The government of India, over the last few years, has taken various steps to reduce human interface between the tax administration and taxpayers through the use of information technology.
In October 2015, the Central Board of Direct Taxes (CBDT) initiated a pilot project on the concept of using emails to correspond with tax payers for carrying out scrutiny assessments to improve taxpayer services, enhance efficiency and usher in a paperless environment for assessment proceedings.
Further to the pilot project, the CBDT, on June 23, 2017, launched an ‘E-Proceeding’ facility, wherein taxpayers are required to submit responses along with attachments and evidences (as applicable) on their respective e-filing portals on Income Tax Website.
Keeping up with the vision of Hon’ble Prime Minister and Finance Minister in providing transparency with speed and faceless assessment procedure, the CBDT launched the E-assessment Scheme, 2019 (the Scheme) on Sept 12, 2019, along with directions for giving effect to the scheme.
For the purpose of this scheme, the National e-Assessment Centre (NeAC) and Regional e-Assessment Centres (ReAC) were inaugurated on Oct 7, 2019, along with specialised units.
The NeAC shall be the central point of contact between the taxpayer and the revenue authorities. Additionally, there would be eight ReACs, comprising the assessment, verification, technical and review units and these would be based at Delhi, Mumbai, Chennai, Kolkata Ahmedabad, Pune, Bengaluru and Hyderabad.
The function of the NeAC is to issue notices/communication electronically through a taxpayer’s registered account on the web portal, http://www.incometaxindiaefiling.gov.in/home or the registered email address or through a mobile app. The responses to notices, orders or any other electronic communication will be required to be filed through the taxpayer’s registered account only. The taxpayer will have no visibility of the tax officer conducting the assessment of his/her case.
NeAC will assign cases to the assessment unit (ReAC) through an automated allocation system. Tax officers in the assessment unit would carry out the assessment, which includes identification of points for determination of any liability (including refund), seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee, etc.
The verification unit would facilitate e-assessment, which includes enquiry, cross-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.
The technical unit would provide technical assistance, including support or advice on legal, accounting, valuation, transfer pricing, data analytics, or any other technical matter that may be required in a particular case.
Upon completion of assessment, a draft order shall be communicated to the NeAC which shall also examine the draft assessment order. If deemed necessary, the NeAC shall get the draft assessment order reviewed by the review unit.
Apart from checking for arithmetical accuracy of modifications proposed in the draft order, the review unit would also check whether relevant material evidence has been brought on record and relevant points of fact and law have been duly incorporated in the draft order.
The taxpayer would also be provided with the opportunity of submitting a response against the draft assessment order. The taxpayer may seek a personal hearing to make oral submissions or present his case before the Revenue authority in any unit under this scheme. In order to avoid physical appearance before the tax officer, such hearing will be facilitated only through a video conference or video telephony. The NeAC would issue the final assessment order along with the demand notice, if applicable and issue the notice for initiating any penalty proceedings, where applicable.
In the first phase, the tax department has issued 58,322 (PIB Delhi: Oct 7, 2019) digitally signed notices in relation to Income tax returns (ITR) for financial year 2017-18. Taxpayers need to ensure that contact details are updated on the e-filing portal and should check their registered e-filing accounts/ e-mail account(s) so as to furnish response within 15 days after the notice is issued.
The E-assessment scheme is a step in the right direction and will usher a paradigm shift in the way tax proceedings are carried out. The efficacy of the scheme will need to be seen in the times to come.(The writer is Partner with Deloitte India)