In 2006, the Indian government introduced
mandatory e-filing of income tax returns by the corporate assesses. Later on,
this was extended to other types of assessees and since then, the digitisation
in this area has progressed for betterment. Gradually, a lot of facilities have
been provided through the official e-filing website of income tax like checking
refund status and demand status, filing of online rectifications, viewing 26AS
for the ease of tax payers etc.
Until now, processing of returns is done by
two ways, i.e. summary assessments u/s. 143(1) and scrutiny assessment u/s.
143(3). In summary assessment, the arithmetical accuracy of returns filed like
errors in interest calculation or claim of credit u/s. 26AS or any such errors
are checked by Centralised Processing Centre (CPC) on e-filing of return of
income. Intimation is thereby sent to the taxpayer by email determining a
demand, refund or just accepting the return as filed, if there are no errors.
Tax payer can file a response to this intimation online on the e-filing portal.
In the latter case of scrutiny assessment, the case is transferred from CPC to
the jurisdictional Income Tax Officer of the assessee to analyse the case in detail.
A scrutiny assessment requires submission of
lot of paper work, evidences and submission of basically everything which the
Assessing officer (AO) desires. Also, the assessee is required to be present
every time the AO will request attendance by way of notice. The entire process
of filing heaps of paper with several meetings and of course, a never-ending
wait outside the officer’s cabin has made the entire process of assessment time
consuming and cumbersome, not to mention the menace of growing corruption in
the whole practice.
As a part of the e-governance initiative and
with a view to facilitate a simple way of communication between the Department
and the taxpayer, through electronic means, the Central Board of Direct Taxes
(CBDT), the policy making body of income tax department, launched its pilot
project on E-assessment proceedings in October, 2015. The idea was to reduce
human interface in the proceedings and to bring transparency and speed.
Initially, the pilot project was launched in
5 metro cities i.e. in Ahmedabad, Bengalaru, Chennai, Delhi and Mumbai where a
few non corporate assessees were assessed through notices and replies shared
through electronic mails (E- mails) and through e-portal of income tax, and
later on it was extended to another two metros – Kolkata and Hyderabad. This
pilot project was successful in these 7 cities. A latest blue print prepared by
the department on the subject states that the number of paperless or
e-assessments over the internet has seen growth in the last three years. It
also said that a simple analysis of the figures states that the growth in the
number of cases being processed in an e-environment has jumped slightly over 78
times. As digital platform is now available to conduct end to end scrutiny
proceedings, CBDT has decided to utilise it in a widespread manner for conduct
of proceedings in scrutiny cases.
The Finance Bill, 2016 proposed to amend
various provisions of the Income-tax Act, 1961 read with Rule 127 of Income Tax
Rules, 1962 and the Notification No. 2/2016 issued by the Central Board of
Direct Taxes (CBDT) which aimed to provide adequate legal framework for
e-assessment, in order to enhance the efficiency and reduce the burden of
compliance.
Accordingly, section 282A is amended so as
to provide that notices and documents required to be issued by income-tax
authority under the Act shall be issued by such authority either in paper form
or in electronic form in accordance with
such procedure as may be prescribed. Also, sub-section (23C) is inserted to
section 2 so as to define the words “Hearing” to include the communication of
data and documents through electronic mode.
The Central Board of Direct Taxes (CBDT)
vide Income-tax (18th Amendment) Rules, 2015 had notified Rule 127
for Service of notice, summons, requisition, order and other communication on 2nd
December 2015. This rule states the manner of communications through physical
and electronic transmission. Also, the Principal Director General of Income tax
(Systems) has specified by Notification No. 2/2016, the procedure, formats and
standards for ensuring secured transmission of electronic communication in
exercise of the powers conferred under sub-rule (3) of Rule 127. So, all the e-
assessment proceedings will be governed by the above stated section, rule and
notification.
Who and what is covered under E-assessments?
– All
taxpayers who are registered under the e-filing portal of income tax –
http//:incometaxindiaefiling.gov.in are technically covered by this initiative.
