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Faceless Assessment Scheme 2019

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Amendment in new procedure of faceless assessment under Faceless Assessment Scheme, 2019

Amendment in new procedure of faceless assessment under Faceless Assessment Scheme, 2019

S.O. 742(E).—In exercise of the powers conferred by sub-section (3B) of section 143 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, videnumber S.O 3265 (E), dated the 12th September, 2019,namely: —

  1. In the said notification, —
    (1) in clause 1, —
    (i) for sub-paragraph (1) of item A, the following sub-paragraph shall be substituted, namely:—

―(1) The assessment under this Scheme shall be made as per the following procedure, namely:—

(i) the National e-Assessment Centre shall serve a notice on the assessee under sub-section

(2) of section 143 of the Act;

(ii) the assessee may, within fifteen days from the date of receipt of notice referred to in clause (i), file his response to the National e-Assessment Centre;

(iii) where the assessee –

  • (a) has furnished his return of income under section 139 of the Act or in response to a notice issued under sub-section (1) of 142 of the Act or sub-section (1) of section 148of the Act, and a notice under sub-section (2) of section 143 of the Act has been issued by the Assessing Officer or the prescribed income-tax authority, as the case may be; or
  • (b) has not furnished his return of income in response to a notice issued under subsection (1) of section 142 of the Act by the Assessing Officer; or
  • (c) has not furnished his return of income under sub-section (1) of section 148 of the Act and a notice under sub-section (1) of section 142 of the Act has been issued by the Assessing Officer, the National e-Assessment Centre shall intimate the assessee that assessment in his case shall be completed under this Scheme.

(iv) the National e-Assessment Centre shall assign the case selected for the purposes of eassessment under this Scheme to a specific assessment unit in any one Regional e- Assessment Centre through an automated allocation system;

(v) where a case is assigned to the assessment unit, it may make a request to the National e- Assessment Centre for –

  • (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify;
  • (b) conducting of certain enquiry or verification by verification unit; and
  • (c) seeking technical assistance from the technical unit;

(vi) where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National eassessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment
unit;

(vii) the assessee or any other person, as the case may be, shall file his response to the notice referred to in clause

(vi), within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National e-Assessment Centre;

(viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National e-Assessment Centre to a verification unit in any one Regional e-Assessment Centre through an automated allocation system;

(ix) where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National e-Assessment Centre to a technical unit in any one Regional e-Assessment Centre through an automated allocation system;

(x) the National e-Assessment Centre shall send the report received from the verification unit or the technical unit, based on the request referred to in clause (viii) or (ix) to the concerned assessment unit;

(xi) where the assessee fails to comply with the notice referred to in clause (vi) or notice issued under sub-section (1) of section 142 of the Act, or with a direction issued under subsection (2A) of section 142 of the Act, the National e-Assessment Centre shall serve upon such assessee a notice under section 144 of the Act giving him an opportunity to show-cause, on a date and time to be specified in the notice, why the assessment in his case should not be
completed to the best of its judgment;

(xii) the assessee shall, within the time specified in the notice referred to in clause (xi) or such time as may be extended on the basis of an application in this regard, file his response to the National e-Assessment Centre;

(xiii) where the assessee fails to file response to the notice referred to in clause (xi) within the time specified in the notice or within the extended time, if any, the National e-Assessment Centre shall intimate such failure to the assessment unit;

(xiv) the assessment unit shall, after taking into account all the relevant material available on the record make in writing, a draft assessment order or, in a case where intimation referred to in clause (xiii) is received from the National e-Assessment Centre, make in writing, a draft assessment order to the best of its judgment, either accepting the income or sum payable by, or sum refundable to, the assessee as per his return or making variation to such income or sum, and send a copy of such order to the National e-Assessment Centre;

(xv) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any;

(xvi) the National e-Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to –

  • (a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or
  • (b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made; or
  • (c) assign the draft assessment order to a review unit in any one Regional e-Assessment Centre, through an automated allocation system, for conducting review of such order;

(xvii) the review unit shall conduct review of the draft assessment order, referred to it by the National e-Assessment Centre, whereupon it may decide to–

