Regulatory updates in India: Revised scheme for E-Assessments introduced and implemented

​published on October 1, 2019 | reading time approx. 3 minutes

In a bid to formalise faceless income tax assessments, the Central Board of Direct taxes (CBDT) has notified an E-Assessment Scheme, 2019 (‘the Scheme’) for the purpose of conducting e-assessments vide Notification No. 61/2019 and 62/2019 dated September 12, 2019. The traditional system of conducting assessment by the jurisdictional assessing officers is being overhauled by an “automated allocation system” for random allocation of cases using artificial intelligence and machine learning techniques.

The scheme comes into force with effect from September 12, 2019 and thus, any scrutiny assessment carried out on or after September 12, 2019 shall be governed by the Scheme. In a swift move subsequently, the CBDT announced transfers/postings of 15 officers at various hierarchies to the newly created National & Regional E-Assessment Centres.

It is now reported that CBDT has set-up National E-Assessment Centre (NeAC) headquartered at Delhi. The NeAC shall be headed by Principal Chief Commissioners of Income Tax (‘Pr. CCIT’) (NeAC), Delhi and shall comprise of Commissioners (CITs), Joint and Deputy Commissioners (JCIT, DCIT) and Income Tax officers (ITOs).

The theme of the newly launched Scheme can best be summarized by the words of former Indian Finance Minister late Mr. Arun Jaitley from his budget speech 2018:

“…. with the experience gained so far, we are now ready to roll out the e-assessment across the country, which will transform the age-old assessment procedure of the income tax department and the manner in which they interact with taxpayers and other stakeholders. Accordingly, I propose to amend the Income tax act to notify a new scheme for assessment where the assessment will be done in electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency.”
 

Highlights of the E-Assessment Scheme, 2019

SCOPE/COVERAGE

• All Income tax scrutiny assessments shall be carried out mandatorily in e-assessment mode only except the following:
  • Income escaping assessment
  • Best judgement assessment
  • Search assessment
• Provisions of the scheme also apply to penalty proceedings
• An appeal against the e-assessment shall lie before the Jurisdictional Commissioner (appeals)

ESTABLISHMENT OF SPECIAL E-ASSESSMENT UNITS

• “National E-Assessment Centre” shall be designated as the nodal body for conducting the e-assessment proceedings and act as the primary communication channel for the taxpayer.
• “Regional E-Assessment Centers” to assist the National E-Assessment Centre in Implementation measures.
• “Assessment Units” to conduct the e-assessment role to determine the liability or refund arising on the taxpayer.
• “Review units” to review the draft assessment order, sustainability of particular addition or exemption or deduction, applicability of judicial pronouncements, among others.
• “Technical units” to render technical assis-tance on legal, accounting, forensic, among other areas of technical spheres.
   

SALIENT FEATURES

• Deployment of Technology for effective implementation of scheme
• This would inter-alia include the following elements:
  • “Automated allocation system” for randomized allocation of cases using inter alia artificial intelligence and machine learning
  • “Mobile app” providing a host of utilities to the taxpayer
  • All notices, orders or any other communication delivered to the taxpayer on “real time” alert

  • Affixing of digital signature certificate on electronic records as a part of the scheme

  • All e-communications to bear a computer-generated Document Identification Number (DIN)

  • Oral submission, if any, shall be facilitated via video conferencing or video telephony or such other software for this purpose

•  Opportunity of Personal Hearing

• Taxpayer shall not be required to appear either personally or through authorised representative in connection with e-assessment. However, he shall be entitled to seek personal hearing so as to make his oral submissions or present his case against the draft assessment order. In such cases, hearing shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony.

• CBDT shall establish suitable facilities for video conferencing, including telecommunication application software which supports video telephony at such locations as may be necessary.

• All communication with taxpayer and all internal communication between the Centres and various units shall be exchanged exclusively by electronic mode.
   

ADMINISTRATION OF THE SCHEME

• CBDT will set-up a ‘National E-Assessment Centre’ (NeAC) and multiple ‘Regional E-Assessment Centres’ to facilitate the conduct of e-assessment proceedings.
• CBDT shall also set-up four separate units namely Assessment Units, Verification Units, Technical Units and Review Units which shall be responsible to facilitate conduct of e-assessment. All communication among the various administrative units or with the taxpayer or any other person for the purposes of making an e-assessment shall be through the ‘National E-Assessment Centre’.
• The ‘NeAC’ shall be responsible to conduct proceedings in a centralized manner, the ‘Regional E-Assessment Centres’ shall be responsible to conduct the proceedings in a particular controlling region of a Principal CCIT.
• The ‘NeAC’ shall assign the case selected for the purpose of assessment under this Scheme to a specific assessment unit in any one Regional E-Assessment Centre through an automated allocation system.
• Throughout the entire assessment stage, the ‘NeAC’ would be a central coordinating agency and would act as an interface to deal with assesses as well as with assessment units, including verification, technical and review units. Thus, all notices, requisitions will be issued to assesses only by the ‘NeAC’ upon receiving specific requests from each of these units.
•  The assessment unit shall, after taking into account all relevant material available on the rec-ord, make in writing, a draft assessment order and send a copy of such order to the NeAC. The NeAC will deal with the assessment order in accordance with the procedures laid down in the Notification.
• The ‘NeAC’ shall transfer all the electronic rec-rds of the taxpayer’s case to the concerned ju-risdictional AO after the completion of assessment for the purpose of Imposition of penal-ties/collection and recovery of tax de-mands/rectification of any mistakes/giving effect to appellate orders/launch of prosecution etc.
   

MODALITIES OF OPERATION

• All notices, orders or any other communication shall be delivered to the taxpayer as a real time alert, by way of:
  • Placing an authenticated copy in taxpayer’s registered income tax e-filing account
  •  Sending an authenticated copy to registered email address of taxpayer or authorized rep-resentative
  • Uploading an authenticated copy on taxpayer’s mobile app.
• All e-communications issued after October 1, 2019 shall bear a computer-generated Document Identification Number (DIN) in the body of such communication itself. Any communication not possessing a valid DIN shall be treated as invalid and it shall be deemed that such communication has never been issued by the Income tax de-partment.
• In the introductory stages of e-assessment in recent past, the AO was required to send communications through the ‘Assessment Module’ of Income Tax Business Application (ITBA) which was delivered in the ‘E-filing’ account of concerned taxpayer. Now e-assessments shall be mandatorily routed through the ‘National E-Assessment Centre’ and multiple ‘Regional E-Assessment Centres’ as set-up by the CBDT. In a way, the jurisdictional AO’s role would now be limited to only imposition of penalties/collection and recovery of income tax demands/rectification of mistakes etc. and e-assessment shall be purely carried out only by the ‘E-Assessment centres’.

COMMENTS

The primary feature of ‘anonymity’ to be maintained in assessment achieved through means of allotment of assessment units through automated allocation system will bring in transparency and curb malpractices. Frivolous assessments will be done away with and number of litigations are also expected to reduce depending upon the administration of the scheme. It is for this reason that the Scheme is perceived as path breaking step in the era of faceless assessments. Needless to add, necessary technology and infrastructure will have to be put in place to en-sure smooth and effective administration of the scheme.