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TMI BlogStandard Operating Procedure (SOP) for Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Review Unit (RU) under the Faceless Assessment provisions of Section 144B of the Income-tax ActX X X X Extracts X X X X X X X X Extracts X X X X ..... lict with the statute is noticed, then the provisions of Statute shall prevail. 4. These SOPs are strictly for departmental use only. 5. This is issued with the prior approval of the CBDT. Enclosed: As above. Yours faithfully, (Ashish Abrol) Commissioner of Income-tax-1, National Faceless Assessment Centre, Delhi Standard Operating Procedure (SOP) under the Faceless Assessment provisions of Section 144B of the Income-tax Act Index of contents S no Heading/Sub-heading Page no SOP Assessment Unit A Assignment of cases 1 B Preliminary Examination and Action 1 C Initial Questionnaire u/s 142(1) 2 D Process for issuance of notice u/s 142(1) 3 E Grant of adjournment to notice u/s 142(1) on request of assessee or suo-moto adjournment 4 F Analysis of Information submitted in response to questionnaire u/s 142(1) and Issue of Additional Questionnaire 4 G Non compliance of notice u/s 142(1) 4 H Assessment Procedure in case of non-compliance of notice u/s 142(1) passing of best judgement assessment u/s 144 of the Act 5 I Enquiry/Verification by AU in Faceless mode only 6 J Reference to Verification Unit (VU) 6 K Reference to VU where assessee seeks Cross examination of Witness not having digit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cases A.3 Set Aside Cases A.4 Reopened Cases B. Preliminary Examination and Action B.1 On initial assignment of case, AU must verify whether the case has been correctly assigned for Faceless assessment, and refer to NaFAC if not correctly assigned. B.2 Refer the case for transfer, if it falls under the exclusions under Section 1446(2), B.2.1 Within 5 days of assignment, or B.2.2 Within 5 days of receipt of information on the basis of which the case is identified as covered under exclusion under Section 1446 (2). B.3 In reopened cases: B.3.1 Where no return of Income is filed within the time specified in the notice under Section 148, issue notice under Section 142(1) wherever the same has not been issued. B.3.2 Where return of Income is filed, issue notice u/s 143(2) wherever the same has not been issued. C. Initial Questionnaire u/s 142(1) C.1 Initial questionnaire u/s 142(1) shall be, preferably, issued by AU within 15 days of as signment of cases. C.2 Before issuing the initial Questionnaire, AU shall: C.2.1 Consider all internal data bases of the Department 360 degree in ITBA, Insight, E-filing AO Portal available to the AU; C.2.2 Consider Structured questions, if available, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ds of the assessee available on ITBA/ Insight, with a request to comply within 5 days. D.3.2 The communication will only refer to non-compliance, without giving specific details of the case, so as to ensure that confidentiality of the queries, raised in the questionnaire accompanying the notice under section 142(1), is maintained, and the assessee responds through the e-filing portal only. E. Grant of adjournment to notice u/s 142(1) on request of assessee or suo-motu adjournment E.1 Where adjournment is granted, AU to ensure that adequate time is given to the assessee to respond: E.1.1 Adjournment up to 7 days where assessee seeks adjournment using the online option; E.1.2 Suo motu adjournment up to 7 days may be granted by the AU, if required. F. Analysis of Information submitted in response to questionnaire u/s 142(1) and Issue of Additional Questionnaire F.1 Examine reply of the assessee with reference to the issue involved in the case; and F.2 Cross-verify reply of the assessee with the information available to the AU; F.3 AU will decide, generally within 10 days of receipt of reply, F.3.1 Whether reference to VU / TU is required; F.3.2 Where the assessee contests or gives inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch variations, shall be issued. H.2 In cases referred to VU, such SCN shall be issued ordinarily after receipt of Verification Report. H.3 If assessee complies with the requirements of the notice at any stage/SCN, AU shall proceed to make assessment under Section 143(3) as per procedure prescribed under Section 144B and not under Section 144. H.4 If assessee does not comply with the requirements of the notice/SCN, AU shall proceed to make assessment under Section 144 as per procedure prescribed under Section 144B. H.5 To ensure that the best judgment assessment in Non-Responsive case is demonstrably reasonable, the AU shall ensure that all the details referred in Para G.3.3 above are included in the final order. H.6 Order under Section 144 read with Section 144B is to be passed by AU, based on material available on record, with estimation of income in accordance with law. I. Enquiry/Verification by AU in Faceless mode only Functions of AU include: 1.1 Enquiry, 1.2 Cross Verification, 1.3 Examination of books of account, 1.4 Examination of witnesses and recording of statements, 1.5 Such other functions as may be required for the purposes of making faceless assessment. J. Reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that