National e-Assessment Centre, Delhi
Room No. 401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium, Delhi-110003.
email:delhi.pccit.neac@incometax.gov.in
Phone No: 24367003; Mobile no & WhatsApp: 9773924660

F. No. Pr.CCIT(NeAC)/2019-20/343

Dated: 19.11.2020

To,
The Chief Commissioner of Income-tax
Regional e-Assessment Centers
(All regions)

Madam/sir,

Subject:- SOPs for Assessment Unit,Verification Unit,Technical Unit and Review Unit of ReACs.

Kindly find enclosed Standard Operating Procedure (SOPs) for AU, VU, TU and RU prepared in collaboration with Directorate of Systems and approved by the CBDT for the purpose of implementation of FAS-2019. The same may be disseminated among the Units under your region for compliance by all of them.

2. The SOPs provide guidance to the Units of ReACs and outline the process for facilitating assessments in faceless electronic environment as envisaged in FAS-2019.AII care has been taken in preparation of the SOPs. However, in implementation of the SOPs if any practical difficulty or conflict with the statute or Scheme is noticed, the same may be brought to the notice of this

3. These SOPs are strictly for the use and circulation among the offices involved in implementation of FAS-2019.

4. This issues with the approval of Pr.CCIT (NeAC), New Delhi.

Yours sincerely,

(Ashish Abrol)
Commissioner of Income-tax
National e-Assessment Centre, Delhi

For Departmental Use Only
F. No. Pr. CCIT/NeAC/SOP/2020-21

Government of India
Ministry of Finance
Central Board of Direct Taxes
National e-Assessment Centre
New Delhi

Dated: 19/11/2020

Subject: SOP for Assessment Unit under the Faceless Assessment Scheme, 2019.

The Principal Chief Commissioner of Income Tax, National e-assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP on the above subject:

A: Issue of Initial Questionnaire u/s 142(1)

1. The initial questionnaire u/s 142(1) of the Act shall ideally be issued by the AU within 30 days of allocation of case to the AU in limited scrutiny cases and within 45 days in com­plete scrutiny cases.

2. All internal data bases of the department in (360 degree in ITBA), Insight, E-filing AO Portal available to the AU shall be examined by the AU, before issuing the initial questionnaire.

3. The AU shall also examine the structured questions for each issue/scenario maintained by INSIGHT on the points of enquiry in the case, before issuing the initial questionnaire. The structured questions on the points of enquiry in the case can be used as it is without editing or after editing. Wherever the structured questions on the points of enquiry are used without editing, the reply of the assessee may be received in a structured form.

4. The questionnaire shall seek specific and focussed information and evidences on the points of enquiry as provided in the Issue/ Scenario/ specific ground in respect of which the case has been selected in Limited Scrutiny Cases or the specific grounds that led to reopening of the assessment u/s 148. In complete or compulsory scrutiny cases, specific information arising from return of income or information available on record should be called from the assessee and roving enquiry on points not directly connected with issue in question ought to be avoided.

5. The initial notice is to be drafted by the AU with due diligence and application of mind to the issues in the assessment, so that all the information related to the issue under consideration is asked from the assessee in first notice itself and the questionnaire is complete in respect of verification and enquiry of a particular issue of assessment. Documents such as ITR, Tax Audit Report, and information available on record in the databases of the department with respect to the particular PAN etc should not ideally be called from the Assessee.

6. A question should be asked seeking PAN/ TAN, correspondence address, e-mail/ e-filing address and mobile number of the parties with whom transactions have been done by the assessee only in such cases where the assessment proceedings require such details for the purpose of verification and enquiry.

7. It is suggested that a structured question on whether the Assessee continues to exist in the same form and identity at the time of receipt of notice as during filing of return ought to be asked in appropriate cases. The question should seek information as to any Merger, Demerger or Amalgamation that may have taken place or the entity/person, filing the return is no longer in existence due to cessation, death or dissolution etc. Evidence of intimation of such an event to the department may also be sought in cases of occurrence of such events.

8. The AUs ought to know that structured questions may not be exhaustive nor self-contained. The respective AO, under the supervision of their Unit Heads needs to apply his mind to suitably add to or amend the suggested questionnaire inline with facts before the AO.

9. The AU may feel that a certain query/ question needs to be added to the structured question bank proposed in INSIGHT on a certain issue as it is relevant in a number of cases; it may be provided/updated through the designated feedback form in INSIGHT. The Structured Question Bank shall be updated every quarter through an approval process.

10. In short, it must be carefully noted for strict compliance that a focussed and issue specific questionnaire is a necessary prerequisite for framing a quality assessment order and it reduces the compliance burden on the Assessee. The quality of questionnaire must reflect the application of mind and due diligence of the AU.

B: Process of issuance of notice u/s 142(1)/ questionnaire

1. The Notice is to be sent to assessee, through the NeAC, with the approval of the Unit Head of the AU. Normally, a response time of 15 days may be given to the assessee for compliance with the notice u/s 142(1) from the date of issue of the notice. It is advisable that time may be reduced to 7 days for subsequent notices. However, these time guidelines must keep in view the limitation date for completing the Assessment.

C: Grant of adjournment to initial notice u/s 142(1) on request of taxpayer or a suo-moto adjournment

1. The assessee has an online option to seek adjournment during the pendency of the notice u/s 142(1). The AO of the AU may grant the adjournment normally for a period of 7 days or more to the assessee. The AO of the AU may also grant adjournment suo-moto without any request from the assessee, in case the AO is seeking any additional information before the filing of initial reply by the assessee.

D: Procedure to be adopted in case of non-compliance of any notice u/s 142(1)& passing of best judgement assessment u/s 144 of the Act

1. The cases that do not require any verification and where returned income can be accepted on the basis of information available in internal data bases of the department on record, the returned income may be accepted under Section 144 of the Act without any initiation of penalty for non-compliance.

2. In other cases the following procedure is to be followed;

i. Issue of centralized reminder from NeAC.

ii. Where the notice issued in point (i) has not been responded to by the compliance date then the assessee can be issued show cause notice for levy of penalty for non-compliance.

3. The AU shall make request for physical verification to the designated VU after recording reasons in writing and obtaining the approval of Pr.CIT in the following circumstances:

a. It is a high risk potential case

b. The impugned PAN is a potential fraud PAN

c. AU suspects a large tax evasion in the case

Whereas, in any other circumstances, the approval of CCIT (ReAC) shall be obtained. The request for obtaining approval for physical verification shall be in prescribed format.

Orders in such cases are to be passed only after receipt of report from designated VU.

4. After receipt of report from designated VU where no modification is proposed to the returned Income or to tax payable; and where returned income can be accepted on the basis of information available in internal data bases of the department or on record, the returned income may be accepted under Section 144 of the Act with no initiation of penalty for non-compliance.

5. After receipt of report from designated VU where tax payable and/or where modification to returned income is proposed then

(i) Show cause notice to be issued as to why assessment should not be framed ex-parte u/s 144 of the Income-tax Act mentioning the points of proposed additions.

(ii) If no reply received then DAO is to be framed with modified income and notices for penalty for non-compliance and/or any other penalty warranted by the facts of the case are to be issued.

6. In case the assessee stops responding after submitting only part reply or after seeking adjournment the AU should proceed with making ex-parte assessment u/s 144 of the Act in accordance with the process and procedure described above.

7. Order under section 144 to be passed by AU should be based on material available on record and estimation of income in accordance with law. High pitched assessments that are not supported by any evidence/document should be avoided.

8. Assessment procedure as laid down in other sections of this SOP for framing regular assessment u/s 143(3) of the Act is to be followed if reply of the Assessee is received at any stage.

9. The process for handling unresponsive, untraceable and for address verification are given in the annexures 11, 12 & 13

E : Issue of penalty notice & levy of penalty u/s 272A for non-compliance of 142(1) notice

1. The case would be treated as non-compliant where:

a. no response has been received from the assessee on or before the date mentioned in the notice.

b. Immediately thereafter a reminder to all known email IDs of the assessee that gives another 15 days to respond is to be issued by the AU.

c. An anonymized physical notice has been issued to the assessee through the INSIGHT on reference from NeAC, if no response is forthcoming even after electronic reminders.

d. SMS reminders have been issued first within 7 days of the issue of the notice; Secondly, on the day prior to the date of compliance of notice and thirdly on the date of compliance mentioned in the notice.

