Faceless assessment a big success, to be future norm: CBDT chief

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Published: July 21, 2020 4:20 AM

“A lot of things would depend on the discretion of assessing officer in manual assessment. We have completely revamped it. Instead of territorial jurisdiction, we have brought in dynamic jurisdiction,” Mody said.

The income-tax department had selected about 58,000 cases for faceless assessment in October last year. The income-tax department had selected about 58,000 cases for faceless assessment in October last year.

Given the encouraging initial results of the faceless assessment process for income-tax returns, the Central Board of Direct Tax (CBDT) is convinced that it is going to be the norm in future. Speaking to FE, CBDT chairman Pramod Chandra Mody said the strength of the new system lies in inherent anonymity of the taxpayer it allows and objectivity of the process.

However, he hastened to add that no decision has been taken on extending the process to all e-returns filed every year, 6 crore at last count.

The income-tax department had selected about 58,000 cases for faceless assessment in October last year. So far, about 8,000 cases have been disposed of without making any addition to taxpayers taxable income. However, review is required in about 300 cases on whether additions have been missed or undue additions have been made.

Further, Mody said that new form of team-based assessment process would also bring down litigation and compress the time-frame of concluding a dispute. He was responding to a question on whether the new process would help in expediting black money cases, unlike the recent case involving a Swiss bank account holder, in which income tax department received a favourable order from the tribunal after 6 years despite having clinching information since 2014.

Explaining the major difference between the manual system of an individual official passing assessing order compared with the randomised system of faceless assessment, Mody said that in former system an income-tax return goes to an official in the same territorial jurisdiction of the taxpayer but in the latter process the algorithm decides where it would go for assessment thus bringing anonymity.

“A lot of things would depend on the discretion of assessing officer in manual assessment. We have completely revamped it. Instead of territorial jurisdiction, we have brought in dynamic jurisdiction,” Mody said.

He added that while one official decides what would happen in a particular case in manual assessment, this is done by a team of three officials in faceless assessment. “Even if a notice is being issued it would go through three levels: Assessing officer, their supervisory office (additional commissioner and principal commissioner). This three-person team looks at the notice, fine-tunes it and decides what questions need to be asked. After all this, a draft assessment order is prepared which goes to a review unit,” Mody said.

The review team is the second layer responsible for ascertaining whether proper additions have been made or conversely if any unnecessary additions have crept in. The review team for any assessment order is also selected by the algorithm and is randomised. “For example, a Delhi-based taxpayer’s return can go to Kolkata, after that its review could take place in Hyderabad. So, there is not linkage between these procedures. The entire assessment is issue-based,” Mody said.

He said the despite multiple layers in faceless assessment, it would be faster than old system as each process would be documented with date and time stamp on it. This would put the onus on the the teams to explain the pendancy which each official can see on the department’s portal.

“So the turnaround time, where it would take a full year, it is possible that in coming days we may be able to compress it further. All in all, dynamic jurisdiction, team based approach and automated allotment is beneficial to the whole process,” Mody added.

On the new Form 26AS, which was notified recently to help taxpayers with information regarding their gains through various transaction and consequent tax liability, Mody said that the department is working towards eventually using the details into an auto-fill return in future.

“We are telling the assessees that their transactions are covered in that (Form 26AS), and they can file their returns matching this information. Earlier, scrutiny assessment was for cases where there was mismatch but now that assessees already have this information, they can file returns with proper details and it may not come for scrutiny assessment at all,” he added.

Till last year, the Form 26AS pertaining to a specific permanent account number (PAN) used to give information mainly on TDS/TCS but it would have additional details like cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, time deposits, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, buy back of shares and cash payment for goods and services since FY06.

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