Electronic assessment of taxpayers: video conferencing, personal interviews outside

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Electronic assessment of taxpayers: video conferencing, personal interviews outside
Electronic assessment of taxpayers: video conferencing, personal interviews outside

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An income tax payer will be able to have a video conference with tax officials under the government’s newly introduced e-assessment scheme, though in the normal course there will be no face-to-face interaction between them. The new scheme came into force from Thursday. However, even after verification, appeals will continue to be made through personal representation. However, the scheme is silent on some key aspects such as assessment years for which this scheme will be applicable, provision of dispute resolution panel (DRT) settlement in case of transfer pricing cases, risk management strategy and terms of reference of many administrative units created to facilitate the evaluation cycle. The e-Assessment Scheme, 2019, launched to conduct impersonal assessment of tax returns, will take up cases selected this year for limited scrutiny under section 143 (2) (where the assessee has escaped the tax net). This will be done through national and regional e-assessment centres, which will distribute the cases automatically. Under the scheme, all communication with taxpayers and between e-assessment centers will be in electronic form, which will be digitally authenticated. Most importantly, the assessees will not appear in person at these centres. In the event that a change is proposed to the draft assessment order, the assessee receives a notice asking her or him to present his or her case orally. “… the assessee or his authorized representative shall have the right to seek a personal hearing to make his oral submissions or to present his case before the tax authority at any unit under this scheme and such hearing shall be conducted exclusively through video conferencing in accordance with the procedure , determined by the Board,” said the gazette notification issued by the Central Board of Direct Taxes (CBDT) on Thursday. It further states that the National e-Assessment Center will consider the assessment order based on risk management strategy and other general parameters, the details of which are not provided in the notification.

Structure of e-assessment

  • National e-Assessment Center: Will issue notice to taxpayers; there will be four bodies under it
  • Regional e-Assessment Centers: Will receive cases from National Authority, conduct inquiries and pass draft assessment order
  • Verification unit: For document verification
  • Technical Unit: Will provide assistance depending on the specified cases
  • Review Unit: Reviews the draft assessment order accepted by the Regional Centers. The final order will be passed by a national authority

According to tax experts, the scheme looks complicated and requires clarification. “Gradually, taxpayers got used to the electronic submission of tax returns. Although aimed at facilitating the assessment process for taxpayers, multiple nodal authorities set up to facilitate e-assessments could initially make the scheme and procedures complex for the average taxpayer to understand. Interestingly, as a seamless practice, the scheme provides for an option to transfer the case to the jurisdictional assessing officer at any stage of the assessment,” said Sandeep Jhunjhunwala, Director, Nangia Advisors (Andersen Global). Another expert says it’s a fantastic idea if it can be kept secret. “I believe there is still a requirement for a face-to-face meeting between the taxpayer and the authorities, particularly where the authorities need clarification based on the information made and the taxpayer is willing to provide it.”

One option could be to have several separate officers manning such consoles who can seek clarifications and forward them to the appropriate departments without disclosing details of the taxpayer,” said SR Patnaik, Partner and Head (Taxation), Cyril Amarchand Mangaldas. The CBDT Rule states that the Scrutiny Notice will be issued by the National e-Assessment Centre. The taxpayer will be asked to file his response within 15 days from the date of receipt of the notice. The notice will go electronically to the address of registration of the taxpayer. After receiving the response, the national e-assessment center will issue the confirmation. The center will then assign the case to the regional e-assessment center through an automated allocation system. In the event that the regional center requires the assistance of a verification unit or technical assistance, such requests will be processed through the automated distribution system. If the regional e-assessment center requests additional information or documents from the taxpayer, such request must first be made to the national e-assessment center. The Regional e-Assessment Center will prepare a draft assessment order and send it to the National e-Assessment Center. The National Unit will review the draft order against the risk management strategy using an automated review tool and either accept the draft order or provide another reason to the assessor if there is any change or send the draft order to the department for review. The review department may accept or propose changes to the national module. The National Unit sends it back to the Regional Unit for evaluation. The National Unit will again send a notice to the assessee and the entire cycle can be traced again till the National Unit accepts the order. All work like imposition of penalty, collection and recovery, appeal and correction will be done by Jurisdictional Officer. The jurisdictional IT Complaints Commissioner will hear complaints against a National Unit order.

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