E-ASSESSMENT SCHEME UNDER INCOME TAX ACT, 1961

[Mr. M. GOVINDARAJAN]

Scheme

Finance Act, 2018 inserted new sub-clauses (3A), (3B) and (3C) to section 143 of the Income Tax Act, 1961 (‘Act’ for short).  Section 143(3A) provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3) so as to impart greater efficiency, transparency and accountability by––

• eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible;
• optimizing utilization of the resources through economies of scale and functional specialization;
• introducing a team-based assessment with dynamic jurisdiction.

E-assessment scheme

The Central Government, in exercise of its power under section 143(3A) of the Act made E-assessment scheme vide Notification No. 61/2019, dated 12.09.2019, which came into effect from 12.09.2019, the date of publication of the Notification in the Official Gazette.

Scope of scheme

The assessment under this Scheme shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.

E-assessment centres

The Board may set up the following E-assessment Centres-

• National E-assessment Centre;
• Regional E-assessment Centres,

for the purposes of this Scheme.

National E-assessment Centre

A National e-assessment Centre is to facilitate the conduct of e-assessment proceedings in a centralized manner, which shall be vested with the jurisdiction to make assessment in accordance with the provisions of this Scheme.

Regional E-assessment Centre

Regional e-assessment Centres as it may deem necessary to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make assessment in accordance with the provisions of this Scheme.

Units

The Board may also set up the following units by specifying their respective jurisdiction-

• Assessment Units;
• Verification Units;
• Technical Units;
• Review Units.

Assessment Units

The assessment units are-

• to facilitate the conduct of e-assessment,
• to perform the function of making assessment, which includes-

• identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information; or
•  clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person; and
• such other functions as may be required for the purposes of making assessment.

Verification Units

The verification units are-

• to facilitate the conduct of e-assessment;
• to perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements; and
•  such other functions as may be required for the purposes of verification.

Technical Units

The technical units are-

• to facilitate the conduct of e-assessment;
• to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management; or
•  any other technical matter which may be required in a particular case or a class of cases, under this Scheme; and

Review Units

The review units are-

• to facilitate the conduct of e-assessment,
•  to perform the function of review of the draft assessment order, which includes checking whether-

• the relevant and material evidence has been brought on record,
• the relevant points of fact and law have been duly incorporated in the draft order,
•  the issues on which addition or disallowance should be made have been discussed in the draft order,
• the applicable judicial decisions have been considered and dealt with in the draft order, checking for arithmetical correctness of modifications proposed, if any; and
•  such other functions as may be required for the purposes of review.

Authorities

The above said Units will have the following Authorities-

• Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be;
• Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be;
• such other income-tax authority, ministerial staff, executive or consultant, as considered necessary by the Board.

Communications among units

All communication among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.

Procedure for assessment

The following is the procedure for assessment in E-Scheme-

• Notice to assessee –

• The National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143, specifying the issues for selection of his case for assessment.
• The assessee may, within 15 days from the date of receipt of notice, file his response to the National e-assessment Centre.

• Assignment to assignment unit-

• The National e-assessment Centre shall assign the case selected for the purposes of e-assessment under this Scheme to a specific assessment unit in any one Regional e-assessment Centre through an automated allocation system.
• Where a case is assigned to the assessment unit, it may make a request to the National e-assessment Centre for –

• obtaining such further information, documents or evidence from the assessee or any other person, as it may specify;
•  conducting of certain enquiry or verification by verification unit; and
• seeking technical assistance from the technical unit.

• Collection of information/documents-

• Where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National e-assessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit.

• Verification-

•  Where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National e-assessment Centre to a verification unit through an automated allocation system.

• Technical assistance-

• Where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National e-assessment Centre to a technical unit in any one Regional e-assessment Centres through an automated allocation system.

• Draft assessment order-

• The assessment unit shall, after taking into account all the relevant material available on the record, make in writing, a draft assessment order either accepting the returned income of the assessee or modifying the returned income of the assessee, as the case may be, and send a copy of such order to the National e-assessment Centre.
• The assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any.

• Decision on draft assessment order-

• The National e-assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to –

• finalize the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or
• provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order; or
• assign the draft assessment order to a review unit in any one Regional e-assessment Centre, through an automated allocation system, for conducting review of such order.

• Review of draft assessment order-

• The review unit shall conduct review of the draft assessment order, referred to it by the National e-assessment Centre whereupon it may decide to-

• concur with the draft assessment order and intimate the National e-assessment Centre about such concurrence; or
• suggest such modification, as it may deem fit, to the draft assessment order and send its suggestions to the National e-assessment Centre.

• Final draft assessment

• The National e-assessment Centre shall, upon receiving suggestions for modifications from the review unit, communicates the same to the Assessment unit.
•  The assessment unit shall, after considering the modifications suggested by the Review unit, send the final draft assessment order to the National e-assessment Centre.
• The assessee will be provided an opportunity for its suggestions to the final draft assessment order by the National e-assessment Centre.
• The National e-assessment Centre shall, upon receiving suggestions for modifications from the review unit, communicates the same to the Assessment unit.
• The assessment unit shall, after considering the modifications suggested by the Review unit, send the final draft assessment order to the National e-assessment Centre.