2. Physical verification may be conducted through the designated VU in cases enumerated in the SOP at Para D(3) after approval of the PCIT of the AU.

3. Where the assessee does not respond even after physical notice and/or physical verification and modification is proposed in income, then

a. The notice shall deemed to have been delivered in accordance with paragraph 10 of the CBDT’s SO 3264 (E) which states that every notice or order shall be delivered to the addressee, being the assessee, by way of placing an authenticated copy thereof in the assessee’s registered account; or sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or uploading an authenticated copy on the assessee’s Mobile App; and followed by a real time alert.

b. Show cause notice for levy of penalty for non-compliance u/s 272A(1) along with the Show Cause Notice for passing order u/s 144 with modified income shall be issued to the Assessee. Such notice ideally would give a time of 15 days for response.

F: Analysis of Information submitted in response to questionnaire u/s 142(1)

1. The AU is to examine the reply of the taxpayer with reference to the issue involved in the case and cross verify it with the information available on record of the AU.

2. The AU shall decide whether reference to VU and/or TU is required and/or additional questionnaire u/s 142(1) is to be issued in the case as per SOP paragraph G. This action should ideally be done within 15 days of receipt of the reply of the Assessee.

3. (a) The AU shall issue additional questionnaire, if the information/ reply received from the Assessee differs or contradicts the information available on record and further clarification is required.

(b) An opportunity is to be given to the assessee before finalization of the assessment through an SCN if the assessee’s reply conflicts with information on record of the AU, or the VU or the TU has given an adverse report against the assessee.

4. If the assessee contests the information available with the Department and version of the assessee is different, then such information or data ought to be re-verified from the reporting agency (RA) by the AU.

G: Issue of additional questionnaire u/s 142(1)

1. The AU shall issue additional questionnaire, if the information/ reply received from the Assessee differs from the information or the record of the assessee with AU or where any further information or clarification is required and such clarification/further information is not available on record or in department’s databases or through the Reporting Agency.

2. The AU shall issue additional questionnaire in case a new point requiring examination arises from the reply filed by the Assessee in complete scrutiny cases.

3. In Limited Scrutiny Cases, the AU shall issue additional questionnaire, only after the PCIT(AU)’s approval, if a new point of dispute arises that is inextricably linked with the issue involved in the Limited Scrutiny,

4. The AU is to be ensure that principles of the natural justice are met and the assessee gets an opportunity to rebut any adverse finding against him before the AU finalizes the assessment.

H : Reference to Verification Unit for online enquiry/Verification.

1. Before making the reference, the AU has to analyse all the materials available on record that includes all replies as well as any other material available on INSIGHT or in public domain such, MCA and/or any other regulatory or research entities.

2. After examining the case records, the AU may decide to get specific enquiry/verification conducted from a Verification Unit. The reference should not be made for collection of information like bank statements or ROC data etc, but for an enquiry or investigation of on any issue in dispute.

3. The AU should endeavour to include all the requirements of further enquiry in the first reference itself. Any reference to VU, after two references have been made in an assessment cycle of the case is to be referred after prior approval from PCIT AU

4. Every reference shall be through a checklist, which has been made available on ITBA.

5. Every reference is to be uniquely identified so that follow up requests will be sent to the same VU by the System algorithm to maintain consistency and continuity in verification.

I: Sending reference to VU for field physical verification.

1. Physical verification can be conducted in select cases through the designated VU, where the assessee is non-compliant or where the third party from whom information/document/evidence is to be collected doesn’t have a digital footprint. A reference for physical verification is to be approved as per D(3) of this SOP.

2. Designated VU means the Verification Unit physically located nearest to the location where physical verification is required. In the event of there being more than one VU nearest, the allocation shall be done by the Automatic Allocation Tool (AAT)

J: Sending reference to Technical Unit (TU)

1. All matters relating to advice of designated TU shall be sent to such TU in a standardized format containing facts of the case, section involved and the issue/point in dispute

2. The AU shall send a reference to the designated TU only in select cases, after obtaining permission from the PCIT (AU) or where specifically indicated in the SOP or wherever there is requirement in law for obtaining the approval of CIT/PCIT.

3. Reference to TU on issues other than those on legal issues, TP reference and FT&TR shall be in exceptional circumstances requiring technical or forensic advice.

4. Reference for advice of TU should ideally be made within 15 days of receipt of requisite information from the assessee and it is advisable that references within 60 days of the date of limitation of passing of the order are done in truly exceptional and rare circumstances.

5. Technical assistance may be called for in the following circumstances listed below:

A. Interpretation of law / legal issues

B. Analysis of Books of Accounts

C. Forensic Analysis of documents, data, device etc.

D. Special Audit/ Forensic Audit

E. Assistance for finding passwords and deciphering digital files, applications etc.

F. Valuation of tangible or intangible assets.

G. Determination of Armed Length Price and Fair Market Value.

H. Translation, transcription etc.

I. Assistance on trade related practises, technical or Management Issues

J. Other technical matters.

Each of the above listed circumstances are discussed below separately.

A. Legal Issues

As far as possible, legal interpretation and application/ distinction of case laws in settled and non-settled issued should be common within the NeAC -ReAC Eco-system and a common view on legal issue may be evolved.

Only in instances where there are adverse views of the jurisdictional high court to the view of the NEAC; the AU may have to take the jurisdictional high court’s view while also mentioning the departmental view/TUs view clearly in the Assessment Order

For Legal Issues following SOP is prescribed

i. The AUs may seek advice of the designated TU on any legal issue before them in respect of the pending assessment.

ii. The reference to TU shall be in a template that includes facts of the case and the point of dispute on which opinion is sought.

iii. The subject on which assistance is sought should be clearly speci­fied.

iv. The name of jurisdictional High Court must be communicated. The jurisdictional High Court will be determined from the location of the assessee.

v. Any High Court decision (especially jurisdictional) on the subject need to be mentioned giving standard citation.

vi. The assistance should be sought by the AU only after the approval of the unit head.

B. Analysis of Books of Account

The AU may seek assistance of the TU for the analysis of the Books of Account requisitioned in a machine readable format in the following format, mode, process and procedure in cases of Complete Scrutiny.

i. Only the books of account or structured seeking of accounting data called for in a predetermined XML/JSON format by the AU may be referred to the designated TU through National E As­sessment Centre.

ii. The accounts on which assistance is sought should be clearly specified by the AU while referring the analysis to the TU through National E Assessment Centre.

iii. The reference for analytics on books shall be made after prior approval of the PCIT in circumstances of large transaction, com­plexity of books or of identified mismatch.

C. Forensic Analysis

The AU may seek assistance of the TU for the forensic analysis of documents, data, device etc or for Forensic Audit. The following format, mode, process and procedure are specified

i. The relevant documents, data, device etc. should be forwarded by the AU to the designated TU through National E Assessment Centre

ii. The assistance should be sought by the AU only after the ap­proval of the PCIT (AU)

D. Assistance for finding passwords and deciphering digital files, applica­tions etc.

i. The relevant digital data files, messages, applications etc. should be forwarded by the AU to the TU through National E Assessment Centre.

