Changing dynamics of income tax scrutiny assessment

Published: September 24, 2019 12:42:26 AM

If the scrutiny order is prejudicial to the taxpayer, an opportunity would be provided to the taxpayer before issuance of the order

The scheme is designed for team-based assessment with dynamic jurisdiction for optimal utilisation of available resources. (Illustration: SHYAM Kumar Prasad)The scheme is designed for team-based assessment with dynamic jurisdiction for optimal utilisation of available resources. (Illustration: SHYAM Kumar Prasad)

By Amarpal S Chadha

The Centre is taking a series of e-governance initiatives to fulfil the motto of ‘Minimum Government, Maximum Governance’. Amongst various e-governance initiatives, there has been consistent focus of the government and the income tax department to reduce taxpayers’ physical interface with the tax authorities.

The Central Board of Direct Taxes (CBDT) implemented the process for undertaking various types of proceedings under the Income Tax Act (the Act) over an e-mail, on a voluntary and pilot basis in five metro cities and later extended the same to Hyderabad and Kolkata, popularly known as ‘E-mail based assessment’.

E-proceeding module
In April 2017, CBDT launched an ‘E-proceeding’ module to undertake a host of proceedings under the Act using electronic means as an interface between the taxpayer and the tax authorities. These initiatives have been taken to the next level through e-Assessment Scheme (the scheme) which was notified recently and would govern the conduct of scrutiny assessments in future.

The scheme is designed for team-based assessment with dynamic jurisdiction for optimal utilisation of available resources. CBDT is expected to come up withinfrastructure for setting up of a National and various Regional Centres and diversion of existing officers to these centres has already been notified by CBDT. All notices/ communication would originate from a centralised National e-assessment Centre (NeAC) and would be communicated to taxpayers electronically. There would not be any direct communication between taxpayers and tax officers. However, in certain situations, personal hearing shall be conducted exclusively through video conferencing from designated centres. If needed, NeAC can transfer the case to the jurisdictional tax officer.

Automated allocation system
To ensure transparency in the entire process, the cases would be allocated based on automated allocation system using Artificial Intelligence and Machine Learning. Every communication under the scheme shall be delivered to the taxpayers on the registered account, registered e-mail or mobile app. This would also be followed by real time alerts on registered mobile, e-mail or a mobile application, which is yet to be launched. Under the scheme, a step-wise process would be followed to conduct scrutiny assessment where multiple anonymous units/ officers would be working on the same case at various levels.

To provide additional muscle to the exchequer, different functions of the tax officer would be delegated to various units like Assessment unit, Verification unit, Technical unit and Review unit. These units would be manned by personnel with adequate specific skillset and knowledge to deal with complexities. Internal checks and balances would be inbuilt in the entire process to achieve qualitative assessments. Moreover, if the scrutiny order is prejudicial to the taxpayer, an opportunity would be provided to the taxpayer before issuance of the order. All the electronic records would be transferred to the jurisdictional tax officer after conclusion of the scrutiny to avoid future hassles to the taxpayers.

As the entire process of the assessment is electronic without any physical interface, the scheme is expected to impart greater efficiency, transparency and accountability. The taxpayers’ experience and interaction with tax department is bound to undergo a significant change and the idea of faceless tax administration, once a dream, would soon be a reality.

The writer is tax partner & India mobility leader, EY India. Inputs from Alfred S. Rodrigues, senior tax professional, EY India. Views expressed are personal

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