By CA Geetanshu Bhalla, Founder, The Virtual Compliance
Last month, the government launched the concept of Faceless Assessment for honest taxpayers, which no doubt will certainly bring down the corruption and unnecessary proceedings that earlier caused undue hardship with the honest taxpayers. In addition to bringing down corruption and unnecessary proceedings, it will provide additional benefits to the taxpayers which are as under:
1. No need to visit tax office
Taxpayers neither need to go to the tax office either himself nor through an Authorised Representative, they can represent their case to the tax officer themselves by submitting their submission online. Thereby, they don’t need to waste their time waiting for their turn of hearing in the income tax office.
2. Specialised team of officers
The assessment will be done by the team rather than a single officer even that team will be supported by the technical experts, verification experts, etc, it appears that now assessment will be completed on merit.
3. Transparent Environment
Now taxpayers will have the record of each hearing including the noting of the assessment team which earlier is not available with the taxpayers. Availability of such noting will certainly support the taxpayers in drafting the application for appellate proceedings in case it requires.
However, there are also few apprehensions which income tax department needs to be re-consider keeping in mind the interest of the honest taxpayers.
Clarity on Jurisdiction
Lets understand with illustration – Mr. Bhalla resides in Delhi and has a Pharmacy business in the city. On the issue of the eligibility to claim expenses on account of distribution of free samples of medicines to doctors while computing his income, there are two divergent Judgements of High Courts namely Delhi High Court allow the claim and Bombay High Court disallowed the claim. In these circumstances, if the tax jurisdiction of Mr. Bhalla fall under Delhi, the Jurisdiction tax officer is duty bound to accept the claim of Mr. Bhalla by relying of Delhi High Court Ruling, However, if the jurisdiction fall in Bombay, the Jurisdictional tax officer can reject the claim by placing the reliance on Bombay High Court even though favourable ruling of Delhi High Court is available on the given issue. That’s why it is very important to know about the jurisdiction.
Now, under Faceless Assessment, we are talking about jurisdiction less assessment which only leads to unwarranted tax litigation in future, because in above illustration, if taxpayers do not know about their jurisdiction High Court, it is quite difficult for Mr Bhalla to decide whether we should go with reliance on Delhi High Court judgement or not.
The government must clear the issue by either creating the deemed fiction or by issuing the notification, otherwise taxpayers will have to face undue hardship owing to this.
English is not the official language across India and thus, legal documents including contracts, property registration papers, etc which are generally required to be submitted and examined during the course of assessment proceeding, may be in the local official language) which Income tax team sitting in another region may not be easily appreciated. Thus, may be asked for the verified translation of the same. If English translation is asked for, this will not only increase the compliance cost of the taxpayers but also require the additional time of the taxpayers. Thus, the Government must consider this issue and must not put the onus on the taxpayer for furnishing the translation form of the documents.
Information Technology Infrastructure
Since the faceless assessment provisions appears to be provide the transparent, virtual hearing and expert team-based assessment, taxpayers may be interested to provide the requisite documents and information by themselves, accordingly, may be required few information technology based tools namely software reducing the size of documents, Apps providing the scanning documents services, App allowing uploading heavy files at low internet speed, etc. Thus, the Government must consider providing such information technology-based tools at free of cost along with proper guidance to use it so that taxpayers do not face any challenges while submitting the requisite documents and information.