E. Valuation of tangible or intangible assets.

The AU or VU may seek assistance of the Designated TU for the Valuation of tangible or intangible assets; the following the following format, mode, process and procedure are specified

i. The details of the tangible or intangible asset to be valued should be specified by the AU for the TU through National E Assessment Centre in a prescribed format.

ii. The format of making references for the valuation of different as-sets from the TU under different sections of the Act are separately prescribed for

a. valuation of immovable property u/s 50C

b. valuation of shares, jewellery, artwork etc u/s 56,

c. valuation of tangible or intangible asset u/s 43(1),

d. valuation of any asset, property or investment u/s 142A,

e. valuation of the net assets u/s 115TD and similar require­ment in other sections of the Act.

iii. Designated TU shall obtain valuation reports from departmental valuers, empaneled valuation experts, designated experts etc. to evaluate the tangible or intangible assets as per law.

iv. The assistance should be sought by the AU only after the approval of the PCIT

F. Determination of Arms Length Price and Fair Market Value.

The AU may seek assistance of the Designated TU for the Determination of Arm’s Length Price and Fair Market Value. The following format, mode, process and procedure are specified

i. The details of international transaction or domestic transaction be-tween two or more associated enterprises maybe specified by the AU for the TU through National E Assessment Centre in a prescribed for­mat.

ii. The TU to ask the Transfer Pricing Officer to determine the arms length price in case of international transaction as per sections 92B or speci­fied domestic transactions as per section 92BA between two or more associated enterprises and as per the extant instructions issued in this regard.

iii. The TU may empanel valuation experts to determine the Fair Market Value of various goods, services or assets which are required under various sections of the Act eg, 9, 17, 28(via), 40A(2), 45, 49, 50CAetc.

G. Assistance in Translation, transcription etc.

The AU or VU may seek assistance of the Designated TU for the Valuation of tangible or intangible assets; the following the following format, mode, process and procedure are specified

i. The document which is required to be translated or the recording which is required to be transcript should be uploaded by the AU for the designated TU through National E Assessment Centre.

ii. The language of document or the language of recording should be clearly communicated to the TU. The language to be translated into should also be specified.

iii. The TU may have empanel manpower/ agency to translate the docu­ments or to make transcripts in translation.

iv. The assistance should be sought by the AU only after the approval of the unit head.

v. Submissions and documents received in AU/VU in vernacular language are to be ideally forwarded to the designated TU through NeAC for translation within 5 days of receipt.

H. Special Audit u/s 142(2A).

The AU or VU may seek assistance of the Designated TU for the Special Audit in case u/s 142(2A); the following format, mode, process and procedure are specified

i. The details of the case whose books of accounts are to be subjected to Special Audit should be specified by the AU for the TU through National E Assessment Centre in a prescribed format.

ii. Designated TUs to have a database of approved Auditors for Special Audit.

iii. The assistance should be sought by the AU only after the approval of the PCITT of AU or VU.

I. Reference for Other Technical Support

The AU or VU may seek assistance of the designated TU for issues beyond those mentioned above. The reference under this clause shall be made after approval of the PCIT, AU or VU. The following format, mode, process and procedure are specified

i. The AU should clearly specify the technical matter other than those listed above, on which it requires the assistance of the TU through the National E Assessment Centre.

ii. The purpose of seeking this advice and its reference to the assessment of income is to be made a part of the reference.

iii. The assistance should be sought by the AU only after the approval of the PCIT (AU)

K: Handling Re-assessment under section 148 of the Act

1. The cases u/s 148 shall be assigned to respective AUs and the notice issued u/s 148 along with reasons/supporting documents shall be made available on the ITBA. Ideally, the sharing of notices/reasons/supplementary documents and evidence with NeAC would take place within 30 days of the issue of notice.

2. Where in the assigned cases to the AU, the return of income has not been filed in response to notice under section 148 and notice under section 142(1) has been issued by the JAO, the AU shall proceed in the case for assessment as per SOP for non-compliance of notice u/s 142(1) cases given at para D above.

3. During the course of proceedings before AU, if the assessee files objections to the notice issued under section 148, the AU would dispose of the objections by passing and communicating a speaking order as per law.

4. The response of the AU to the objections shall be shared with Assesee through NeAC. Thereafter, the AU would proceed to complete assessment in accordance with law and as per the applicable paragraphs of this SOP.

L : Handling approval for withholding of refunds u/s 241A of the Act

1. The power to withhold refund till the date of assessment vests with the Jurisdictional Assessing Officer and it is to be exercised with the approval of CIT/PCIT.

2. The data relating to cases, where refunds become due to the Assessee during the pendency of the faceless assessment shall be made available by the ITBA to the NeAC, which would send it to the Assessment Units where such cases are assigned.

3. The AU shall record the reasons in writing along with specific recommendation for withholding of refund or otherwise as per provisions of section 241A for approval of PCIT(AU).

4. The PCIT (AU) shall consider the proposal and give his approval or otherwise ideally within 15 days of receipt of proposal.

5. The decision of PCIT(AU) along with the proposal shall be shared with jurisdictional Assessing Officer through ITBA, who shall take necessary action to withhold the refund under section 241A of the Act and intimate the assessee.

M : Handling of revised return cases:

1. A Return of Income may be Revised by the taxpayer either prior to the case being assigned for Faceless Assessment or during the pendency of the Faceless Assessment.

2. In all such cases the Revised Return shall be made available to the Assessment Unit on ITBA and E-Filing AO Portal for consideration during Assessment proceedings. Ideally the sharing with AU may take place within 7 days of the revision of the return.

N: Handling of unverified return cases

1. This pertains to cases assigned to AUs where Returns of Income are filed in CPC but have not been verified either through E-verification or through ITR-Vs.

2. Such instances are to be reported to the NeAC through the PCIT AUs

O: Handling of cases with CPC related defect issues

1. This pertains to cases assigned to AUs where CPC has marked the Return as ‘defective’ for processing .

2. Such instances are to be reported to the NeAC through the PCIT AUs

P: Handling of reference for attachment u/s 281B of the Act Need to make reference to Board for amendment after reading New scheme)

1. Where during the course of pendency of assessment proceedings, AU is of the opinion that for the purpose of protecting interest of the revenue, it is necessary to do so, it would submit proposal for provisional attachment under section 281B to PCIT(AU) through the workflow on Systems.

2. The PCIT(AU) would recommend or reject the proposal on the workflow in Systems and if recommended for attachment, the recommendations alongwith the proposal shall be sent to the jurisdictional Assessing Officer (JAO) through NeAC.

3. The JAO may pass an order for provisional attachment under section 281B after approval from jurisdictional PCIT.

Q. Handling of Compulsory Scrutiny cases &Handling of Legacy Set Aside cases

1. The cases assigned to the NeAC shall be allocated to the respective AUs as per random allocation norms of NeAC. The AU shall proceed with these assessments in accordance with relevant provisions of this SOP.

R. Handling of PAN marked as fraud PAN.

1. In the case where PAN has been marked as fraud by ITBA and the case is under scrutiny, the AU shall refer the matter to verification unit for physical verification of assessee as per the SOP.

2. In case of Individual assessee, AU may ask VU to verify Aadhaar mapping with PAN.

3. After taking into account the report of VU, the AU would proceed to complete assessment in the case in accordance with various provisions of this SOP.

S: Preparation and Submission of draft assessment order.

1. The AU ought to ensure that the reasons on which the case is selected for scrutiny are duly examined and that all the information available on System pertaining to the issue is examined and utilized for the purpose of preparation of draft order. All notices issued to the assessee and the information sought on points in dispute ought to be mentioned in the DAO.

2. The AU shall diligently and timely identify appropriate cases where enquiry or verification is required from VU and technical assistance is required from TU and refer the cases to VU or TU at the earliest. Ideally reference may be made 90 days prior to the limitation period, except when RU recommends further enquiry or verification.

3. The draft assessment order ideally should be submitted for RMS within reasonable time and not later than 15 days of receipt of complete and final information required for submission of draft order. It is advisable that all references to RMS are made 45 days prior to the date of limitation of passing of order.

4. The AU shall ensure that draft assessment order is speaking, reasoned and judicious and all issues have been duly dealt with.

T: Issue of Show Cause Notice

1. The AU has to issue show cause notice wherever modification is proposed in return income or sum payable. The show cause notice, except in the case of order under section 144 of the Act shall accompany draft assessment order. As a corollary, the draft assessment order is required to be speaking, fair and judicious.

2. The AU is advised to issue show cause notice along with draft order as soon as SCN flag is raised in RMS and generally not be later than 5 days.

3. The AU should ensure that reasonable time is given in the show cause notice to the assessee so as to comply with the principle of natural justice.

U: Passing of Final Assessment Order

1. The AU is to invariably preview the assessment order to be issued to ensure that the assessment order has properly framed the issue in dispute and incorporated all facts relevant to the issue.

