E-assessment: How it will provide a level playing field to income tax assessments

Updated: July 19, 2019 5:25:15 PM

E-assessment will change the landscape of assessment proceedings and the future of tax litigation and can build a corruption-free nation so long as the entire scheme is suitably crafted.

E-assessment, income tax assessment, Budget 2019, Modi government, e-assessment income tax, tax litigationThe government is well aware that the existing system of income tax assessments leads to undesirable practices such as corruption or undue harassment for taxpayers.

The biggest priority of the current government is to develop corruption-free, citizen-friendly and development-friendly ecosystem. The Union Budget 2019-20, delivered by the Finance Minister on the 5th July 2019, has announced several initiatives which, if implemented in the true spirit, should help the current government in fulfilling its objectives. One such initiative is the implementation of income tax assessments by completely eliminating the interactions between the tax authorities and the taxpayers.

The government is well aware that the existing system of income tax assessments leads to undesirable practices such as corruption or undue harassment for taxpayers. The concept of e-assessment has been introduced to circumvent these challenges and provide a level playing field in relation to income tax assessments. The broader steps proposed while implementing e-assessment are as under:

# The Central Cell will carry out the selection of cases for scrutiny. The selection will be made based on verification of certain specified transactions or discrepancies in the return of income.

# The cases so selected with be allocated in a random manner to the Assessing Officers.

# The Assessing Officers will provide a list of requirements to the Central Cell which will act as a channel of communication between Assessing Officers and taxpayers.

# The Central Cell will ensure that the details of the Assessing Officer to whom case has been allotted, is kept discreet such that taxpayers do not suo motu approach the Assessing Officer.

While the thought process of the current government to develop a corruption-free nation by implementing the e-assessment proposal deserves to be applauded, its success will depend on how intelligently the process is crafted. For instance, while the taxpayer is not aware of the Assessing Officer, it is likely that the Assessing Officer will have details of the taxpayer and may attempt to discreetly approach the taxpayer. Also, the Indian judicial system has rightly incorporated the concept of “giving opportunity of being heard” to justice seekers.

Therefore, currently at all levels of judicial machinery starting with the assessments by the Assessing Officer till the Supreme Court of India, the matter is personally represented by taxpayers or the appointed legal counsel. It is possible that elimination of the element of personal hearing may increase tax litigations, thereby making the system less citizen-friendly. This may be addressed by either making the advance ruling mechanism robust and applicable to even residents such that taxpayers have certainty on the positions taken by them in the return of income. Alternatively, a machinery may be created for taxpayers to represent facts and legal arguments in respect of tax positions taken by them.

To conclude, e-assessment will change the landscape of assessment proceedings and the future of tax litigation and can build a corruption-free nation so long as the entire scheme is suitably crafted.

(By Geeta Ramrakhiani, Director; Nikhil Sangtani, Deputy Manager; and Yash Gada, Assistant Manager, with Deloitte Haskins and Sells LLP)

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