The announcement by the Government of India on 13th August 2020, on the Transparent Taxation – Honouring the Honest [T2-H2] is an extension of E-assessment scheme 2019 launched by Government of India in September 2019. The objective of the platform is to achieve Faceless Assessment, Faceless Appeal and implement Taxpayer’s Charter. Whereas, Faceless Assessment and Taxpayer’s Charter is implemented with immediate effect, the Faceless Appeal will be effective from 25th September 2020.
Government has acknowledged that the country can move forward and can develop when the life of honest taxpayer is made easy. This scheme is in the direction of making assessee s’ life easy. Launching of Taxpayers charter is to ensure fair, courteous, and rational behaviour to the honest taxpayers.
An order U/s 119, issuing direction as to who can be considered as Income tax Authority for the purpose of conducting Survey u/s 133A of the Income Tax Act has also been issued. This is discussed in detail later in this article.
What is E-assessment and Faceless Assessment, steps involved in faceless assessment, exceptions to this faceless assessment, mode of communications between assessee and the department and internally within the department are all dealt with in this article.
B. E-Assessment v/s Faceless Assessment
The word E-assessment is substituted with the word faceless assessment in the law. In E-assessment the assessee will be aware of the assessing officer who will be carrying out the assessment proceedings. In Faceless Assessment, the assessee will not be aware of assessing officer who will be doing his tax assessment. The e-assessment was more of one assessing officer carrying out the assessment whereas in faceless assessment there will be a team (NeAC, ReAC, VU,TU, explained later in this article) of assessing officers who will be carrying out the assessment.
Assessment under section 144 (i.e. best judgement assessment) is also covered under faceless assessment.
C. Procedure of Faceless Assessment
1. National e-Assessment Centre (NeAC) will serve a notice on the assessee u/s 143(2) specifying the issues for selection of the case for Assessment.
2. The assessee may, within 15 days from the date of receipt of notice file the response to NeAC.
3. Where the return of income is filed u/s 139 or u/s 142(1) or u/s 148 and notice is issued u/s 143(2) OR where the return of Income is not furnished in response to the notice u/s 142(1) OR has not furnished the return of income u/s 148(1) and notice u/s 142(1) has been issued by the assessing officer, the NeAC will intimate the assessee that assessment in the case will be completed under this scheme.
4. The NeAC will assign the case selected to specific assessment unit in any one Regional e-assessment Centre (ReAC) through an automated allocation system. [ReAC is an assessment unit. There will be multiple regional assessment units set up and case may be transferred to any ReAC)
5. The ReAC can request the NeAC for
a) Obtaining such further information, documents or evidence from the assessee or any other person as it may specify.
b) Conducting of certain enquiry or verification by Verification Unit (VU)
c) Seeking Technical assistance from Technical Unit (TU)
6. Based on the specific request from ReAC, the NeAC will issue the appropriate notice or requisition to the assessee or any other persons for obtaining information or documents sought by the ReAC
7. The assessee or any other authorised person may file the response to NeAC within such time as may be extended on an application to NeAC by the assessee or any other person.
8. Where certain request for enquiry or verification is made by ReAC then the NeAC will assign it to Verification Unit through an automated allocation system.
9. Where any request for seeking technical assistance from technical unit is made by the ReAC then the NeAC will assign it to Technical Unit through an automated allocation system.
10. The NeAC will send the reports or response received from the assessee or any other person or received from Verification Unit or Technical unit to the concerned ReAC or the assessment unit.
11. Where the assessee fails to comply with the notice from NeAC or notice issued u/s 142(1) or direction issued u/s 142(2A), the NeAC will serve upon such assessee a notice u/s 144 giving an opportunity to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of its judgement.
12. The assessee shall respond within such time as specified in the notice or such time as may be extended based on application filed to file his response to NeAC.
13. Where the assessee fails to submit the response within the time specified in the notice or within such extended time, then the NeAC will intimate the assessment unit (i.e. ReAC) about failure of the assessee.
14. The ReAC, after considering all the relevant material available on record, will make in writing a draft assessment order and send copy of such order to NeAC. The ReAC will provide the details of the penalty proceedings to be initiated.
15. NeAC will examine the draft assessment order in accordance with risk management strategy specified by the Board, including by way of automated tool and it may decide to
i) Finalise the assessment order and serve copy of the order along with the demand order and notice for initiating penalty order if any.
ii) Provide an opportunity to the assessee in case any modification is proposed by serving a notice to the assessee
iii) Assign the draft assessment order to a review unit for conducting review of such order.
16. The review unit may concur with the draft assessment order or suggest modifications to the draft assessment order and intimate NeAC.
17. The NeAC upon receiving concurrence of the review unit either finalise the order or provide an opportunity to the assessee to respond.