reasonable adjournment is sought by the Witness for an alternative date and time, AU may reschedule VC and make a fresh reference to VU, following the procedure as per this Para; K.7 Where VU reports that the Witness is available at some other address not in physical proximity to that VU, AU may reschedule VC and make a fresh reference to the VU based on new address Pin code, following the procedure as per this Para. L. Reference to Technical Unit (TU) L.1 AU may seek assistance of TU on matters provided in Section 144B(1)(iv)(c) and Section 144B(3)(iv). L.2 Reference shall be made in prescribed formats (Annexure AU-3,4,5,6). L.3 Prior to seeking Legal Assistance, AU must: L.3.1 Refer to the guidance note on ITBA homepage; L.3.2 Take care that Legal issues already covered by decision of jurisdictional High Court or Supreme Court are not referred to TU; L.3.3 Obtain approval of PCIT of the AU; L.4 In other Technical references, approval of PCIT of the AU shall be obtained as per the requirement in law. L.5 Timeline for making reference to TU should generally be made: L.5.1 Where requisite information is received from assessee/third party within 10 days of receipt. L.5.2 Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure adherence to the principles of natural justice and reasonable opportunity to the assessee, timelines to be given for obtaining response to the SCN shall be: N.1.3.1 Response time of 7 days from the issue of SCN. N.1.3.2 Response time of 7 days may be curtailed, keeping in view the limitation date for completing the assessment. N.2 Personal Hearing against SCN N.2.1 Wherever personal hearing is sought by the assessee through the button on the e-filing portal, AU shall accord personal hearing to the assessee through Video Conferencing (VC) facility. N.2.2 To ensure adherence to the principles of natural justice and reasonable opportunity to the assessee, VC must be given within 2-3 days of request by the assessee. N.3 Income Loss Determination Proposal (ILDP) N.3.1 ILDP is to be prepared in all cases, containing all the essential ingredients of the assessment order. N.3.2 In cases involving variation prejudicial to the assessee, ILDP shall be prepared after completion of the process of SCN and or VC, if any. N.3.3 In cases involving variation prejudicial to the assessee, it must be ensured that the ILDP is prepared after considering: N.3.3.1 Reply of the assessee in response to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout no objection having been received from the assessee within the specified time under Section 144C(2), AU shall: N.6.2.2.1 Capture the fact in ITBA; N.6.2.2.2 Initiate all relevant penalty proceedings on the ITBA, where applicable, and; N.6.2.2.3 Pass final order as per provisions of Section 144C within 3 days of communication. N.6.2.3 Upon receipt of communication, about filing of objection by the assessee (along with copy of objections filed before DRP) within the specified time u/s 144C(2), AU shall: N.6.2.3.1 Capture the response in ITBA within 3 days of receipt of communication; N.6.2.3.2 Upon receipt of Directions of DRP, initiate all relevant penalty proceedings on the ITBA, where applicable, and; N.6.2.3.4 Pass final assessment order in conformity to DRP directions within 3 days of communication of Directions of DRP. O. Passing of Final Assessment Order O.1 The final Assessment Order, using the prescribed format (Annexure AU-9), must include the following: O.1.1 Complete description of the issues involved; O.1.2 Details of dates of all notices/opportunities given including the details of centralized communication as per Para G.3 above; O.1.3 Details of dates of complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to JAO, through issue letter functionality 241A dropdown in ITBA. S.1.3 Where grant of refund is not likely to adversely affect revenue, communicate the same to JAO through issue letter functionality -241A dropdown in ITBA. S.1.4 The power to withhold refund till the date of assessment, vests with the Jurisdictional Assessing Officer. S.2 Process with reference to Sec 281B of the Act: S.2.1 Where AU is of the opinion that it is necessary for the purpose of protecting the interest of the Revenue, it shall: 5.2.1.1 Record reasons for provisional attachment in writing; S.2.1.2 Submit such proposal to PCIT of the AU; S.2.1.3 Obtain approval of PCIT of the AU (to be given within 7 days); S.2.1.4 Pass an order in writing; S.2.2 Communicate to JAO, through ITBA, to give effect to the order of attachment. Government of India Ministry of Finance Central Board of Direct Taxes National Faceless Assessment Centre New Delhi Dated: 03.08.2022 Subject: Standard Operating Procedure (SOP) for Verification Unit (VU) Under the Faceless Assessment provisions of Section 144B of the Income-tax Act The Principal Chief Commissioner of Income Tax, National Faceless Assessment Centre, with the prior appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce; D.1.4 Carry out the verification requested; D.1.5 In case of physical verification or service of notice/ summons: D.1.5.1 Where any new address is found, VU shall conduct verification at the new address if it is in physical proximity of the VU, D.1.5.2 Where