Combatting and eradicating corruption is the biggest challenge for Modi government. To achieve this, the government regularly takes necessary steps through various initiatives. One of the stepping stone was the introduction of e-assessment scheme by late finance minister Arun Jaitley, during Budget 2018. The scheme was to replace the old concept of manual assessment with complete automated process. The concept of e-assessment is targeted to bring more transparency, less human intervention and thereby curtail corruption.
Under the e-assessment scheme, the selection of cases for scrutiny would be purely automatic/ system-driven through the use of analytical tools, artificial intelligence etc. Cases would be selected randomly based on certain pre-determined risk parameters. Under this scheme there are various centers, each one of which has to perform a desired role. The various centers under this scheme are the National E-assessment Centre (NEC), Regional e-assessment Centre (REC), Assessment units (AU), Verification units (VU), Technical units (TU), Review units (RU). Each center is assigned with specific role to carry out seamless e-assessment.
- The role of NEC is to act as a single point of contact between the taxpayer and the department. The NEC would issue notices, obtain evidence, collect information, raise demand notice etc. In all these matters, communications needs to be done online and has to be signed digitally.
- REC will ensure that e-assessment is carried out smoothly under the range of its principal chief commissioner.
- AU has a bigger role to play in the sense that they will analyze the information received from the assessee, seek for additional data requirement etc.
- VU will perform the task of cross verification, examining the records, recording statements as may be required
- TU will give advisory on various aspects like legal, accounting, transfer pricing, IT etc.
- RU has a role of reviewing the draft assessment order, check for arithmetical accuracy and to perform other functions of review as may be required from time to time.
Under this scheme, cases selected for scrutiny shall be allocated to assessment units in a random manner and notices will be issued electronically by NEC, without disclosing the name, designation or location of the tax official. The scheme has proposed a time limit of 15 days within which an assessee has to respond to the notice issued by NEC. The notice issued will be sent electronically on the taxpayer's registered email address. After verifying all the submission filed by assessee, RU will make a draft assessment order and send it to the NEC. The NEC will examine the draft assessment order received in accordance with the risk management strategy specified by the CBDT. In case there is any adjustments, the draft assessment order will be sent to assessee for his comments and to make further representation.
In some cases to ease out practical difficulties of proper representation, CBDT has clarified that the new regime of e-assessment will not apply for search cases, reassessment matters, assessment framed under non PAN cases, in set-aside proceedings where return of income was filed in paper mode and the assessee does not have an e-filing account. Further it has clarified that personal hearing can take place in exceptional situations where books of accounts are rejected, examination of witness is required by either parties, where an adverse view is expressed by the officer and the assessee wants to opt for personal hearing to explain the matter.
The e-assessment scheme clearly lays down the aim of the government to counter the menace of corruption. The step taken by the government is placed in a right direction of standardisation of assessment proceeding with no or minimum human intervention. Tax payers however needs to ensure that their email Id is updated on e-filing portal. In order to achieve the desired objective especially in Tier II and Tier III cities, the government will have to ensure that the necessary systems, use of technology and infrastructure are in place. In most of the cases, the new system of e-assessment should eliminate inefficiencies and corruption. However, in large cases, where there is huge complexities, e-assessment may not practically work as complexities of the proceedings may require explanations in person. Government should lay down proper guidelines and install proper system of checks and balances, where personal hearings is required.
The authors are partner and senior associate from N.A Shah Associates LLP