• Revised draft assessment-

• The National e-assessment Centre shall, upon receiving final draft assessment order may issue a notice to the assessee to furnish his response.
• The assessee may, in a case where show-cause notice has been served upon him, furnish his response to the National e-assessment Centre on or before the date and time specified in the notice.
• The response received from the assessee will be sent to the assessment unit.
• If no response is received the National e-assessment centre shall finalize the assessment as per the drat assessment order.
•  The assessment unit shall, after taking into account the response furnished by the assessee, make a revised draft assessment order and send it to the National e-assessment Centre.

• Assessment-

• The National e-assessment Centre shall, upon receiving the revised draft assessment order,-

• in case no modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, finalize the assessment;
•  in case a modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, an opportunity will be provided to the assessee;
• the assessment will be made considering the response furnished by the assessee.

• Returning of documents-

• The National e-assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over such case., for-

• imposition of penalty;
• collection and recovery of demand;
• rectification of mistake;
• giving effect to appellate orders;
• submission of remand report, or any other report to be furnished, or any representation to be made, or any record to be produced before the Commissioner (Appeals), Appellate Tribunal or Courts, as the case may be;
• proposal seeking sanction for launch of prosecution and filing of complaint before the Court.

Transfer of case

The National e-assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case.

Appeal

An appeal against an assessment made by the National e-assessment Centre under this Scheme shall lie before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer and any reference to the Commissioner (Appeals) in any communication from the National e-assessment Centre shall mean such jurisdictional Commissioner (Appeals).

Communication only by electronic mode

All communications between the National e-assessment Centre and the assessee, or his authorized representative, shall be exchanged exclusively by electronic mode.  All communications between the National e-assessment Centre and the assessee, or his authorized representative, shall be exchanged exclusively by electronic mode.

Authentication of electronic record

An electronic record shall be authenticated by the originator by affixing his digital signature.  In case of the originator, being the assessee or any other person, such authentication may also be done by electronic signature or electronic authentication technique in accordance with the provisions of sub-section (2) of section 3A of the said Act.

Delivery of electronic record

Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being the assessee, by way of-

• placing an authenticated copy thereof in the assessee's registered account; or
• sending an authenticated copy thereof to the registered email address of the assessee or his authorized representative; or
• uploading an authenticated copy on the assessee’s Mobile App; and followed by a real time alert.

Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert.  The Assessee shall file his response to any notice or order or any other electronic communication, under this Scheme, through his registered account, and once an acknowledgement is sent by the National e-assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated.

Personal hearing

A person shall not be required to appear either personally or through authorized representative in connection with any proceedings under this Scheme before the income-tax authority at the National e-assessment Centre or Regional e-assessment Centre or any unit set up under this Scheme.

In a case where a modification is proposed in the draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft assessment order, the assessee or his authorized representative, shall be entitled to seek personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit under this Scheme, and such hearing shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with the procedure laid down by the Board.

Any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit under this Scheme, exclusively through video conferencing, including use of any telecommunication application software which supports video telephony in accordance with the procedure laid down by the Board.

The Board shall establish suitable facilities for video conferencing including telecommunication application software which supports video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorized representative, or any other person is not denied the benefit of this Scheme merely on the consideration that such assessee or his authorized representative, or any other person does not have access to video conferencing at his end.

Penalties

Any unit may, in the course of assessment proceedings, for noncompliance of any notice, direction or order issued under this Scheme on the part of the assessee or any other person, send recommendation for initiation of any penalty proceedings under Chapter XXI of the Act, against such assessee or any other person, as the case may be, to the National e-assessment Centre, if it considers necessary or expedient to do so.  The National e-assessment Centre shall, on receipt of such recommendation, serve a notice on the assessee or any other person, as the case may be, calling upon him to show cause as to why penalty should not be imposed on him under the relevant provisions of the Act.   The response to show - cause notice furnished by the assessee or any other person, if any, shall be sent by the National e-assessment Centre to the concerned unit which has made the recommendation for penalty.

The said unit shall, after taking into consideration the response furnished by the assessee or any other person, as the case may be, -

•  make a draft order of penalty and send a copy of such draft to National e-assessment Centre; or
• drop the penalty after recording reasons, under intimation to the National e-assessment Centre.

The National e-assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the same on the assessee or any other person.

Discussions to this article

[Ganeshan Kalyani]

The communication will play an important role when one move toward information technology mode of assessment. The drafting should be crystal clear. In the personal assessment method one can put his point on the table very easily which will not be the case in online mode. Misunderstanding may create between tax payer and the department. Need to see the challenges. Apart from issues, the benefit of the initiative is going to be fruitful.

[Jamshed Mehta]

Dear Sir:

Is there any 'e' scheme for cases where the CIT(A) can implement the appeal order for an assessee where an Order under 143(1) has been issued by an A.O.

Thanks,

Jamshed F. Mehta

[email protected]