2. The AU while finalizing the assessment order is to ensure that penalty proceedings, if any required to be initiated for imposition by Jurisdictional Assessing Officer, are discussed in the body of order as well as initiated in the system through a specific format.

3. Draft assessment order is to be monitored to ensure that assessment order is passed well in time and without any delay. Any unwarranted delay shall be brought to the notice of the PCIT (AU).

4. Before passing the Assessment Order, the AU is to ensure that the feedback is filled for each item where feed-back is sought.

5. A feedback form to be filled by the assessee accompanying the assessment order to elicit the experience of the assessee on the faceless scheme.

V: Handling Clarifications sought by VU/TU

1. Any clarification sought by VU or TU or RU should be responded to within a reasonable time generally not later than 5 days of receipt.

2. The clarification by AU should be given in clear language, be specific and to the point

W: Handling of cases received by new AU after suggestion of modification by RU

1. The scope of assessment of the cases received by the new AU is to be restricted to consideration of the review report and its ramifications on the assessment order.

2. If, during the process of finalisation of draft order that takes into account the report of the RU, the new AU finds an additional fact or a point that arises from such examination and which is not mentioned in the Report of RU then the additional fact or point can be raised in the assessment proceedings. This action shall be initiated only after obtaining approval of the Pr.CIT (AU).

3. The factum of disagreement among various units on any issue should not be made part of the assessment order. The new AU would thoroughly discuss all the issues in the assessment and pass a speaking order as per the law and the facts before the new AU.

Annexure — 1-1

SOP for handling non-responsive cases

Background

1. Faceless Assessment Scheme, 2019 envisages different units to work in coordination for completing the assessment process.

2. ReAC unit may face a situation where the taxpayer is not responding to the notices being sent by ReAC. This SOP specifies the options available, and the steps needed to be taken to handle non-responsive cases.

3. The system will highlight the cases where the assessee has not responded to the notices, so that ReAC user can send reminders in such cases. Cases where there is no response even after the expiry of the due date mentioned in the reminder will also be highlighted by the system.

Sending email communication to other emails available in internal sources

4. In the first stage, the ReAC user will identify alternate email addresses available in Depart­ment databases. The ReAC user will be shown different email addresses of the taxpayer (refer Key Information in Insight Master Profile Views) captured in the system from vari­ous sources (IT Return, E-filing Profile, SFT etc.).

5. The ReAC user should send the communication to alternate emails available in internal data sources before proceeding to the next stage.

Sending SMS communication to other mobile numbers

6. A facility will be provided to send SMS communication on various mobile numbers related to the person informing them about pending proceedings and requesting them to respond on the portal.

Marking the person as Non-responsive

7. In cases where the notices and reminders are not being responded even after sending reminders on alternate contacts available within the system, the ReAC will be able to mark the person as non-responsive. The process of marking a person as non-responsive will require the approval of Range Head.

8. When a person is marked as non-responsive, following actions will be automatically trig­gered:

a. The non-responsive status of the person will be shown in the profile views.

b. In the profile view of related persons, red flag showing marking of person as non­responsive will be shown.

c. If the case is marked as non-responsive by Assessment unit, it will trigger a refer­ence of non-responsive case to the verification unit through an automated alloca­tion system.

Handling of non- responsive case by Verification Unit

9. The Verification unit will use the information available in Insight Profile Views and i-Search to identify additional contact information for the non-responsive taxpayer.

10. The VU user may send notice u/s 133(6) to collect contact information available with the information source (e.g. reporting entity). The SOP for collection of information from re­porting entity may be referred for collecting contact details from reporting entity.

11. The VU user should send communication to alternate emails available from internal and external sources.

12. Cases where the notices and reminders are not being responded to even after sending reminders, can be referred for address verification. Please refer to SOP on handling Ad­dress verification request for more details.

13. In cases where the person could not be traced even after address verification, the person will be marked as untraceable by the verification unit conducting address verification. Please refer to SOP on handling untraceable cases for more details.

14. In case any person marked as unresponsive submits response on system, the non- re­sponsive flag will be automatically deactivated.

Supervision and monitoring

15. The Pr. CIT (Verification Units) will supervise and monitor the non-responsive cases and will perform the following key activities:

a. Supervision and monitoring of verification units

b. Granting approval for additional information access rights

c. Review of feedback and result of verification

d. Marking of verification report as quality report

e. Review of Updation to Knowledge repository

f. Updation and Management of Verification Unit Assignment Matrix

Annexure — 1-2

SOP for handling Address Verification Requests

Background

1. Faceless Assessment Scheme, 2019 envisages different units to work in coordination for completing the assessment process.

2. ReAC unit may face a situation where the taxpayer is not responding to the notices being sent by ReAC. This SOP specifies the steps needed to be taken to handle Address Verifica­tion requests.

Preparation of reference for address verification

3. Cases where the notices and reminders are not being responded to even after sending reminders, can be referred for address verification. The reference of case for address ver­ification will require the approval of Range head, VU. The following conditions needs to be confirmed by the verification unit before marking the person is referred by the ReAC:

a. The person has already been marked as non-responsive. Please refer SOP of han­dling non-responsive cases for more details.

b. Notices and reminders are not being responded after sending communication at various email available in systems and information sources.

4. In addition to non-responsive case, address verification request can also be initiated in appropriate cases with the approval of Pr. CIT, ReAC. The Pr. CIT, ReAC should be staosfied that address verification is required in the case.

Allocation of reference for address verification

5. The reference for address verification will be allocated to the designated verification unit through an automated allocation system. The allocation will take into consideration the geographical location of the address to be verified (based on pincode mapping dictionary) and workload of the verification units.

Handling of address verification by Verification Unit

6. The request for address verification will be available to the designated verification unit as ‘Address Verification Requisition form’ containing details of address and person which is required to be verified.

7. During address verification following information is expected to be collected in a discrete manner:

  • Whether the address was found/not found/incomplete
  • Whether the specific person is currently staying at the address or shifted from the address.
  • In case the person has shifted and the new address is available, the new address of the person is required to be collected.
  • In case the details of person is not ascertainable, the details of person residing at the address may be collected.

8. In cases where the person could not be traced even after address verification, the person will be marked as untraceable by the verification unit conducting address verification. The marking of person as untraceable will require the approval of Pr. CIT, ReAC (VU). The following conditions needs to be confirmed by the verification unit before marking the person as untraceable:

a. Notices and reminders are not being responded after sending communication at various email available in systems and information sources.

b. The person was not found at the communication address or the address was found to be incorrect/incomplete.

c. The whereabouts of the person could not be ascertained during address verifica­tion.

9. Please refer to SOP on handling untraceable cases for more details.

Supervision and monitoring

10. The Pr. CIT (Verification Units) will supervise and monitor the reference for address veri­fication and will perform the following key activities:

a. Supervision and monitoring of verification units

b. Granting approval for additional information access rights

c. Review of feedback and result of verification

d. Marking of verification report as quality report

e. Review of Updation to Knowledge repository

f. Updation and Management of Verification Unit Assignment Matrix

Annexure — 1-3

SOP for handling untraceable cases

Background

1. Faceless Assessment Scheme, 2019 envisages different units to work in coordination for completing the assessment process.

2. ReAC unit may face a situation where the taxpayer is not traceable. This SOP specifies the options available, and the steps needed to be taken to handle untraceable taxpayer.

Marking the person as untraceable

3. In cases where the person could not be traced even after address verification, the person will be marked as untraceable by the verification unit conducting address verification.

4. The marking of person as untraceable will require the approval of Pr. CIT, ReAC (VU). The following conditions needs to be confirmed by the verification unit before marking the person as untraceable:

a. Notices and reminders are not being responded after sending communication at various email available in systems and information sources.

b. The person has already been marked as non-responsive. Please refer SOP of han­dling non-responsive cases for more details.

c. The whereabouts of the person could not be ascertained during address verifica­tion or the address was found to be incorrect/incomplete. Please refer SOP of ad­dress verification for more details.

