In a bid to end tax terrorism and bring down corruption in the Income Tax Department, the Central Board of Direct Taxes (CBDT) on September 12 notified a new e-assessment scheme for income tax returns which have discrepancies.
CBDT, through this e-assessment scheme, aims to deal with all income tax notices which will be issued after October 1, to be processed through the centralized e-assessment platform.
The union finance ministry had introduced an enabling provision for the scheme in the law through Finance Act of 2018. The scheme involves the creation of e-assessment centres at national and regional levels; auto-allocation of cases among these centres.
Explaining the contours of the scheme, a senior government official said, "Any tax discrepancy notice issued by CBDT will be assessed through the electronic platform from October 1. The central system will have close to 200-300 officers dedicated only to work on e-assessment across India."
As per the details of the notification, only in a select few cases, personal representation can be demanded by the Income Tax Department, from October 1. Also, the assessee is free to challenge the assessment order or process, in case he/she is not satisfied, through the routine on-going process of appeal.
The department has been running a pilot in select cities to test the feasibility of the new system of tax assessment for the last few years. Union finance minister Nirmala Sitharaman has said the scheme will be rolled out from October 8, which is also 'Vijayadashami".
“A person shall not be required to appear either personally or through an authorised representative in connection with any proceedings under this scheme (e-assessment) before the income-tax authority at the National e-assessment Centre or Regional e-assessment Centre or any unit set up under this scheme," the notification said.Process under the e-assessment scheme is as follows:
Notice to be issued by a central system. Assessee to respond to the notice on the central system. Selection of assessing officer through a random system; for eg: a case of Mumbai officer could be physically sitting in Guwahati etc. Assessing officer to raise queries through the central system. The case should be settled through e-assessment.
Meanwhile, tax experts have given mixed reactions to the scheme.
Frank D'Souza, partner and leader corporate & international tax, PwC India said, "It’s a welcome move and the process has been significantly thought through. Naturally, in an initiative of this kind, the process will evolve and get refined over a period of time. For example, the process does not appear to envisage cases where the taxpayer has the right to apply to the dispute resolution panel."
Rakesh Nangia, managing partner, Nangia Advisors (Andersen Global) said, "With similar contours of the government's programmes such as e-Governance and Digital India, this man-to-tech approach under the e-assessment scheme has many advantages, the utmost being saving of time and bringing in due transparency in the assessment proceedings. While the idea of e-assessments, is in principle, an outstanding one, the administrative systems and procedures need to be developed to ensure that it does not result in an uncalled-for injustice to the taxpayers. The use of artificial intelligence, machine learning, video conferencing, telecommunication application software, mobile app etc in the e-assessment process are few measures which emerged economies have already adopted long back. However, digital capabilities may pose significant implementation challenges in India."
However, according to Sandeep Jhunjhunwala, director, Nangia Advisors (Andersen Global), "With the advent of technology, gradually the taxpayers have gotten used to e-filing of the income tax return. Though aimed at easing the process of assessment for taxpayers, multiple nodal bodies such as national e-assessment centres along with regional centres and assessment, verification, technical and review units, set up to facilitate e-assessments could initially make the scheme and procedures complicated for a common taxpayer to comprehend. Interestingly, as a fail-safe practice, the scheme provides for an option to transfer the case to the jurisdictional assessing officer at any stage of the assessment."
Rajat Mohan, senior partner, AMRG & Associates feels, "Centralised body namely, National e-assessment Centre would be set up as a nerve centre for entire assessments body, on which wide powers under this new notification has been showered upon. This authority would have immense resources at its disposal to facilitate the conduct of e-assessment in a centralised manner. Fair, unbiased and transparent assessments would help heighten the standards of governance and pushing across the investor confidence in the impartial justice system in tax offices. The novel concept of verification units, technical units and review units seems to be borrowed from the western world, however, if implemented in true tone and tenor it would a long way in defending the interests of revenue in long run.
Implementation of “automated tech tools” for the examination of draft orders and allocation of tax cases based on artificial intelligence and machine learning would be a revolution in the world of tax assessments and is destined to be a game-changer."Close to 0.5 percent cases are picked up every year on a random selection basis for scrutiny. Last year, 3-4 lakh cases were selected for scrutiny out of over 7 crore of taxpayers. Prime Minister Narendra Modi in Rajasva Gyan Sangam had asked the Income Tax Department to work on such a system in 2017.