the new address is not in physical proximity of the VU, the VU may close the verification after reference to the proximate VU for physical verification; D.1.6 Prepare a Verification Report as per format, along with Case History Details of Verification proceedings and any other findings, generally within 2-3 days of completion/ closure of verification; D.1.7 Forward the Verification Report to the AU through Insight. E. Procedure for Cross-examination of Witness not having digital footprint, by Assessee E.1 VC for the assessee using 131(1)(b) tab, through ITBA, containing date, time and link of the VC shall be scheduled by the AU and communicated to VU; E.2 VU shall issue summons, to enforce attendance of the Witness in the office of the VU or the designated place, on the date and time of VC scheduled by AU; E.3 The cross examination of the Witness by assessee shall be conducted in the presence of the VU and the AU; E.4 AU/VU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed format. (Annexure TU-1) B.2 Clarification if required, must be sought within 2-3 days of receipt of reference. C. Tools for facilitating Technical Assistance C.1 TU may view case records through status Monitor; C.2 TU shall take assistance of all resources available including Knowledge Management Portal, Insight, Public domain, CMIE, MCA, other databases; C.3 TU must monitor developments pertaining to Legal Issues assigned to them. D. Procedure for Handling and Forwarding References by TU D.1 References are to be forwarded to the designated authority/expert in the following matters: D.1.1 Transfer Pricing; D.1.2 Valuation of Property; D.1.3 Withdrawal of Registration, Approval, Exemption; D.1.4 Agreement entered into under Sec 90 or 90A; D.1.5 Any other Technical Matter. D.2 Care may be taken that all references, made in the prescribed format by AU, are com plete in all respects. D.3 Reference in case of Para D.1.1 (Transfer Pricing) must be forwarded, using only the TP reference button (not through Issue letter functionality ) on Technical Reference work-item on ITBA, to enable creation of work-item for the TPO. D.4 Reference in cases of paras D.1.2 to D.1.5 (Other than Transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding of reference to TPO shall be made as per Para D.3 within 2-3 days of re ceipt/ clarification. F.4 TP order under Section 92CA(3) shall be forwarded to the concerned AU within 2 days of receipt. G. Procedure for Rendering Technical assistance on References for Valuation of Property / Asset/ Investment etc. G.1 On receipt from AU, TU must ensure that Reference is complete and contains the req uisite documents as per prescribed format. G.2 Reference to the Valuation Officer shall be made as per Para D.4 within 2-3 days of receipt/ clarification. G.3 Valuation Report shall be forwarded within 1-2 days of receipt: G.3.1 To the concerned AU-where relevant assessment proceedings are pending; who shall share it with the assessee G.3.2 To the JAO where the relevant proceedings are completed. G.4 On receipt of technical objection of assessee, through AU, the objection shall be forwarded within 1-2 days of receipt to the Valuation Officer for appropriate action. G.5 Report of Valuation Officer on objection of assessee shall be forwarded within 1-2 days of receipt: G.5.1 To the concerned AU where the relevant assessment proceedings are pending G.5.2 To the JA0 where the relevant proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by PCIT of the TU as per GFR. Government of India Ministry of Finance Central Board of Direct Taxes National Faceless Assessment Centre New Delhi Dated: 03.08.2022 Subject: Standard Operating Procedure (SOP) for Review Unit (RU) Under the Faceless Assessment provisions of Section 144B of the Income-tax Act The Principal Chief Commissioner of Income Tax, National Faceless Assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP for Review Unit (RU) under the Faceless Assessment provisions of Section 144B of the Income-tax Act. This is issued under Section 144B(6)(xi) of the Income-tax Act. A. Handling of case received for Review A.1 Upon receipt of reference from AU, RU shall A.1.1 Examine the ILDP in the light of case records and material accessible to RU. A.1.2 Check the ILDP, whether: A.1.2.1 Relevant and material evidence has been brought on record; A.1.2.2 Relevant points of fact and law have been duly incorporated; A.1.2.3 Issues requiring addition or disallowances have been incorporated; A.1.2.4 Such other issues required to be incorporated, have been included. A.1.3 Prepare a Review Report as per prescribed forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for AY XXX-XX 2. Records show that you have not complied with the statutory notice(s) issued in your case. 3. Records of proceedings including notices issued are available in your account at e-filing portal ( incometax.gov.in ) 4. This is to remind that you are required to furnish your reply to the notice within the due time through your account at e-filing portal (www.incometax.gov.in). You must submit your reply within 5 days of receipt of this mail. 5. Please appreciate that your replies to notices would enable passing of a fair assessment order taking into account the information and explanation