5. When a person is marked as untraceable, following actions will be automatically triggered:

a. The untraceable status of the person will be shown in the profile views.

b. In the profile view of related persons, red flag showing marking of person as un­traceable will be shown.

c. The case will automatically revert to the requesting verification unit for handling of untraceable person.

d. A reference of untraceable case will be sent to the designated verification unit through an automated allocation system

Handling of untraceable case

6. Once marked untraceable, the designated verification unit will use various measures to trace the person including the following:

a. The verification unit will review the details of related persons in the Profile Views and send notice u/s 133(6) to collect contact information available with related person. The SOP for collection of information from related person may be referred for collecting contact details.

b. The verification unit may also contact other authorities outside the department (such as CIBIL or regulators, according the specifics of the case), which are likely to have the contact details of the person in question.

7. The designated verification unit will prepare a verification report on untraceable case con­sisting of following information:

a. Details of enquiries conducted to contact and trace the person.

b. Details of related persons identified

c. Details of other information (assets etc. ) identified

d. Proposed action

8. The verification report shall be approved by the range head before it is shared with the unit which had made the reference. The verification report will also be accessible to units which has issued any notice to the untraceable person.

9. In case any person marked as untraceable submits response on system, the non- traceable flag will be automatically deactivated and a new verification case will be generated and marked to designated verification unit by case allocation system to capture the complete details of the person and send necessary communications to related units.

Supervision and monitoring

10. The Pr. CIT (Verification Units) will supervise and monitor the online verification reference and will perform the following key activities:

a. Supervision and monitoring of verification units

b. Granting approval for additional information access rights

c. Review of feedback and result of verification

d. Marking of verification report as quality report

e. Review of Updation to Knowledge repository

f. Updation and Management of Verification Unit Assignment Matrix

Format for proposal for physical verification

Brief description of enquiry/verifi-cation proposed to be assigned to designated VU by AU
Verification proposed to be done in physical enquiry
Justification for physical enquiry

For Departmental Use Only
F. No. Pr. CCIT/NeAC/SOP-VU/2020-21

Government of India
Ministry of Finance
Central Board of Direct Taxes
National e-Assessment Centre
New Delhi

Dated: 19/11/2020

Subject: SOP for functioning of Verification Unit under the Faceless Assessment Scheme, 2019.

The Principal Chief Commissioner of Income Tax, National e-assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP on the above subject:

1. As per Faceless Assessment Scheme, 2019, the AU can request VU for specific enquiry or verification, examination of books of accounts, examination of witnesses and recording of statements and such other functions as may be required for the purposes of verification. All general enquiries from assessee or from INSIGHT/E-Filing or from Banks etc shall be done by the AU itself. The AU shall make reference for enquiry in the prescribed format as per Annexure.

2. On receipt of request for enquiry or verification, the VU shall examine the reference in context of facts of the case. The VU can view all the case records through status monitor and devise a strategy for completion of the enquiry/verification.

3. The AUs have been provided access to case information as well as profile view of cases assigned to them. They can also get access to profile view of other persons related to the case after getting approval of the supervisory authority. However, VU has more access rights in INSIGHT and therefore VU should check whether the enquiry/verification can be done through INSIGHT (Refer INSIGHT Information Access policy for more details on Information access rights).

A: Handling of case(s), having digital footprint, received for Verification or Enquiry.

1 If the PAN, in respect of whom enquiry or verification is received, is registered on e-filing portal then that PAN would be regarded to be having a digital footprint.

2 Information shall be called from the party by sending notice u/s 133(6) of the Act, with­in 5 days of receipt of request, giving the party a time of 7 days to respond.

3 Such notice shall be generated through the digital footprint tab, for generation of notice provided, by ITBA. The AU will fill the PAN, compliance date and information to be called for. The rest of information shall be auto-populated by ITBA.

4 The notice shall be delivered on e-filing portal of the third party and intimation in re­spect of the same shall be sent on the latest email and mobile number of the party.

5 On receipt of reply, the VU shall examine the reply in light of information required in the case and may call for further information or may decide for physical verification or may compile its report.

6 In case the AU later gets the information from the taxpayer for which verification was sought, there should be facility to withdraw the reference. The VU would send the re­port on the basis of verification made so far.

B : Handling of case(s), not having digital footprint, received for Verification or Enquiry.

1 If the PAN, in respect of whom enquiry or verification is received, is not registered on e-filing portal then that PAN would be regarded to be not having a digital footprint, irre­spective of whether email of such person is available with VU or not. Such parties also include the parties which have many decentralized offices but one PAN like Sub Regis­trars, Banks, SEBI, CIBIL, ROC, Customs & Excise, other state or central government of­fices, etc. The same procedure shall be used to call for the information from persons like Valuation Officers who are directly not connected with/involved in the case.

2 Information shall be called from the party by sending notice u/s 133(6) of the Act physi­cally through centralized mailing system (handled by INSIGHT) of Faceless Assessment Scheme as well as to the email of the party, within 5 days of receipt of request, ideally giving the party a time of 15 days to respond.

3 Such notice shall be generated through the non-digital footprint tab, for generation of notice provided, by ITBA. In this case the VU shall have to fill the PAN (if available), cur­rent address of the party, compliance date and information required.

4 The party not having digital footprint shall reply through the procedure elaborated in the notice, through the efiling portal, by giving reference of the notice and after valida­tion of uploading party by efiling. (Till such functionality is developed by the efiling, an alternate procedure may be adopted to handle such cases with non-digital footprint, the SOP for which shall be issued separately)

7 On receipt of reply the VU shall examine the reply in light of information required in the case and may call for further information or may decide for physical verification or may compile its report.

C: Handling of case(s), where request is received for physical verification or VU decides for physical verification.

1. In some select cases, the AU can request for physical verification or in some other cases the VU itself may consider it necessary that the matter needs physical onsite verifica­tion.

2. The VU shall make request for physical verification to the designated VU after recording reasons in writing and obtaining the approval of Pr.CIT in the following circumstances:

a. It is a high risk potential case

b. The impugned PAN is a potential fraud PAN

c. AU suspects a large tax evasion in the case

Whereas, in any other circumstances, the approval of CCIT (ReAC) shall be obtained. The request for obtaining approval for physical verification shall be in prescribed format.

3. After approval, the physical verification request shall be sent to designated VU. Desig­nated verification units have been mapped to the pin-code to enable optimised handling of physical verification references.

4. The case/issue should be referred to designated VU ideally within 7 days of receipt of reference from AU.

D: Handling of case(s), received by designated VU for physical verification.

1 On receipt of request for physical enquiry/verification, the designated VU shall de­cide the strategy to be adopted for verification and the Inspectors (atleast two) to be deputed for the purpose. Ideally this strategy shall have to be approved by PCIT(VU) within 5 days of receipt of request.

2 After approval the Inspectors shall be assigned the enquiry/verification to be con­ducted and they should submit their report within 3 days which shall contain the photographs of the object/place of enquiry/verification. The report shall include all facts observed by the Inspectors alongwith issues the faced, if any.

3 The designated VU shall forward the report alongwith the photographs and its com­ments to the referring VU/AU ideally within 10 working days.

E: Procedure for seeking clarification from AU

1. In case of any ambiguity, the VU may seek clarification from the AU. However, it should try to seek all clarifications through a single communication so as to avoid any delay in verification/enquiry process. It may provide the AU time of 3-4 days to respond.

2. Unnecessary clarification on facts/information which are available on record should not be called from the AU

F. Handling of case(s), which are not responding to notices u/s 133(6) of the Act and levy of penalty u/s 272A of the Act.

1. Where the party does not respond to first notice u/s 133(6) by compliance date, then a second reminder notice should be issued through portal or email/phone number/address previously used and alternate emails, phone numbers & addresses as well by searching on INSIGHT.

2. If the second reminder notice also remains uncomplied then:

i) Issue of centralized reminder from NeAC (An anonymized physical notice to the party through the INSIGHT on reference from NeAC).

ii) SMS reminders should be issued firstly within 7 days of the issue of the notice; Secondly, on the day prior to the date of compliance of notice and thirdly on the date of compliance mentioned in the notice.

iii) Where the notice issued in point (i) has not been responded by the compliance date then the party can be issued show cause notice for levy of penalty for non­compliance.

