The E-Assessment Scheme was notified by the central government on 12th September 2019 mandating framing of assessment without personal interaction with the assessee or his representative and move to centralized team based assessment.
As per the scheme an assessment unit would complete the assessment taking inputs if necessary from the technical unit, the verification unit and the review unit. The National Assessment Centre would act as channel of communication between the units as well as with the assessee. A Circular was also issued on 26th September providing certain relaxations in respect of re-assessment and cases of technical/administrative difficulty. The appellate proceedings however would be as per current practice with opportunity of personal interface.
The e-assessment scheme seeks to eliminate personal interface with jurisdictional officer and introduce more transparency between the taxpayer and the department as also reduce corruption.
The introduction of e-assessment proceeding is a welcome move and with the involvement of multi-layer review, the quality of assessment should improve. While it may be too early to assess a system that would depend on robust infrastructure which ushers a sea-change in the way assessment would be carried out, some points are worth pondering over.
- All communication (internal or with taxpayer) shall be mandatorily through electronic mode and since the same will form part of an electronic record, it will ensure transparency and greater accountability, although the security and confidentiality of the extremely critical data would have to be maintained.
- The new system may shift the focus from standard questionnaire to specific and relevant query by the assessment unit to which the taxpayer can reply in a concise manner since there may be an issue of size of files to be uploaded.
- It is expected that the e-proceedings many not provide for voluminous detailed submissions by a taxpayer and hence how far, an authority would be able to understand complex business transactions and tax positions adopted by the taxpayer may be an issue.
- As per the Income Tax Act, assessment includes reassessment but Section 147 has not been mentioned in the notification though the Circular provides for personal hearing in the case of reassessment in case of complexity or administrative difficulty.
- Personal hearing if sought and provided by the National Assessment Centre where a show cause notice is issued at the time of modification of the draft order, will be through video conferencing only. Tax payers have to get used to these procedures similar to modern day banking where there is hardly any need to visit the branch.
- The taxpayers have to be very alert and ensure that they keep track of their efiling account. The mode of service of notice and time of delivery is defined as per the Information Technology Act, 2000. Once the mail leaves the server of the department and reaches the efiling account/ registered email address, service is complete. While it has been provided that real-time alerts would also be given, the new system will take time to settle down.
- It is provided under the scheme that National E-Assessment has power to assign the review of draft assessment order, however it is not clear from the scheme whether assignment to review unit will be done or not in the revised draft even if new issue brings into the revised draft assessment order.
- The taxpayer needs to be very active/prompt in responding the queries as they would have very little scope to take adjournments.
- An order which is subject to review or a draft order proposing a modification will have to go through the same procedure of verification, assessment as may be necessary, with opportunity to assessee to respond to the draft order in case a show cause notice is issued. It is to be seen how far it would be possible to complete the assessment within the timelines given under the provisions of the Act.
- As per the scheme cases can be allotted by National E-Assessment to any regional unit. Therefore, assessment unit may be in a different state and the taxpayer is in a different state. The current practice is to follow the rulings of jurisdictional tribunals or Courts which would be the basis on which the taxpayer may have understood his transactions. However, the regional unit is likely to be influenced by the decisions in its in which state assessment unit is situated.
The author is partner at Lakshmikumaran & Sridharan Attorneys