provided by you. 6. Failure to file complete reply shall lead to passing of ex-parte assessment order u/s144 of the Act and to other penal consequences as provided in the Income-tax Act, which is avoidable. Assessment Unit Income-tax Department. AU-2 Format for reference to Verification Unit through Insight SOP J.4 To, The Designated Verification Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Reference for Physical Verification in select non-responsive cases Madam/Sir, Brief description of enquiry/verification proposed to be assigned to designated VU by AU Verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical Unit through ITBA for assistance for Valuation- SOP Para L To, The Technical Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Reference for assistance for Valuation Madam/Sir, Kindly refer to the above subject. Your assistance is being sought for valuation as detailed hereunder: 2. Valuation reference : 1 Section under which valuation is sought 2 Details of the property/investment/asset along share of assesse therein, with supporting documents. Free text attachment options 3 Location of the property State- District- Mohalla-Pin code 4 Value declared by assessee Copy of valuation report submitted by the assessee to be attached, if any. Free text attachment options 5 Brief reason of requirement of valuation. Free Text 6 Any other remarks Free Text 7. Valuation required as on 2. Complete Address and e-mail of the Assessee :- 3. The report in the matter may kindly be forwarded by Yours faithfully, Assessment Unit, Income Tax Department AU-6 Format for making reference to TU for withdrawal of Approval, Registration, Exemption, etc by Approving Authority SOP Para L To, The Technical Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Reference for withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se type (Full/part/ adjournment) Remarks if any. 3 Cases where variation is not proposed: 3.1 Complete description of issues (issue wise) 3.2 Synopsis of all submissions of the assessee relating to the issue and indicating the dates of submission. 3.3 Summary of information/evidence collected which proposed to be used against it attach documents if required). 3.4 Reasons for inference drawn that no variation is required on this issue. 4 In cases where variation is proposed 4.1 Update the table of opportunities given (at point 2 above) to include the details of SCN or additional SCN issued and further notices including personal hearing through VC given. 4.2 Use the text of SCN issued to reproduce:- Complete description of issues involved (issue wise) Synopsis of all submissions of the assessee relating to the issue and indicating the dates of submission Summary of information/evidence collected which proposed to be used against it attach documents if required) Variation proposed on the basis of inference drawn 4.3 Synopsis of the reply of the assessee to SCN and additional SCN(if any) 4.4 Summary of information evidence collected after SCN (if any). 4.5 Point-wise rebuttal of reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 6 Assessed under section XX of the Income-tax Act. Penalty proceedings under section XX,XX etc have been initiated through notice(s) issued separately. Computation of income and demand notice u/s156 of the Act is attached. {Editable to meet the requirements of case} TU-1 Format for Seeking clarification SOP TU B.1 To, The Assessment Unit, Sub : Clarification from AU Madam/Sir, Kindly refer to the above subject. Your assistance/advice is being sought on legal issue(s) as detailed hereunder Format for seeking clarification from AU 1. Clarification in respect of question number XXX 2. Description of clarification sought ...................................... 3. Brief reasons for seeking clarification .................................. .................................. 4. Whether clarification is on facts or on application of any particular case law ................................ ................................ 5. Any other remarks ............................... Yours faithfully, Technical Unit, Income Tax Department TU-2 Format for TP reference received after approval of PCIT of AU SOP TU F.2.2 To, The Technical Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firms that the requesting country would be able to refrain from notifications in similar circumstances. 9. Time period or taxable event for which or in relation to which the information is sought: 10. Tax(es) to which the request relates: 11. Tax purpose for which the information is requested: Please check the box: determination, assessment and collection of taxes, recovery and enforcement of tax claims, investigation or prosecution of tax matters, other (please specify): 12. Relevant background: 13. Information requested: 14. Grounds for believing that the requested information is held in the requested jurisdiction or is within the possession or control or is within the possession or control of a person within its jurisdiction: 15. Name and address of any person believed to be in possession of the information requested (to the extent known): 16. Form, if any, in which information is requested: For copies of documents what type of authentication, if any, is requested: Other form requirements, if any: 17. Translation of reply requested: Please check the box: Yes No Language requested: 18. In making the request, the requesting competent authority states that: (a) All information rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instance, if three members of a family have received gifts from persons located in three different jurisdictions, the total number of Forms to be filled in would be nine. 4. Row wise instructions for filling up the Form are provided in the later part of these Instructions which must be followed by the CIT/DIT concerned. The guidelines for assistance in preparing the references have been provided in Para 3.5.1 to 3.5.21 of the Manual on Exchange of Information which should be followed by the officers concerned. 