3. A request for physical verification can be made by the VU to the designated VU as per Para C(2) of this SOP.

4. Where the party does not respond even after physical notice and/or physical verification then show cause notice for levy of penalty for non-compliance u/s 272A(1) shall be issued to the party. Such notice ideally would give a time of 15 days for response. A penalty shall be levied on non-compliance of such notice or on facts and circumstances of the case if there is compliance to the showcause notice.

G. Handling of case(s), received for examination of books of account.

The SOP for this shall be shared after finalization of the process.

H. Handling of case(s), for examination or cross examination of witnesses.

The SOP shall be shared separately when the VC procedure is in place.

I: Preparation of Verification Report.

1. The VU shall prepare a verification report after the enquiries/verifications have been completed.

2. The verification report shall invariably contain :

a. Reason(s) for verification

b. Facts gathered during verification/enquiry

c. Whether any statement recorded during verification

d. Report on the matter with clear conclusion

e. All documents/photographs/evidence collected during verification/enquiry should be included as attachment

f. Any issues faced in verification/enquiry should also form part of the report.

3. The VU should ideally send the verification report within 20 working days of receipt of request for verification/enquiry.

Every reference shall be accompanied by following checklist and structured questionnaire for third party, if any. Till checklist is incorporated in the System, it can be sent as an at­tachment to the VU

CHECKLIST FOR MAKING REFERENCE FROM AU TO VU

Reference no. System generated

S. No Description Particulars
1 PAN AUTO-POPULATED
2 ASST. YEAR AUTO-POPULATED
3 Head of income DROPBOX ARRANGEMENT — 5 BOXES
4 Section (if specifiable)
5 Reason for reference
6 Type of scrutiny LIMITED/COMPLETE(AUTO-OPULATED)
7 Factors for Verification

(a) Genuineness of claim of agri. income

(b) Genuineness of claim of unsecured loans

(c) Allowability of deduction u/s

(d) Determination of ALV

(e) Genuineness of expenses claimed

(f) Export-import data

(g) Others

DROPBOX ARRANGEMENT WITH OPTION TO FEED “OTHERS” BOX.

For (c) also a box to feed the relevant Section.

In (e) there can be two code numbers.

1 to indicate sales promotion; and

2 to indicate commission

8 Assessee’s claim (in brief)
9 Location of assessee’s claim :

(a) Page/Schedule of ITR

(b) Letter dated/uploaded

(c) Annexure No.

10 Documents, if any, relied upon by assessee:

(a) Description of document

(b) Date on which uploaded

(c) Annexure No.

11 A.O.’s perception, if any, of the claim
12 Documents, if any, relied upon by AO:

(a) Description of document

(b) Reference for access

13 Method/s of verification suggested by AO:

(a) Field enquiry u/s 131(1)(d)

(b) Collecting of info. u/s 133(6)

(c) Collection/Examination of documents u/s 131

(d) Recording of statement u/s 131

(e) Others (Google earth, etc)

DROPBOX ARRANGEMENT WITH 5 BOXES WITH OPTION TO FEED 5Th BOX “OTHERS”.
14 Due date by which report is expected TO PICK FROM CALENDAR
15 AO’s detailed note, if any, attached YES (OR) NO

Format for proposal for physical verification

Brief description of enquiry/ verification proposed to be assigned to designated VU by VU
Verification proposed to be done in physical enquiry
Justification for physical enquiry

For Departmental Use Only
F. No. Pr. CCIT/NeAC/SOP/2020-21

Government of India
Ministry of Finance
Central Board of Direct Taxes
National e-Assessment Centre
New Delhi

Dated:19/11/2020

Subject: SOP for functioning of Technical Unit (TU) under the Faceless Assessment Scheme, 2019.

The Principal Chief Commissioner of Income Tax, National e-Assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP on the above subject:

As per Faceless Assessment Scheme, 2019, the AU can seek advice/assistance of TU on any legal, accounting, forensic, information technology, valuation, audit, transfer pricing, data analytics, management or any other technical matter. The AU shall make reference for advice in the prescribed templates for each of the specific heads. In case the VU requires any advice or assistance on any such heads, the request shall be routed through the AU.

A: Handling of case received for Technical Assistance on legal matters.

1 On receipt of request for technical advice on legal matters, the TU shall examine the proposal which shall have brief background of the issue in dispute, specific question(s) on which advice is sought, and brief contentions of the assessee. The TU can view the all the case records through status monitor and tender its advice considering all the facts and legal issues involved. Template of reference by AU to TU is attached as An-nexu re-A.

2 In case the TU needs any clarification on the reference received, it should seek clarifica­tion from the AU within 5 days of receipt of reference. The format for seeking the clari­fication from AU is attached as Annexure-B.

3 The TU shall employ and take assistance of all the resources available like NJRS, Knowledge Management Portal, private software and other available resources. The AOs of the TU are expected to regularly monitor the legal developments and keep themselves updated on major prevalent legal disputes.

4  Opinion of legal experts outside the department can also be sought in appropriate cases with the approval of Pr.CIT (TU).

5 The High Court or ITAT having jurisdiction over the location of the assessee shall be tak­en as Jurisdictional High Court, ITAT in respect of legal precedents.

6 The AO of the TU is expected to advise on legal points taking into account facts of the case referred. There are several instances where the facts of cases referred by the asessee differ substantially from the facts of the present case. In some cases, even the decision referred by assessee is found to be supportive of revenue if facts of the case are minutely analysed.

7 The report of the TU should be concise, speaking and self-contained. The questions posed by the AU should be replied to specifically and supporting legal deci-sions/material may also be made available to the AU.

8 It must be ensured that consistency is maintained in respect of a particular issue while rendering legal advice.

9 Technical Advice should generally be disposed of on First-In First-Out basis.

10 The advice may be sent to the AU ideally within 15 days of its receipt and the time may be curtailed close to the time barring date of assessment.

11 Comprehensive Legal Knowledge Repository

a. A comprehensive Legal Knowledge Repository (developed on Insight Knowledge Hub) will be used for knowledge management and capacity building of the technical units. The Legal Knowledge Repository will consist of following components:

i. Legal Issue Dictionary (i-wiki and i-forum)

ii. Legal Issue Checklist (i-wiki and i-forum)

iii. Published Legal Opinion Reports (i-Library)

iv. Published articles on legal issues (i-Library)

v. Legal Discussion Forums (i-Forum)

vi. Legal Queries (i-Query)

b. The technical units are expected to provide inputs to the legal knowledge repository on a regular basis. All legal opinion reports should be appropriately tagged in the legal knowledge repository. Tagging of report on similar legal issues will help in adopting uni­formity of approach on similar legal issues.

c. Since the Legal Issue dictionary and Legal Issue checklist will be referenced by the units while framing the reference, regular updation of these documents is very important. While preparing the legal opinion report, if the technical unit finds a new legal issue or requirement, suggestions on updation of legal issue dictionary and Legal Issue checklist should be submitted on the forum hosted for this purpose.

B : Handling of references received in Technical Unit for assistance in TP Matters.

Section 92CA mandates that in case of assessee having international transaction with asso­ciate enterprise or specified domestic transaction, the AO may in appropriate cases make reference to the TPO to determine arm’s length price of such transactions. Total income of the assessee shall be computed having regard to and in conformity of arm’s length price so determined by the TPO.

As per FAS, the TU has to advice/assist the AU in transfer pricing related matters. As such the AU shall have to approach the TU for obtaining the order of the TPO.

The role of TU in such matter would not only be to assist in obtaining the order of the TPO u/s 92CA(3), but to coordinate with TPOs to evolve the best practices for smooth flow of work and maintain a qualitative data base of decisions of the TPO so that the data can be used for quality enhancement.

1. On receipt of request for reference to TPO, the TU shall examine whether the request is accompanied by the 3CEB filed by the assessee and the approval of PCIT (AU) as per the prescribed template attached as Annexure-A

2. If the reference is on account of international transaction(s) with Associated Enterprise or specified domestic transaction not disclosed by assessee in the 3CEB and noticed during the proceedings then the request should include the report from AU and the documentary evidence of such transactions identified by the AO.

3. In case the TU needs any clarification on the reference received, it should seek clarifi­cation from the AU within 5 days of receipt of reference.