– The
new regime is voluntary for the tax payer and the tax payer can choose between
the e-proceedings through electronic media or the existing manual assessment
proceedings with the income tax department.
– The
E-functionality shall be open for all types of notices, questionnaires, and
letters issued under various sections of the Income-tax Act, 1961, and it shall
cover the following:
– Regular Assessment
proceedings u/s. 143(3).
– Transfer pricing
assessments.
– Penalty proceedings under various
sections.
– Revision assessments.
– Proceedings in first
appeal for hearing notice.
– Proceedings for granting
or rejecting registrations u/s. 12AA, 80G or other exemptions.
– Proceedings for seeking
clarification for resolving e-nivaran grievances.
– Rectification applications
and proceedings and any other things which may be notified in future.
Step by step procedure of E-assessment
proceedings:
– All
the notices and questionnaires will be visible to the taxpayers after they log
onto the income tax e-filing website under “E-proceeding” tab and the same
shall also be sent to the registered email address of the taxpayer. In case a
taxpayer wishes to communicate through any other alternative email ID, the same
may be informed to the officer in writing. All mails from the income-tax
department for the e-assessment proceedings should be sent through the
designated email ID of the assessing officer having the official domain, for
eg: domain@incometax.gov.in.
– Also,
a text message will also be required to be sent on the mobile number of the
taxpayer registered on the e-filing website.
– Notice
received u/s. 143(2) should clearly mention the nature of scrutiny as “Limited
Scrutiny” or “Complete Scrutiny” as the case may be, along with issues
identified for examination i.e. reason for selection by the Assessing Officer
is supposed to have detailed description related to the case collected from
AIR, CIB and other sources.
– All
notices/questionnaires/communications sent by department through e-proceeding
shall be digitally signed by the Assessing officer.
– The
ITO along with these correspondences shall also send a letter by email seeking
consent for use of email based communication of paperless assessment. However,
the assessee will have the choice to opt out of the e-proceedings and this can
be communicated by sending a response through e-filing website. Also, the
assessee can, even after he has opted for e-assessment proceedings, at any time
choose to switch to manual proceedings with prior mention to the Assessing
Officer. This should remove apprehensions about limiting the right to
being heard.
– Manual
mode can also be adopted for those assessees who are not registered on the
E-filing website of The Income-tax Department or if the Income-tax Authority so
decides with specific reasons which should be recorded in writing and approved
by the immediate supervisory authority.
– Response
should be submitted in PDF format as attachments and the size of attachments in
a single email cannot exceed 10MB. In case total size of the attachments
exceeds 10 MB, then the tax payer shall split the attachment and send in as
many emails as may be required to adhere to the limit of the attachment size of
10MB per mail. Alternatively, responses may also be sent in e-filing website
through e-proceeding tab available.
– The
Assessee will be able to view the entire history of
notice/questionnaire/letter/orders on ‘My Account’ tab on the e-filing website
of the department, if the same has been submitted under this procedure.
– All
email communications between the tax officer and taxpayer shall also be copied
to e-assessment@incometax.gov.in for audit trail purposes.
– In
order to facilitate a final date and time for e-submission, the facility to
submit a response will be auto closed 7 days prior to the Time-Barring (TB)
date, if any. If there is no statutorily prescribed TB date, then the
income-tax authority can, on his volition, close the e-submission whenever the
compliance time is over or when the final order or decision is under
preparation to avoid last minute submissions. The authority shall close
proceedings in such case after mentioning in the electronic order sheet that
‘hearing has been concluded’
– Once
the proceeding is closed or completed by the income-tax authority, e-submission
will not be allowed from assessee.
– Once
the scrutiny/hearing is completed, the tax officer shall pass the assessment
order/final letter and email it in PDF format to the taxpayer and the same will
also be uploaded on the e-filing portal of the user.
Salient Features of CBDT’s Instruction no.9/2017
dated 29th September, 2017:
CBDT vide its Instruction No. 8/2017 dated
29th September, 2017 has brought about various aspects of conducting
assessments electronically in cases which are getting time barred by limitation
during the financial year 2017-18.
