What is new about Income tax scrutiny notices issued recently?
With the government’s constant endeavor to make tax assessments assessee friendly and reduce corruption, the Income tax department has launched e-assessments. The department is also reducing time limits of completing assessments in a phased manner.
What are Income tax e-assessments?
The defined scheme has been made applicable for assessments for financial year 2017-18. With the new scheme, the complete assessment proceedings will be performed electronically. The assessee himself or his authorised representative doesn’t need to visit any income tax office physically during the complete proceedings generally. The new system has been designed in such a manner that it will be faceless assessment and assessee and income tax officer will not come to know about each other.
Is it really possible that Income tax officer will not come to know about assessee particulars?
Even if the income tax officer come to know about assessee’s contact particulars, it will not make any difference on case. The new scheme of e-assessment is designed in such a manner that more or less at each communication, the income tax officer is changed randomly by the system. This random change system works automatically.
How does income tax e-assessment system works?
An institution called as the National e-Assessment Centre has been established under the new scheme of assessment. It is supported by 8 regional e-assesssment centres or units. These units will comprise of Assessment Unit, Review Unit, Technical Unit and Verification Units. The new system does away with the jurisdiction-based assessment. Assessments across India will be dealt by National e-Assessment Centre only. The department aims to improve the quality of assessments and use functional specialisation at the fullest under the new scheme.
What will be the role of various regional assessment units?
As the name suggests,
- The assessment unit is responsible for facilitating the proceeding of e-assessment, identification of material points, seeking assessee’s clarification on issues identified and so on.
- The verification unit will have the task of enquiry, cross verification, examination of books of accounts, examination of witnesses on recording statements and such other tasks
- The technical unit will assist the National E-assessment Centre by providing technical assistance such as legal, accounting, forensic, information technology, valuation, transfer pricing, data analysis, management or such other matters.
- The review unit will review the draft assessment order, checking completeness, detailing of issues in assessment order pointing out all the allowances or disallowances and so on.
All the above tasks to various regional assessment units will be assigned on the basis of automated allocations system.
How does income tax department select cases for scrutiny under the new scheme?
Over the past years, the income tax department is using Computer assisted Scrutiny System (CaSS) to select the cases for scrutiny. The computer assisted system analysis the 360 degree profile of all the assessee’s with the dynamically growing risk system to select the cases. The selection of cases is based upon selection filters in a non-discretionary manner. The same risk approach is now being used under new e-assessment scheme.
What is the process of sending Income tax notice under the new scheme?
The taxpayers will receive notices on their registered e-mails as well as accounts on income tax portal. The notice served will specify the issues for which it has been selected for scrutiny. As per the new scheme the notice will be served under Section 143(3) of the Income Tax Act, 1961.
How to reply to Income tax notice under e-assessment scheme?
The replies need to be uploaded to income tax portal online at their ease 24 x 7. The assessee is given the time period of 15 days to file the response to National e-Assessment Centre.
What if the assessee is not able to reply to notices under e-assessment?
The National e-Assessment Centre has all the powers likewise of income tax officer to raise penalty proceedings. He may impose penalty or issue the assessment order on the basis of information and facts available with them in such circumstances.
What is the re-course available to aggrieved assessee in such a scenario?
The appeal against the Assessment order issued by National e-Asessment Centre can be filed within 30 days with jurisdictional Commissioner of Income Tax Appeals in Form 35.
What precautions need to be taken care by taxpayer while responding to Notice under e-assessment?
Taxpayer need to evaluate the facts of the case from each and every angle considering position under law while making any submission and always take a lawful stand. With the introduction of new system, department has replaced the erstwhile ITO from a robust e-mechanism. To err is human, but now it is the case with Income Tax department. This is equivalent to making submissions to a fully trained robot. This robot is further supported by specialized humans. It would be right to conclude that it is no more Assessee vs. ITO, it is Assessee vs. Robot.
Saurabh Gupta is a practicing Chartered Accountant having qualified post qualification course in “Master in Business Finance” from ICAI. He has over 15 years of experience in finance and accounts domain. He specializes in strategic planning and implementation, financial control, fund raising, transfer pricing audits, tax planning & statutory compliances. He is having versatile corporate experience in retail sector and has worked in financial controller role with DLF Brands prior to joining practice.