4. The TU shall forward the reference to the designated TPO within 7 days of receipt of request from AU.

5. TU and TPO may also obtain TP reports and CbCR data from Insight for the purpose of determination of Arm’s Length Price.

6. The order u/s 92CA(3) of the Act received from the designated TPO by the TU shall be forwarded to the concerned AU within 3 days of receipt of the same.

7. The TU may maintain a database of the orders received from TPO in the format to be designed by the Pr.CIT(TU) with the approval of Pr.CCIT (NeAC). The format may include Industry Segment, details of nature of referred transaction, variation proposed or not , method for determination of arm ‘length price used by the assessee, method of determination of arm’s length price used by TPO, whether consistency in similar transaction maintained by the same TPO or TPOs of different stations.

C: Handling of references received in Technical Unit for assistance in audit u/s142(2A) of the Act.

As per section 142(2A), the AO may with the previous approval of the CIT/PCIT/CCIT/PCCCIT direct the assesse to get its account audited by an Accountant nomi­nated by CIT/PCIT/CCIT/PCCIT if in his opinion, it is necessary having regard to nature and complexity of the accounts, volume of the accounts, doubts about correctness of the ac­counts, multiplicity of transaction in the accounts or specialised nature of business activity of the assesse and the interest of revenue.

Under the FAS, the TU is mandated to provide assistance/advice to the AU in getting the accounts audited u/s142(2A) of the Act. The SOP for providing such advice is given below:-

1 On receipt of request to get the accounts audited by an Accountant, the TU shall ex­amine whether the request is accompanied by the copy of approval of PCIT(AU), terms of reference for Audit u/s 142(2A) and proposal of the AO seeking the approv­al of Pr.CIT(AU). Prescribed template is enclosed as Annexure- A

2 Nomination of the Auditor shall be done centrally by Pr.CCIT(NeAC). Proposal for nomination of an auditor for a case shall be submitted by Pr.CIT(TU) in consultation with Pr.CIT(AU).

3 In case the TU needs any clarification on the reference received, it should seek clari­fication from the AU within 5 days of receipt of reference.

4 The TU shall forward the reference to the nominatedAuditor within 7 days of receipt of request from AU.

5 Any legal matter like writ petition arising from such reference for Audit shall be han­dled by the allocated TU under the guidance of Pr.CIT(TU). It will defend the legal matter in the concerned courts by coordinating with concerned counsel and inputs of the AU which shall be pre-approved by Pr.CIT(AU).

6 Matters relating to section 142(2D) of the Act shall be handled by the PCIT(TU) in consultation with PCIT(AU).

7 The report of the Auditor u/s 142(2A) received by the TU shall be forwarded to the concerned AU within 3 days of receipt of the same.

8 The PCIT(TU) shall maintain a list of approved special auditors country wise and col­lect and record feedback on performance of such auditor for the purpose of alloca­tion of audit.

D: Handling of references received in Technical Unit for assistance in Valuation of asset, property or investment etc.

Income tax Act provides for reference for valuation under various provisions of the Act, some of those that are relevant to assessment proceeding are:-

Section 50C: AO may refer valuation of capital asset to a DVO, if assessee claims that FMV is less than Stamp Duty Valuation and such valuation is not disputed before the stamp au­thorities.

Section 55A: To ascertain FMV of capital asset, AO may refer valuation to DVO if AO is of opinion that it is necessary having regard to nature of asset and other relevant circum­stances.

Section 56(2)(x): AO may refer valuation of immovable property received by taxpayer to DVO, if Stamp duty valuation > actual consideration by INR 50,000 or 5% of the considera­tion and such SDV is not disputed before the stamp authorities.

Section 142(2A): For purpose of assessment/ re-assessment, AO may make reference to DVO to estimate value (including FMV), of any asset, property or investment whether or not he is satisfied about correctness or completeness of accounts of assesse.

1 On receipt of request to get the valuation of any asset, property and investment, the TU shall examine whether the request is accompanied by the prescribed format duly filled along with complete description of the property, location thereof and details of section under which valuation is requested. Template is enclosed as Annexure- A

2 In case the TU needs any clarification on the reference received, it should seek clari­fication from the AU within 5 days of receipt of reference.

3 The TU shall forward the reference to the designated Valuation Officer/ Valuer with­in 7 days of receipt of request from AU.

4 Any clarification sought by the DVO shall be immediately forwarded for clarification of AU, if required.

5 During the course of the proceedings, any technical objection is raised by the as-sessee on the report of the DVO, the TU shall forward such request to DVO for rebuttal/clarification within 3 days on receipt of such request from AU. The TU shall follow up with DVO periodically so that the report is received in reasonable time and there­by allowing the AU to confront the assessee with adverse report.

6 Matters relating to payment to Valuers shall be handled by PCIT(TU).

7 The report of the Valuation Officer/Valuer received by the TUs shall be forwarded to the concerned AU within 3 days of receipt of the same.

8 Database of DVO shall be maintained in the office of PCIT(TU) and the same shall be updated from time to time.

E: Handling of case received for assistance in respect of information to be called from Foreign Jurisdictions.

Section 90(1) (c) of the Act and applicable DTAA/TIEA with foreign jurisdictions provide for exchange of information for investigation or detecting evasion or avoidance of tax. The AU and VU may seek information from foreign jurisdiction during the course of assessment proceedings in suitable cases, through the competent Authority, i.e Joint Secretary, F&TR, CBDT in the format prescribed by the Board.

As per FAS, the TU shall assist the AU in requisition and collection of information from FT&TR. Request of VU shall be routed through the AU and the AU shall seek the assistance from TU.

1 On receipt of the request to seek information from any foreign Jurisdiction, the TU shall examine whether the request is accompanied by the prescribed format duly filled and signed by PCIT (AU). Whether the request for information is from a foreign jurisdiction, with whom India has a DTAA or TIEA. The format of making reference to TU is enclosed as Annexure- A

2 The TU shall forward the reference to the concerned JS, FT&TR within 7 days of re­ceipt of request from AU in the prescribed format.

3 In case the TU needs any clarification on the reference received, it should seek clari­fication from the AU within 5 days of receipt of reference.

4 Any request for clarification from foreign jurisdiction shall be forwarded to the TU by NeAC. TU shall submit the clarification within 7 days. In case, TU requires infor­mation from AU/VU, in order to submit the clarification, then information in such cases shall be submitted within 3 days of receipt thereof from AU/VU.

5 The information from FT&TR through NeAC shall be forwarded to the TU, which shall in turn be forwarded to the concerned AU within 3 days of receipt of the same.

F: Handling of case received for assistance in analysis of accounts.

The SOP shall be shared when procedure for analysis of accounts is in place.

G. Handling of case received for assistance in accounts, forensics, Information & technology, data analytics, management or any other technical matter.

The SOP shall be shared when procedure for processes is in place.

H. Technical Knowledge Repository

1. A comprehensive Technical Knowledge Repository (developed on Insight Knowledge Hub) will be used for knowledge management and capacity building of the technical units. The Technical Knowledge Repository will consist of following components:

i. Technical Issue Dictionary (i-wiki and i-forum)

ii. Technical Issue Checklist (i-wiki and i-forum)

iii. Published Technical Reports (i-Library)

iv. Published articles on Technical issues (i-Library)

v. Technical Discussion Forums (i-Forum)

vi. Technical Queries (i-Query)

2. The technical units are expected to provide inputs to the Technical Knowledge Re­pository on a regular basis. Important technical reports should be appropriately tagged in the knowledge repository.

3. The technical units are expected to provide suggestions on updation of Technical Is­sue dictionary and Technical Issue checklist on the forum hosted for this purpose

Each reference from the TU shall be uniquely identifiable and it shall be rec­orded in ITBA for extension of time limit for completion of assessment, wherever applicable.