18. The NeAC, upon receiving the suggestions for any modifications from the review unit, will assign the case to ReAC other than to unit which made the draft assessment order
19. The ReAC, after considering the suggestions made by the review unit will send the final draft assessment order to NeAC
20. The NeAC upon receiving the final draft assessment order will decide to finalise the order or provide an opportunity to the assessee to respond.
21. Where show cause notice is received by the assessee, the assessee may furnish his response to NeAC within such time or such extended time if any.
22. The NeAC, will
i) in case where no response is received to the show cause notice finalise the draft assessment order
ii) in any other case, send the response received to the assessment unit. (ReAC)
23. The ReAC, after considering the response furnished will make a revised draft assessment order and send it to NeAC.
24. The NeAC upon receiving the revised draft assessment order
i) In case no modification is prejudicial to the interest of the assessee, finalise the assessment order or
ii) In case modification is prejudicial to the interest of the assessee, provide an opportunity to the assessee by serving notice
iii) The response furnished by the assessee shall be duly considered before finalising the assessment order
25. The NeAC, after completion of assessment, will transfer all electronic records of the case to the Assessing Officer having jurisdiction over the said assessee for such action as may be required under the Act.
D. Exceptions to faceless assessment
The Principal Chief Commissioner or the Principal Director General, in charge of NeAC may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having Jurisdiction over such case, with the prior approval of the Board.
E. Personal hearing to make oral submissions – only through video conferencing
In case where the modification is proposed to the draft assessment order, an opportunity is provided to the assessee by serving a notice.
In such case, the assessee or his authorised representative may request for personal hearing, so as to make oral submissions or present his case before the income tax authority in any unit under this scheme.
The Chief Commissioner or Director General in charge of ReAC, may approve personal hearing.
Once approved personal hearing shall be made only through video conferencing
Any examination or recording of the statement of the assessee or any other person shall be conducted by the Income tax authority through video conferencing.
F. Exchange of Communication exclusively by Electronic mode
1. All the communications between NeAC and the assessee, or his authorised representative or any other person shall be exchanged exclusively by electronic mode and
2. All Internal communications between the NeAC, ReAC, and various units shall be exchanged exclusively by electronic mode
G. Survey Powers u/s 133A are made exclusive to Income tax authority
With the objective of minimal interface with the taxpayers and aiming at greater transparency in the working of the income tax department, The CBDT vide its order u/s 119 has directed that only Officers posted in the Directorates of Investigation (Investigation Wing) and Officers posted in the Commissionerate of TDS as exclusive Income Tax Authorities to conduct survey u/s 133A.
This means that any survey action u/s 133A shall be carried out with the approval of DGIT (Investigation) and Principal Chief Commissioner or Chief Commissioner of Income Tax (TDS) with respect to TDS charges for the action on to be carried out on or after 13th August 2020.
Earlier these powers were vested with respective the Jurisdictional Assessing officers with approval of the concerned Range Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General of Income Tax.
H. Exchange of Communication exclusively by Electronic mode
a) All the communications between NeAC and the assessee, or his authorised representative or any other person shall be exchanged exclusively by electronic mode and
b) All Internal communications between the NeAC, ReAC, and various units shall be exchanged exclusively by electronic mode
I. Taxpayers Charter – a 14-point taxpayers charter
The taxpayer charter was first spoken in the budget speech by Honourable Finance minister while presenting budget for the year 2020-21.
The 14 Point taxpayer charter includes the following
1. Provide fair, courteous, and reasonable treatment
2. Treat taxpayer as honest –
3. Provide mechanism for appeal and review
4. Provide complete and accurate information
5. Provide timely decisions
6. Collect the correct amount of Tax
7. Respect privacy of taxpayer
8. Maintain confidentiality
9. Hold its authorities accountable
10. Enable representative of choice
11. Provide mechanism to lodge compliant
12. Provide a fair and just system
13. Publish service standards and report periodically
14. Reduce cost of compliance
To implement the Taxpayer Charter the department expects following from the Taxpayer
1. Be Honest and Compliant
2. Be informed
3. Keep accurate records
4. Know what representative does on his behalf
5. Respond in time
6. Pay in time.
J. E-appeal scheme – as per Budget 2020
As a part of Government initiative to have greater transparency, efficiency, and accountability in the assessment process, the e-appeal scheme is to be made on similar lines of e-assessment by making amendments to Section 250(6A) of the Income Tax Act. E-Appeal scheme to have following features
1. Empowering Govt. to notify e-appeal scheme for disposal of appeals
2. Eliminating interface between Commissioner (Appeals) and the appellant during appeal proceedings to the extent technologically feasible
3. Optimizing utilisation of the resources through economies of scale and functional specialisation
4. Introducing appeal system with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals)
The Govt. is yet to notify the E-Appeal scheme and is expected to be made effective from 25th of September 2020.
Venugopal.C – Chartered Accountant