5. It shall be ensured that request for only that information is made which has demonstrable foreseeable relevance to the investigation carried out in India. Further, before making the request, efforts should be made to obtain information in India and this fact should be mentioned in the request. Not satisfying these conditions may result in the request being treated as defective and will be returned in original to be resubmitted again after removing these deficiencies 7. In time barring cases, the requests should be made at least three months before the cases are getting time barred giving sufficient time in the office of Competent Authority to process the requests and allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be mentioned. Row 2 The name and designation of the Indian Competent Authority, i.e., JS (FT TR-I) and JS (FT TR-II) as the case maybe needs to be mentioned here. This will be filled up by FT TR Division and thus should be left blank. Row 3 The contact details of the officers in the FT TR Division needs to be mentioned in this row. This will be filled up by FT TR Division and thus should be left blank. Row 4 The legal basis of making the request, for instance Article 26 of the DTAA between India and ----------------- or Article 5 of the TIEA between India and ---------- or Article 4 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters or Article 5 of the SAARC Multilateral Limited Agreement should be mentioned here. There may be more than one legal instrument available for administrative assistance with the same country. In such situations, the instrument having the provision for particular administrative assistance required may be selected. If the administrative assistance required is available in more than one instrument, the one which is wider in scope should be selected. Row 5 This row contains reference number, acknowledgment etc. These det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information or in relation to which the information is sought should be mentioned. If the information is relevant for the current period, this fact should also be mentioned. Row 10 The taxes for which the request is made should be mentioned. As stated in Para 2.2.2 of the Manual on Exchange of Information, in most of the tax treaties, requests for information regarding taxes not cover by the treaty, such as indirect taxes or taxes levied by State Government, can be made. Row 11 The relevant box needs to be ticked and if necessary more than one box may be ticked. Row 12 Detailed background of the case should be mentioned clearly including the fact that how the information requested is foreseeably relevant for administration and enforcement of the domestic tax laws of India. This background information should also include a brief summary of the ongoing examination or investigation and how the requested information relates to this examination or investigation. The efforts made for collecting the information in India and the results thereof should be clearly specified. Details of foreign taxpayers related to the person under investigation/examination in India, as available in the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e information should be mentioned. This could be name and address of the Bank (in case of bank accounts), tax administration of the other country (in case of return of income or taxes paid), name and address of agents/service providers (in Case of say financial accounts requested from offshore financial centres) etc. The purpose of this information is to assist the foreign tax authorities to locate the information quickly and should be mentioned only to the extent known. Row 16 The form in which the information is required for evidentiary value, for example, the specific forms for deposition of witnesses or the manner in which copies of original documents are authenticated may be mentioned. Row 17 If the information is requested in English, the same may be indicated here. Row 18 Before making the request, it should be ensured that the four conditions mentioned here have been satisfied as before making the request undertaking to this effect needs to be given. 3. The name and designation of the Pr. CIT/ClT/Pr. DIT/DIT concerned making the request should be mentioned and he should sign and verify the content of the information contained in the request. - Circular - Trade Notice - Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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