Annexure A

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
National e-Assessment Centre
Delhi

NeAC LOGO

To,

The Technical Unit

 

Name of the as-
PAN: sessee : Assessment Date:
XXXXXXXXXX XXXXX XXXXX XXXX Year:
XXXX-XX
XX/XX/XXXX

Sub : Reference for assistance/advice on legal issue

Madam/Sir,

Kindly refer to the above subject. Your assistance/advice is be­ing sought on legal issue(s) as detailed hereunder:

<Tables can be added as per number of issues>

2. Issue <n> :

1 Section(s) (if specifiable)
2 Brief description of issue being referred <Free text>
3 Contention of assessee (Reply of assessee on the issue may be attached) <Free text & attachment options>
4 Points on which legal advice is sought (Questions may be framed) <Free text>
5 Remarks (Any other information) <Free text>

3. The advice in the matter may kindly be tendered by <Date> Yours faithfully,

Additional/Joint/Deputy/Assistant Commissioner of Income-tax National e-Assessment Centre, Delhi

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
National e-Assessment Centre
Delhi

NeAC LOGO

To,

The Technical Unit

Name of the as-
PAN:

XXXXXXXXXX

sessee :

XXXXX XXXXX XXXX

Assessment
Year:
XXXX-XX
Date:

XX/XX/XXXX

Sub : Reference for assistance/advice on Transfer Pricing adjustment

Madam/Sir,

Kindly refer to the above subject. Your assistance/advice is be­ing sought on determination of arms length price of the transac-tion(s) as per Sec 92CA of the Act.

2. Description:

1 Copy of TP Report (Form 3CEB) (To be attached)
2 Whether any transaction with Associate Enterprise found not disclosed, if yes description thereof alongwith supporting documents (Description alongwith attachment of supporting documents)
3 Date of approval of PCIT AU <To be automatically filled by ITBA workflow>
4 Remarks (Any other information) <Free Text>

<The limitation date in the case may automatically be extended when the reference is forwarded from TU to TPO>

Yours faithfully,

Additional/Joint/Deputy/Assistant Commissioner of Income-tax National e-Assessment Centre, Delhi

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
National e-Assessment Centre
Delhi

NeAC LOGO

To,

The Technical Unit

Name of the as-
PAN: sessee : Assessment Date:
XXXXXXXXXX XXXXX XXXXX XXXX Year:
XXXX-XX
XX/XX/XXXX

Sub : Reference for assistance for Audit u/s 142(2A) of the Act

Madam/Sir,

Kindly refer to the above subject. Your assistance is being sought for audit u/s 142(2A) of the Act in the above case.

2. Description:

1 Copy of proposal of AU submitted to PCIT AU for obtaining previous approval (To be attached)
2 Date of approval of PCIT AU alongwith copy of approval <Date> , (Documents to be attached)
3 Terms of reference for Audit u/s 142(2A) <Free Text>
4 Remarks (Any other information) <Free Text>

<The limitation date in the case may automatically be extended from the date when TU directs the assessee to get accounts au­dited under section 142(2A) >

Yours faithfully,

Additional/Joint/Deputy/Assistant Commissioner of Income-tax National e-Assessment Centre, Delhi

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
National e-Assessment Centre
Delhi

NeAC LOGO

To,

The Technical Unit

Name of the as-
PAN:

XXXXXXXXXX

sessee : XXXXX XXXXX XXXX Assessment
Year:
XXXX-XX
Date:

XX/XX/XXXX

Sub : Reference for assistance for valuation

Madam/Sir,

Kindly refer to the above subject. Your assistance is being sought for valuation as detailed hereunder:

<Tables can be added as per number of references>

therein :-

2. Valuation reference<n> :

1 Section under which valuation is sought
2 Details of the property/investment/asset along share of assesse therein, with sup­porting documents. <Free text & attachment options>
3 Location of the property State- District- Mohalla-Pin code
4 Value declared by assessee Copy of valua- tion report submitted by the assessee to be attached, if any. <Free text & attachment options>
5 Brief reason of requirement of valuation. <Free Text>
6 Any other remarks <Free Text>

2. Complete Address and e-mail of the Assessee :-

3. The report in the matter may kindly be forwarded by <Date> Yours faithfully,

Additional/Joint/Deputy/Assistant Commissioner of Income-tax National e-Assessment Centre, Delhi

Annexure – B

Format for seeking clarification from AU

1. Clarification in respect of question number-XXX

2. Description of clarification Sought –

_________________________________________

_________________________________________

_________________________________________

3. Brief reasons for seeking clarification –

­­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________________________________

_________________________________________

_________________________________________

4. Whether clarification is on facts or on application of any particular case law-

_________________________________________

_________________________________________

5. Any other remark –

________________________________________

________________________________________

________________________________________

For Departmental Use Only
F. No. Pr. CCIT/NeAC/SOP/2020-21

Government of India
Ministry of Finance
Central Board of Direct Taxes
National e-Assessment Centre
New Delhi

Dated:19/11/2020

Subject: SOP for functioning of Review Unit (RU) under the Faceless Assessment Scheme, 2019.

The Principal Chief Commissioner of Income Tax, National e-assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP on the above subject:

A: Handling of case received for Review

1 On allocation of case to RU, the RU is mandated to examine and verify if proper en-quiry/verification has been done with respect to the issues/scenarios on the basis of which the case has been selected for limited/full scrutiny.

2 The RU shall examine the case records to ascertain: –

a. Whether the relevant and material evidence to support the modification of income proposed by AU has been brought on record;

b. Whether the issues on which addition or disallowance ought to have been made have been duly verified;

c. Whether the relevant points of fact and law have been incorporated in the draft order;

d. Whether the submissions and arguments of the assessee have been duly con­sidered and rebutted

e. Whether the judicial decisions brought on record have been considered and applied in the draft order.

3 The RU is also mandated to verify and check the arithmetical correctness of modifications proposed.

4 In complete scrutiny cases, the RU must verify that all relevant issues that arise from the record have been examined. And all additions to income or disallowances warranted by the facts on record have been made in the draft assessment order.

5 The RU shall also examine and comment whether the order contains any frivolous and high pitched disallowances or additions to income.

6 If the facts on record so warrant then the RU may give suggestion for improvement of the contents of the order so that the draft assessment order is complete and self-explan­atory.

7 Review report should generally be disposed off on First-In First-Out basis.

8 The Review report may be ideally sent to the AU within 15 days of its receipt. The time may be restricted, if the time barring date so demands.

B : Procedure for seeking clarification from AU

1. In case of any ambiguity the RU may seek clarification from the AU. However, it should try to seek all clarifications through a single communication so as to avoid any delay in review process. It may provide the AU time of 3-4 days to respond.

2. Unnecessary clarification on facts/information which are available on record should not be called from the AU.

C: Preparation of Review Report

1. Review Report should be concise, specific to the point, speaking and self-contained.

2. Vague and impractical suggestions, which are difficult to implement by the AU/VU should not be made in the report.

3. It may be kept in mind that the case shall be transferred to a new AU if any suggestion for modification is made in the report. Hence frivolous suggestions which do not have much effect on quality of case should be avoided.

4. Any suggestion for modification by RU having potential impact of Rs.1 Crore or more on taxable income of the assessee vis a vis income determined by AU in draft assessment order should be issued only after obtaining prior approval of the Pr.CIT(RU).

For Departmental Use Only
F. No. Pr. CCIT/NeAC/SOP/2020-21

Government of India
Ministry of Finance
Central Board of Direct Taxes
National e-Assessment Centre
New Delhi

Dated:23/11/2020

Subject: SOP for Personal hearing through Video Conference under the Faceless Assessment Scheme, 2019.

The Principal Chief Commissioner of Income Tax, National e-assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following circumstances in which personal hearing through Video Conference shall be allowed in the Faceless Assessment Scheme, 2019:

Where any modification is proposed in the draft assessment order (DAO) issued by any AU and the Assessee or the authorised representative in his/her written response disputes the facts underlying the proposed modification and makes a request for a personal hearing, the CCIT ReAC may allow personal hearing through Video Conference, after considering the facts & circumstances of the case, as below:-

1. The Assessee has submitted written submission in response to the DAO.

2. The Video Conference will ordinarily be of 30 minutes duration. It may be extended on the request of the Assessee or authorised representative.

3. The Assessee may furnish documents/ evidence, to substantiate points raised in the Video Conference during the session or within a reasonable time allowed by the AU, after considering the facts and circumstances of the case.

Download SOPs for Faceless Income Tax Assessment Scheme, 2019

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