  • (a) concur with the draft assessment order and intimate the National e-Assessment Centre about such concurrence; or
  • (b) suggest such variation, as it may deem fit, in the draft assessment order and send its suggestions to the National e-Assessment Centre;

(xvii) the National e-Assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure laid down in sub-clause (a) or sub-clause (b) of clause (xvi), as the case may be;

(xviii) the National e-Assessment Centre shall, upon receiving suggestions for variation from the review unit, assign the case to an assessment unit, other than the assessment unit which has prepared the draft assessment order, through an automated allocation system;

(xix) the assessment unit shall, after considering the variations suggested by the review unit, send the final draft assessment order to the National e-Assessment Centre;

(xx) the National e-Assessment Centre shall, upon receiving final draft assessment order,follow the procedure laid down in sub-clause (a) or sub-clause (b) of clause (xvi), as the case may be;

(xxi) the assessee may, in a case where show-cause notice has been served upon him as per the procedure laid down in sub-clause (b) of clause (xvi), furnish his response to the National e-Assessment Centre on or before the date and time specified in the notice or within such time as may be extended on the basis of an application in this behalf;

(xxii) the National e-Assessment Centre shall, –

  • where no response to the show-cause noticeas per clause (xxii) is received,—
    • in a case where the draft assessment order or the final draft assessment order is in respect of an eligible assessee and proposes to make any variation which is prejudicial to the interest of such assessee, forward the draft assessment order or final draft assessment order to such assessee; or
    • in any other case, finalise the assessment as per the draft assessment order or the final draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, upon the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;
  • in any other case, send the response furnished by the assessee to the assessment unit;

(xxiii) the assessment unit shall, after taking into account the response furnished by the assessee, as referred to in sub-clause (b) of clause (xxiii), make a revised draft assessment order and send it to the National e-Assessment Centre;

(xxiv) The National e-Assessment Centre shall, upon receiving the revised draft assessment order, –

(a) in case the variations proposed in the revised draft assessment order are not prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, and –

  • in case the revised draft assessment order is in respect of an eligible assessee and there is any variation prejudicial to the interest of such assessee proposed in draft assessment order or the final draft assessment order, forward such revised draft assessment order to such assessee;
  • in any other case, finalise the assessment as per the revised draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, upon the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(b) in case the variations proposed in the revised draft assessment order are prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, provide an opportunity to the assessee, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made;

(xxv) The procedure laid down in clauses (xxiii), (xxiv) and (xxv) shall apply mutatis mutandis to the notice referred to in sub-clause (b) of clause (xxv);

(xxvi) where the draft assessment order or final draft assessment order or revised draft assessment order is forwarded to the eligible assessee as per item A of sub-clause (a) of clause (xxiii) or item A of sub-clause (a) of clause (xxv), such assessee shall, within the period specified in sub-section (2) of section 144C of the Act, file his acceptance of the variations to the National e-Assessment Centre;

(xxvii) the National e-Assessment Centre shall, –

  • uponreceipt of acceptance as per clause (xxvii); or
  • if no objections are received from the eligible assessee within the period specified in sub-section (2) of section 144C of the Act,

finalise the assessment within the time allowed under sub-section (4) of section 144C of the Act and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(xxviii) where the eligible assessee files his objections with the Dispute Resolution Panel, the National e-Assessment Centre shall upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C of the Act, forward such directions to the concerned assessment unit;

(xxix) the assessment unit shall in conformity of the directions issued by the Dispute Resolution panel under sub-section (5) of section 144C of the Act prepare a draft assessment order in accordance with sub-section (13) of section 144C of the Act and send a copy of such order to the National e-Assessment Centre;

(xxx) the National e-Assessment Centre shall, upon receipt of draft assessment order referred to in clause (xxx), finalise the assessment within the time allowed under sub-section (13) of section 144C of the Act and serve a copy of such order and notice for initiating penalty proceedings, if any, upon the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(xxxi) The National e-Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act.

(2) in sub-paragraph (2) of item B, —

  • in the first line for the word ―modification‖, the word ―variation‖ shall be substituted; and
  • in the first and third line  after the words ―draft assessment order‖, the words ― or final draft assessment order or revised draft assessment order‖ shall be inserted.