– All
time barring scrutiny assessments pending as on 1st October 2017,
where hearing has not been completed shall be now migrated to e-proceeding
module on ITBA. An intimation informing the same shall be sent by the AO to
assessee before 8th October, 2017.
– In
respect of ‘limited scrutiny’ cases, now an option has been made available to
the assessee to give his consent to conduct e-proceeding of their scrutiny
assessment. The consent is required to be submitted before 15th October,
2017.
– Scrutiny
cases which are covered as above or cases where assessee has opted for manual
proceedings, all time barring assessments u/s. 153C/53A or any specific time
barring proceedings such as proceedings before the transfer pricing officer,
before the Range head u/s. 144A shall be continued to be conducted
manually.
–
Assessment proceedings being carried out through e–proceeding facility may
under following situations take place manually:
– Where manual books of
accounts or original documents needs to be examined.
– Where AO invokes
provisions of section 131 of the Act or notice has been issued for any third
party investigation/enquiries.
– Where examination of
witness is required to be made by the concerned assessee or department.
– Where a show cause notice
has been issued to the assessee expressing any adverse views and assessee
requests for personal hearing to explain the matter.
– In
time barring ‘limited scrutiny cases’ or seven metros under email based
assessment where now proceedings will be conducted through e-proceeding
facility, the records related to earlier case proceedings shall be continued to
be treated as part of assessment records. In these cases, case records as well
as note sheet of subsequent proceedings through e-proceeding shall be maintained
electronically.
Advantages if the taxpayer opts for the
scheme:
– It
shall certainly save a lot of time and money of the tax payer contrary to the
existing scenario, where most of the time goes in travelling to the income tax
offices and being present personally before the officer, as also waiting
outside the cabins of the officers.
– No
bulky submissions are required to be made physically anymore, so this will
definitely reduce the compliance burden on the assessee. It will also result in
saving of tonnes of paper.
– Facilitates
ease of operation for both the taxpayer as well as the Income Tax Officer.
Taxpayer can at anytime, and from anywhere, reply to the questionnaires and
notices issued by the Income Tax Officer.
– Taxpayer
and Assessing Officer can track a complete record of any number of proceedings
between the two, thus offering stability and uniformity.
– The
e-assessment process will limit the interactions between the taxman and the
taxpayer and will improve transparency in the entire course of assessments,
accordingly helping in reducing corruption in the system.
– The
taxpayer has flexibility any time at his discretion to opt out of this scheme
with prior intimation to the Assessing Officer.
Prospective issues which may occur:
– The
complete proceedings of e-assessments are based on technology and hence, the
system shall totally depend on the timely and appropriate two way communication
between the tax payer and the tax officer and also the simplicity the system
provides.
– Currently,
many tax payers are reluctant to opt for e-assessments, worrying that it will
be difficult to make a complex representation.
– For
assessments where voluminous data and details are asked by the assessing
officer, it may be a challenge to upload everything online within the given
limit of 10 MB, and may also become an onerous task at the same time.
– Once
the proceedings are closed by the officer, no e-submission of the assessee will
be accepted, one has to wait and watch the consequences of genuine defaults and
delays.
– The
proceedings can be a nightmare for senior citizens who may not be technology
savvy to use this service, so they may opt for manual proceedings only.
However, given the limited hardships it has,
the expediency offered by the paperless proceedings cannot be neglected. The
time and cost saved in consultants, record keeping, and making personal
representations are worth appreciating. Considering the significance of
technology in today’s era, it is a welcome move by the government towards
digitalisation of India.
The e-proceedings are hassle free and cannot
be tampered with under vigilant cyber security laws. If best practices are
adopted by the taxmen and the taxpayer towards the e-proceedings, it shall
prove to be a historic change in the tax systems of the country. A large number
of assessments today are done based on asking for details and data and seeking
justifications and explanations; this option should help such assessees.
The success of the scheme shall depend upon
the ease of operation in e-proceedings, acceptance of tax officers to get acquainted
with it and the willingness of the taxpayers to opt for it. _
