and systems to suit the unique requirements of our judicial system. The Indian judiciary has incorporated Information and Communication Technology (ICT) under the aegis of the eCourts Integrated Mission Mode Project (e-Courts Project). This has been a part of the National e-Governance Plan (NeGP) which has been implemented in all High Courts and the District Courts of India. It was based on the ‘National Policy and Action Plan for Implementation of Information and Communication Technology’ prepared by the e-Committee of the Supreme Court of India in 2005. The 2005 e-Committee Report proposed three phases for implementation of the e-Courts Project.

E Model guidelines for broadcasting of the proceedings and other judicial events of the Supreme Court of India A. Kind of matters to be live-streamed 1. Proceedings involving the hearing of cases before the Supreme Court shall be live-streamed in the manner provided below: a) Cases falling under the following categories shall be excluded as a class from live-streaming: (i) Matrimonial matters, including transfer petitions; (ii) Cases involving sensitive issues as in the nature of sexual assault; and (iii) Matters where children and juveniles are involved, like POCSO cases. b) Apart from the general prohibition on streaming cases falling in the above categories, the presiding judge of each courtroom shall have the discretion to disallow live-streaming for specific cases where, in his/her opinion, publicity would prejudice the interests of justice. This PART E 46 may be intimated by the presiding judge in advance or live-streaming may be suspended as and when a matter is being heard; and c) Where objections are filed by a litigant against live-streaming of a case on grounds of privacy, confidentiality, or the administration of justice, the final authority on live-streaming the case shall lie with the presiding judge. 2. In addition to live-streaming of courtroom proceedings, the following events may also be live-streamed in future subject to the provisions of the Rules: (a) Oath ceremonies of the Judges of the Supreme Court and speeches delivered by retiring judges and other judges in the farewell ceremony of the respective Supreme Court Judges; and (b) Addresses delivered in judicial conferences or Full Court References or any event organized by the Supreme Court or by advocate associations affiliated to the Supreme Court or any other events. B. Manner of live-streaming 1. Live-streamed and archived videos of the broadcast shall be made available on the official website of the Supreme Court. The recorded PART E 47 broadcast of each day shall be made available as archives on the official website of the Supreme Court by the end of the day; 2. Live-streaming shall commence as soon as the judges arrive in the courtroom and shall continue till the Bench rises; 3. The presiding judge of the courtroom shall be provided with an appropriate device for directing the technical team to stop live-streaming, if the Bench deems it necessary in the interest of administration of justice; 4. Live-streaming of the proceedings should be carried out with a delay of two minutes; 5. Proceedings shall only be live-streamed during working hours of the court; 6. Courtroom proceedings will continue to be live-streamed unless the presiding judge orders the recording to be paused or suspended; 7. To give full effect to the process of live-streaming, advocates addressing the Bench, and judges addressing the Bar, must use microphones, while addressing the Court; 8. Recording of courtroom proceedings shall be done by the Registry with the technical support of National Informatics Centre or any other public/ PART E 48 private agency authorised by the Supreme Court or the Ministry of Information and Technology; and 9. The portions of proceedings which are not broadcast online, on the direction of the presiding judge of the Bench shall not be made part of the official records and shall be placed separately as ‘confidential records’. C. Technical specifications for live-streaming 1. Live-streaming shall be conducted by the Supreme Court with its own camera-persons or by an authorized agency. No person who is not authorized by the Supreme Court will be permitted to record any proceeding; 2. Cameras should be focused only on the judges and advocates pleading before the Bench in the matter being live-streamed; 3. Cameras shall not film the media and visitor’s galleries; 4. Cameras may zoom in on the Bench when any judge is dictating an order or judgment or making any observation or enquiry to the advocate; and 5. The following communications shall not be filmed: a) Discussions among the judges on the Bench; PART E 49 b) Any judge giving instructions to the administrative staff of the courtroom; c) Any staff member communicating any message to the judge or circulating any document to the judge; d) Notes taken down by the judge during the court proceedings; and e) Notes made by an advocate either on paper or in electronic form for assistance while making submissions to the court. D. Archiving 1. The audio-visual recording of each day’s proceedings shall be preserved in the Audio-Visual Unit of the Supreme Court Registry; 2. Archives of all broadcasts of courtroom proceedings which have been live-streamed should be made available on the website of the Supreme Court; and 3. Hard copies of the video footage of past proceedings may be made available according to terms and conditions to be notified by the Supreme Court Registry. The video footage shall be made available for the sole purpose of fair and accurate reporting of the judicial proceedings of the Supreme Court. PART E 50 E. Broadcast Room 1. The Registry will make one or more rooms or a hall available within the premises of the Supreme Court for the purpose of broadcasting the proceedings. Multiple screens along with the other necessary infrastructural facilities shall be installed, for enabling litigants, journalists, interns, visitors and lawyers to view the courtroom proceedings in the broadcast room(s). Special arrangements will be made for the differently abled. F. Miscellaneous 1. The Supreme Court shall hold exclusive copyright over videos streamed online and archived with the Registry; and 2. Re-use, capture, re-editing or redistribution, or creating derivative works or compiling of the broadcast or video footage, in any form, shall not be permitted except as may be notified in the terms and conditions of use and without the written permission of the Registry. PART E 51 I would like to acknowledge and appreciate the efforts and assistance rendered by Mr K K Venugopal, the learned Attorney General for India, Ms Indira Jaising, learned Senior Counsel, Mr Mathews Nedumpara, learned Counsel and by the law student, Mr Swapnil Tripathi, who also moved a petition under Article 32.

Various judgments of this Court have reinforced the importance of open courts. The earliest and most significant judgment on this aspect is the decision of a nine-judge Bench in Naresh Shridhar Mirajkar v State of Maharashtra18 (“Mirajkar”). While upholding an oral order of the High Court prohibiting the media to publish the evidence of a witness in a defamation suit, the majority emphasised the importance of open courts.

Key takeaways emerge from the opinions in Mirajkar:

(i) Open courts serve as an instrument of inspiring public confidence in the administration of justice;

(ii) Open courts act as a check on the judiciary; PART B 13 (iii) Publicity of the judicial process is the soul of justice; (iv) Open justice must yield to the paramount object of the administration of justice, in case it becomes necessary to restrict access in the facts of a particular case; and (v) Open courts are essential for the objective and fair administration of justice