What is the E-assessment scheme and the government’s approach for the same?

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With the aim to Digitalize India, the Indian government has undertaken various reforms in the Tax department. With the main objective of consistency and greater transparency in the system of assessment, the Finance minister proposed the introduction of a scheme of faceless e-assessment. The scheme seeks to eliminate the human interface between the taxpayer and the income tax department.

Faceless E-assessment will eliminate the existence of undesirable practices on the part of tax officials. This will lead to ease in compliance for taxpayers, transparency and efficiency, improvement in the quality of assessment, better monitoring of cases.

Procedure

As per the scheme, the National e-Assessment Center (NEC) shall serve notice u/s. 143(2) on the taxpayer and shall assign the case to an Assessment Unit in any Regional e-Assessment Center through an automated allocation system.

In case of any requirement of additional information or technical assistance, the regional center can request the National e-Assessment Center to provide the same. Upon a request for technical assistance, the National e-Assessment Centre shall assign the same to a technical unit in any one Regional e-Assessment Centres through an automated allocation system. After considering the inputs received, the assessment unit will pass a draft order, which will be then examined by the national center and reviewed by the review unit.

The assessment unit, after considering the modifications suggested by the Review unit, send the final draft assessment order to the NEC. After receiving the final draft assessment order, the NEC may follow the below procedure-

  • In case of no modification prejudicial to the interest of the taxpayer is proposed with reference to the draft assessment order, finalize the assessment as per the specified procedure, or
  • In case of modification prejudicial to the interest of the taxpayer is proposed with reference to the draft assessment order, provide an opportunity to the taxpayer
  • The response furnished by the taxpayer shall be dealt with as per the prescribed procedure.

The NEC shall, after completion of the assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the case.

Phase-1 of Faceless scrutiny

Since the launch of faceless scrutiny on October 7, 2019, a total of 58,319 cases were assigned in an automated way randomly in the first phase and these were kept away from the geographical jurisdiction of the case, based on computer algorithms. Out of this, 7,116 cases have been disposed of till 19th July, with assessment orders issued without any additions, and 291 cases, wherein additions are proposed to be made, have been submitted to Risk Management unit.

With the introduction of faceless scrutiny, all the communications with taxpayers are made electronically by a central cell in Delhi and identity of all assessing officers will remain unknown to taxpayers. The taxpayers need to update contact details on the e-filing portal and should check their registered e-filing accounts/ e-mail account(s) to furnish responses within 15 days after the notice is issued.

Earlier during assessment proceedings in scrutiny cases, taxpayers or tax professional/s were required to make multiple visits to the income tax office. Various incidences of discretion and subjective approach were experienced by the taxpayers which often resulted into high-pitched assessments.

The faceless assessment system of the Income Tax Department has been a game-changer in the arena of direct taxation. It has empowered the taxpayers and has, as a foremost mechanism, altered the facets and perception of overall tax administration in India.

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