VERY SHORT NOTICES ASKING ELABORATE DETAILS AND EVIDENCES IN FACELESS PROCEEDINGS IS NOT JUSTIFIED - REASONABLE TIME MUST BE ALLOWED AND UN-NECESSARY DETAILS AND EVIDENCES MUST NOT BE ASKED TO AVOID WASTAGE OF TIME OF TAX AUTHORITY AND ASSESSEE AND ALSO TO AVOID LITIGATION.

[DEV KUMAR KOTHARI]

Covid19 problems:

Due to various Covid19 related problems there are many problems because of

1. back log of work
2.  time bound compliances
3. Partial working due to limited hours and less number of working days.
4. Extra care required to protect from health risks of self and people in working team and nearby people also.
5. Limited and restricted availability of persons who can handle tax matters to respond to notices   

Notices not served or not noticed:

One email can be tagged with limited number of ITR/ PAN. Therefore, tax professionals and assesse  have to maintain several emails. It is noticed that notices are not sent on email or some time it remains unserved and also it may remain noticed. There is also possibility of delayed in downloading emails and having a note of notice received in email. SMS are not sent in case of most of notices. even in case of SMS the problem of too many mobile numbers is found because one mobile phone is allowed to be tagged with limited numbers of ITR/ PAN.

Many times emails are placed in spam or social or other groups, causing it difficult to be noticed.

Therefore, even with  ITES services, communication barriers is found as a difficult task by tax people.

More time is required to prepare and reply:

In case of faceless proceedings, documents are to be more elaborative to establish facts, legal position and even general explanations. Due to Coved  related problems, time available is less.

In view of the above factors more time should be allowed and time gap between posting of notice and date of hearing should be after due consideration of intervening holidays.

However, we find that notices are issued keeping very short time between date of posting and date of compliance. This causes difficulties in compliance and assesse has to seek more time, make partial compliance and seek time for balance compliance etc.

Time of tax authorities is also wasted:

Considering requests for adjournment of time and looking at piecemeal compliances require more time of tax authorities.

Suggestion for tax authorities:

Allow reasonable time for compliance by fixing date of compliance taking into account working days.

Ensure service of proper notice timely.

Raise requirement / questionnaire after due consideration of available records.

Do not ask documents or details which are available in records.

Do not ask irrelevant information.

Do not ask for documents which are available to tax authority on click of mouse for example:

Return of Income, Tax audit reports, details of TDS and TCS made by assessee other certificates or forms.

Asking many things or information in a routine manner although the same are not applicable.

Past scrutiny assessment orders and also details are required.

Example of requirements in one of notice u.s. 142:

In a case of manufacturing company who is furnishing ROI and Tax Audit report regularly the Ld. Authority has asked many information which are already with the authority or is available at a click of mouse. Many information are asked which are not at all applicable. Many details are asked which are not relevant or are not important for scrutiny purposes. This shows that notices are being issued in a routine manner without application of mind and consideration of information already in record.

Some portions from a notice u.s. 142

Please furnish the Nature of Business/ profession for the year under consideration and for the two proceedings years

Furnish the Profit and loss account / Balance sheet and Tax Audit report with all the schedules and annexures for the A.Y. 2018-19 and 2017-18.  

Furnish the Computation of Income for the A.Y. 2018-19.

Furnish the ledger of Shareholders with name /address and PAN.

Furnish the details in the following format regarding contribution of Gratuity Fund :-

( elaborate details are required employee wise)

{Please furnish your remarks/ note that whether the contribution made by you to the Gratuity fund is as per the different provisions applicable under Income Tax Act and Income Tax Rules or the Act and Rules of the concern fund Act, time being in force. Furnish the copy of return of gratuity filed} . 

Furnish the details in the following format regarding contribution of Superannuation Fund or Provident Fund :-

                          (elaborate  details are required employee wise)

Please furnish the Calculation sheet for calculating the percentage contribution by you to the Superannuation Fund or Provident Fund with respect to the salaries to the employees. Furnish the copy return of provident fund filed

Please furnish the details of “ Workers and staff welfare expense “ with documentary proof and prove the nature with genuineness of the expenses.

Furnish the month wise details of " wages " with a note on nature of work doen in that month .

Furnish the details of party wise with address / PAN of sales / revenue from operations with opening balance , sales made during the year , received during the year and closing balance .

Furnish the details of expenses liable for deduction of TDS in the following format:-                                                                                                       

{Elaborate details are required}

Please furnish the details of unsecured Loans in the following format:-

          { Elaborate details are required.}

Furnish the ledger and prove the genuineness, creditworthiness and identity of the loan lenders.

Furnish the details of Secured loans with ledger of the same and state the purpose of taking loans and explain how the same had been used for the business purpose.

Furnish the details of short term provisions and its subsequent settlement .

Furnish the partywise with opening amount of “ other current liabilities “ along with ledger .

furnish the details of fixed assets, fixed assets added during the year with source and documentary proof the same and also furnish the put to use of these assets.

Furnish the ledger and nature of following expenses, with party wise details of expenditure with name / address and PAN of the concern and prove the genuineness of expenses:

1.Stores and spare consumed

2. Power and fuel

3. Other manufacturing expense

4. Plant and machinery repairs

 5. Brokerage and commission and service charge

6. Freight and other selling expenses

7. Transport and vehicle upkeep expenses.

 Furnish the working of Turnover, G.P and N.P of A.Y. 2016-17, 2017-18 and 2018-19.

Furnish the details with opening amount of Fixed depoists with source of new fixed deposits and its relation to the business.

. What is “ other advances “ , furnish the details with party name and address with ledger and its subsequent treatment /settlement

Furnish the Bank statement with bank book for the period of 1/4/2017 to 31/3/2018 for all the banks with account number, address of the branch .

Details of returned income and assessed income( if assessed in the assessment proceedings under Income tax act ) in the earlier three assessment years and give brief details on the issues of addition made in the assessment proceedings.

 If any other relevant details you wish to submit for the Assessment proceedings.

Observations:

It appears that issue of notices asking so much details many of which are available or not relevant or are not important will result into lot of time wastage of tax authorities and assesse both. This is also likely to result into un-necessary additions and disallowances. When details are asked without application of mind, it is but natural that assessment orders are also likely to be without proper application of mind.

Once a requisition is issued in above manner, and if anything remain unexplained to the satisfaction of the authority an addition or disallowance can be made without considering ground realities.

This also seems that even the face less tax authorities are having bias against assesse and are acting with a biased mind, presumptions and conjectures.

When policy is to rely on tax payer then treating tax payer as a CHOR once scrutiny assessment is to be framed is not justified.