2. This notification shall come into force with effect from the date of its publication in the Official Gazette.

[Notification No. 7/2021/F. No. 370149/154/2019-TPL]

ANKIT JAIN, Under Secy.

Note : The principal notification was published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number S.O.3265 (E), dated the 12thSeptember, 2019.

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Know new time limit for Belated, Revised, Processing, Scrutiny of Income Tax Returns for FY 2021-22

Know new time limit for Belated, Revised, Processing, Scrutiny of Income Tax Returns for FY 2021-22

Assessment Provisions in Budget 2021

Amendment in provisions of processing of returned income u/s 143(1) and issue of notice of scrutiny assessment u/s 143(2)

  • Time limit to issue notice for scrutiny proceedings is proposed to be reduced from 6 months to 3 months, from the end of FY in which return has been filed.
  • Time limit for sending intimation for processing the return of income u/s 143(1) is also proposed to be reduced from 12 months to 9 months, from the end of FY in which return has been filed.
  • Currently, disallowance of expenditure indicated in tax audit report and not included in computation of income was only allowed to be added while computing total income u/s 143(1). It is proposed to provide for increase in income indicated in tax audit report but not taken into account in computation of income while processing returned income u/s 143(1).
  • It is proposed to disallow certain income based deductions under section 10AA and section 80H to 8OTT (Chapter VI —A under heading ‘C’) if the return of income is filed after due date and the same was not disallowed in the return of income.

Rationalisation of Time Limit for Completion of Assessments

  • The current time limit for the completion of assessment
    proceedings is within 12 months from the end of the AY.
  • It is now proposed to reduce the time limit for completion of assessment including reassessment proceedings to 9 months from the end of AY.
  • The proposed amendment will be effective from AY 2021­22 i.e. FY 2020-21.

Illustration of various timelines (assuming FY 20-21)

NoTimeline ofExistingProposed
1Belated / Revised
Return		Earlier of
31 March 2022 or
Completion of
Assessment		Earlier of
31 December 2021 or
Completion of
Assessment
2Processing of ITR u/s
143(1)		31March 202331December 2022
3Selection of Scrutiny
Assessment u/s 143(2)		30 September 202230 June 2022
4Completion of
Assessment u/s 143(3)		31 March 202331 December 2022

Budget Memorandum

Section 153 of the Act contains provisions in respect of time-limit for completion of assessment, reassessment and re-computation under the Act. The sub-section (1) of the said section provides that the time-limit for passing an assessment order under section 143 or 144 of the Act shall be 21 months from the end of the assessment year in which the income was first assessable.

However, this time limit had earlier been curtailed in order to improve the efficacy and efficiency of the Department to give effect to computerization of processes under the Act. As a result, the time limit for completion of assessment proceedings under sections 143 or 144 of the Act was reduced to 18 months for A.Y. 2018-19 and 12 months for A.Y. 2019-20 and subsequent assessment years vide the Finance Act, 2017.

Since then, the assessment procedure has been completely overhauled by the introduction of the Faceless Assessment Scheme, 2019. The assessment procedure is now conducted in a completely faceless and jurisdiction-less way where all internal and external communication is made electronically and different aspects of the assessment procedure like verification, scrutiny of books of accounts etc. are carried on by different units. The person-to-person interface between the taxpayer and the Department has been eliminated.

This team-based approach for assessment with a dynamic jurisdiction is technologically driven and very efficient. Thus, the time required for completion of assessment procedure needs to be further reduced.

The benefits of shorter time period for scrutiny proceedings are manifold. On the one hand, it reduces the compliance burden on the taxpayers who find it easier to explain matters pertaining to a recent previous year which also improve the ease of doing business. On the other hand, it enhances the ability of the Department to detect and bring to tax any leakages of revenue as the instances of tax evasion come to the notice of the Department within a shorter span of time.

Hence, it has been proposed that the time limit for completion of assessment proceedings may be reduced further by three months. Thus the time for completing of assessment is proposed to be nine months from the end of the assessment year in which the income was first assessable, for the assessment year 2021-22 and subsequent assessment years.

