February 2020

INCOME-TAX E-ASSESSMENTS YESTERDAY, TODAY & TOMORROW

Nitish Ranjan | Dinesh Chawla | Bangaru Eswar Teja
Chartered Accountants

INTRODUCTION

The Government of India has, over the last few years, taken various steps to reduce human interface between the tax administration and the taxpayers and to bring in consistency and transparency in various tax administrative matters through the use of Information Technology. This has been very pronounced in the matter of scrutinies being conducted by tax officers under the Income-tax Act, 1961 (the Act). This article traces the history of E-assessments and takes a peep into what the coming days will bring.

 

RECENT HISTORY

When we look at the recent past, one of the initial impacts of technology in the income tax scrutiny assessment procedures was the implementation of the Computer-Assisted Scrutiny Selection (CASS) scheme for selection of cases. The process of selection of cases based on scrutiny on random basis was gradually dispensed with and was replaced by a system-based centralised approach. Under CASS, the selection of income tax returns for the purpose of scrutiny was based on a detailed analysis of risk parameters and 360-degree data profiling of the taxpayers.

 

The CASS substantially reduced the manual intervention in the selection process of cases for assessment proceedings. Nonetheless, some cases were manually picked up by the taxmen on the basis of pre-determined revenue potential-based parameters.

 

The CASS provided greater transparency in the selection procedures as the guidelines of selection were placed in the public domain for wider information of taxpayers. The entire process was made quite transparent and scientific.

 

In order to address the concerns of taxpayers with respect to undue harassment and to ensure proper tax administration, the Board, by virtue of its powers u/s 119 of the Act and in supersession of earlier instructions / guidelines that in cases selected for scrutiny during the Financial Year 2014-15 under CASS, on the basis of either AIR data or CIB information or for non-reconciliation with Form 26AS data, ensured that the scope of inquiry should be limited to verification of those particular aspects only. The Assessing Officers (AOs) were instructed to confine

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