This amendment will take effect from 1st April, 2021.

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Faceless Assessment Scheme, a right step towards Minimum Government, Maximum Governance: Chief Commissioner – IT Mumbai

Faceless E-Assessment scheme is a right step towards Minimum Government, Maximum Governance and the foundation stone for a transparent tax system. This is how Principal Chief Commissioner of Income Tax in Mumbai, Shri Patanjali Jha summarizes the new platform of Income Tax Department.

He added that providing Ease of Tax Compliance and Opportunity to taxpayers before finalizing of Assessment Order are the core features of this scheme, while speaking at a webinar on ‘Faceless Assessment, Appeals & Taxpayer’s Charter’ jointly organized by the IMC Chamber of Commerce & Industry and Bombay Chamber of Commerce & Industry.

Making a comparison between the faceless assessment system and the current system it replaces, the Principal Chief Commissioner explained how the new system is one designed for the 21st century. “There is no discretion in selection of assessment cases, while earlier, case selection used to happen manually.

In place of single territorial jurisdiction, we now have automated random allocation of cases. While notices used to be issued both manually and on the system, issue of notices will now be done through a central mechanism (by NeAC) in electronic mode.

There will be no physical meeting with any officer, no officer will call you to office and no more waiting outside office”, explained Shri Jha. He also noted, wide discretion and subjective assessment are being replaced by team-based assessment and a system wherein draft order is issued in one city, review is done in another city and finalization is done in yet another city, said the Principal Chief Commissioner.

This apart, the scheme gives opportunity to taxpayers, in case of any order prejudicial before finalizing the Assessment order.

The Principal Chief Commissioner urged all taxpayers to visit the e-filing portal to understand how easy it is to use the platform from where all issues with the Department can be resolved easily. “On our part we expect you to understand and try to adapt; We will also provide suitable infrastructure facilities and ensure tax compliance is easy for tax payers”, stated Shri Jha

A National e-Assessment Centre (NeAC) and a network of Regional e-Assessment Centres will be set up to implement the Faceless Assessment Scheme of the Income Tax Department, launched nation-wide by Prime Minister Shri Narendra Modi on 13th August, 2020.

The regional assessment network would comprise assessment units, verification units, technical units and review units. The system allows for dynamic jurisdiction, team-based working, and functional specialization and does away with human interface altogether.

The Chief Commissioner of Income-Tax (ReAC) Mumbai, Smt. Lekha Kumar and Principal Commissioner of Income-Tax, Mumbai, Shri. Kaushal Shrivastava also addressed the participants and responded to their queries.

Faceless Assessment Scheme was rolled out in the Income Tax Department as a pilot project in September, 2019. Initially, a limited number of cases were picked up for faceless assessment which was being done at eight centres in the country.

The Prime Minister of India, Shri Narendra Modi announced the extension of the scheme to the entire department on 13th August 2020. The scheme is also being extended to the first appellate authority i.e. Commissioner of Income Tax (Appeals) from 25th September, 2020.

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CBDT Notifies E Assessment and who can carry on Survey under Section 133A of Income Tax

CBDT Notifies E Assessment and who can carry on Survey under Section 133A of Income Tax

Introduction

CBDT vide Notification F No. 187/3/2020-ITA on 13th August, 2020 directed that all the assessment orders shall hereafter be passed by National e-Assessment Centre through the Faceless Assessment Scheme, 2019.

Finance Minister Nirmala Sitharaman had announced the faceless assessment scheme also known as the e-assessment scheme in her Budget speech on July 5, 2019, which was subsequently inaugurated on October 7, 2019. This was aimed at moving to faceless scrutiny and elimination of human interface in assessment proceedings.

The scheme was set to bring in a “paradigm shift” in taxation by eliminating human interface in the income tax assessment system. The Ministry of Finance vide Central Board of Direct Taxes (CBDT) notification No 61 & 62 dated 12th September 2019 has respectively notified the E-assessment Scheme 2019 & given directions for its implementation.

Important features of the E-assessment Scheme

  1. A person shall not be required to appear either personally or through authorised representative for any proceedings before the income-tax authority at the National e-assessment Centre or Regional e-assessment Centre or any unit set up under this Scheme.
  2. If a modification is proposed in the draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the draft assessment order, the assessee or his authorised representative, shall be entitled to seek personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit under this Scheme.
  3. Such hearing shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony.
  4. Any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit, exclusively through video conferencing, including use of any telecommunication application software which supports video telephony.
  5. The Board shall establish suitable facilities for video conferencing including telecommunication application software which supports video telephony at such locations as may be necessary, to ensure that the assessee, or his authorized representative, or any other person is not denied the benefit of this Scheme merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing at his end.

Order under section 119 of the Income-tax Act, 1961 dated 13th August, 2020 pertaining to e-assessment

With the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax-administration. Keeping the same in mind, CBDT issued an order under Section 119 pertaining to assessment orders.

Section 119 of the Income Tax Act, empowers the Central Board of Taxes (CBDT) to issue instructions to lower level of authorities. In addition, section 119(2)(b) empowers CBDT to direct income tax authorities to allow any claim for exemption, deduction, refund and any other relief under the income tax act even after the expiry of the time limit to make such claim.

In order to ensure that all the assessment orders are passed through the Faceless Assessment Scheme, 2019, CBDT in exercise of powers under section 119 of the Income-tax Act, 1961 directed that all the assessment orders shall hereafter be passed by National e-Assessment Centre through the Faceless Assessment Scheme, 2019.

However the above order shall not be applicable to the below mentioned cases:-

  1. Assessment orders in cases assigned to Central Charges
  2. Assessment orders in cases assigned to International Tax Charges.

CBDT also issued order u/s 119 of Income Tax Act directing officers to exclusively act as “Income Tax Authorities”

With the launch of the Faceless Assessment Scheme 2019, the Income Tax department is moving towards minimal interface with the taxpayers, aiming at significant improvement in delivery of services and greater transparency in the working of the department.

Survey in a wider sense means to scrutinize or to inspect. The power of survey under the Income tax Act has been provided under Section 133A and Section 133B. Survey u/s 133A of the Act being an intrusive action, it is expected that the same should be carried out with utmost responsibility and accountability.

Central Board of Direct Taxes, in exercise of powers under section 119 of the IT Act, 1961 directed that the officers posted in Directorates of Investigation (Investigation Wing) and Commissionerate’s of TDS, only and exclusively shall act as “Income-tax Authority” for the purposes of power of survey under section 133A of the Income-tax Act.

The competent authority for approval of such survey  action u/s 133A of the Act shall henceforth be DGIT(Inv) for investigation wing and Pr. CCIT /CCIT (TDS) for TDS charges , as the case may be.

The Income-tax Act gives very wide powers to an authorised officer to carry out the search and also to seize documents and unaccounted assets. The authorised officer has the power to:

  1. Enter and search any building, place, etc. where he has reason to suspect that books of account, other documents, money, bullion, jewellery or other valuable article or thing representing undisclosed income is kept;
  2. Break open the locks, where the keys thereof are not available;
  3. Carry out personal search of the person who is suspected to have secreted some item as mentioned in a) above;
  4. Seize the items as mentioned in a) above;
  5. Place marks of identification and take extracts or copies of the books of account and other documents; and
  6. Make a note or inventory of the valuables found during the search.
  7. The authorised officer is also permitted to pass orders placing prohibition on the person in possession or control of the valuable article or thing from removing, parting with or otherwise dealing with such article or thing without prior permission.
    The authorised officer also has the right to demand the services of any Police officer or any officer of the Central Government
  8. The authorised officer cannot seize stock-in-trade of a business and he can only make a note of inventory of such stock-in-trade.

Prior to the above order passed by CBDT, survey action could not be taken by Assistant Director, or Deputy Director or Assessing Officer or Tax Recovery Officer without obtaining approval of Joint Commissioner or Joint Director.

However, now survey can only be carried out only by DGIT(Inv) for investigation wing and Pr. CCIT /CCIT (TDS) for TDS charges, as the case may be. This is a welcome change as the powers now can be only higher authority. This would in turn lead to effective accountability and improved efficiency in the survey process.

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