TAX LAWS DURING COVID-19: THE IMPORTANCE OF E-ASSESSMENT
As all forms of business and activities are
switching to online interfaces to ensure adequate social distancing. State
duties that will befall several citizens such as responding to tax assessments
can be done online since last year, when the central government launched the
visionary 2019 E-Assessment Scheme. The following questions deal with the
purpose, procedure and benefits of the scheme.
1.
What is the 2019 E-Assessment scheme introduced by the government?
The 2019 E-Assessment scheme was brought in by
the Union Government during the 2019 Budget Session. It aims at a faceless
electronic assessment of taxes for individuals, effectively eliminating human
interface between the taxpayer and the income tax department.
The Central Board of Direct Taxes has set up a
National e-Assessment Centre, along with Regional Centres to control the
overall functioning of the scheme. Verification, technical and Review Units
have been set up in each region for such functions, and even eight Assessment
Units are present for identifying liabilities and analysing the information
provided. With this structure, an elaborate system of e-Assessments has come
into operation since last year, and will be very useful in present times. [Formed under sub-section (3A) of section 143 of the Income-tax
Act, 1961 (43 of 1961), Dept. of Revenue, Ministry of Finance, S.O. 3264(E),
dt. September 12, 2019].
The 2019 E-Assessment scheme is
thus, an online system of tax assessment that minimises human interface between
the taxpayer and the Income Tax Department.
2.
Why was the E-Assessment scheme brought in place?
The Scheme was launched in October 2019. It is
part of the government’s efforts to reduce human discretion in the assessment
and scrutiny of tax returns that in turn could help eliminate possibilities of
corruption, by minimising personal interaction between the taxpayer and the
authorities.
Another aspect in which the e-Assessment
scheme aims to be more fair is, cases will be referred to eight different
e-assessment units across the country that have been discussed above,
automatically. The purpose of this is to ensure more transparency and reduce
grievances related to over-pitched assessments, and reduce litigation as a
consequence. [See Revenue Secretary Inaugurates National
e-Assessment Centre, Press Information Bureau, Ministry of Finance, dt. October
7, 2019].
The Scheme was therefore
introduced to ensure transparency, correct assessments, corruption and human
discretion, making the assessment process as fair as possible for the taxpayer.
3.
What is the procedure to be followed for E-Assessment?
The Government has directed that the following
procedure has to be followed:
Notice and Response: A
notice under section 143(2) would be served by the National e-Assessment Centre
to the taxpayer’s about his case for assessment, to which the taxpayer must
respond in fifteen days.
Automated Assignment to
Assessment Unit: An assessment unit and a Regional e-Assessment Centre will
be assigned through the automated allocation by the National e-Assessment
Centre, which will then provide that Unit with the appropriate documents,
verifications and technical assistance, as needed.
Draft Assessment Order: The
Assessment Unit shall evaluate all the relevant material gathered and pass a
draft assessment order either accepting the returned income of the taxpayer or
modifying the returned income of the taxpayer, as the case may be, and send a
copy of such order to the National e-Assessment Centre. While making the draft
assessment order, The Unit must provide details of the penalty proceedings to
be initiated therein, if required in the case.
Examination of Draft Assessment
Order: The National e-Assessment Centre shall carry out this
examination and may then either: a) Finalise the assessment as per the draft
assessment order and serve a copy of the same to the taxpayer, specifying the
sum payable by, or refund of amount due to the taxpayer accordingly; or b) in
case of modification, Provide an opportunity to the taxpayer to show cause as
to why the assessment should not be completed as per the draft assessment order;
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.
Review: The
review unit may either concur or suggest modification, and accordingly inform
the National e-Assessment Centre of its decision:
• In case of concurrence, the National
e-Assessment Centre shall finalise the draft assessment order or provide an
opportunity to the taxpayer in case a modification is proposed.
• In case of suggestions for modifications,
the National e-Assessment Centre shall communicate the same to the assessment
unit, which will then accordingly send the final draft assessment order to the
National e-Assessment Centre.
Finalisation of Assessment
Order: Upon receiving final draft assessment order, the National
e-Assessment Centre shall finalise it, or provide an opportunity to the
taxpayer in case a modification is proposed, as the case may be.
[See Clause 5, E-Assessment
Scheme 2019]. *The National e-Assessment Centre has the power, at any stage, to
transfer the case to the Assessing Officer [Clause 5(xxi)].
4.
Can there be penalties imposed on the taxpayer during the process?
Aside from the obligations at the end of the
assessment, penalties may be imposed on the taxpayer for non-compliance of the
procedure. Any unit may, in the course of assessment proceedings, for
non-compliance of any notice, direction or order issued under this scheme on the
part of the taxpayer or any other person, send recommendation for initiation of
any penalty proceedings under the income tax law, against such taxpayer or any
other person, as the case may be, to the National e-Assessment Centre, if
considered necessary. The National E-Assessment Centre then serves notice and
imposes the penalty. [Clause 6, E-Assessment Scheme
2019]
Therefore, the taxpayer must
carefully comply with the procedure established, else penalties may also be
levied for non-compliance.
5.
What happens after the National E-Assessment Centre has completed the
assessment process?
Once the National e-Assessment Centre has
completed the assessment, the matter is transferred before the Assessing
Officer under whose jurisdiction the case falls so that he may impose a
penalty, make recovery of demand, rectify mistakes, give effect to appellate
orders, submission of any relevant reports to the Commissioner/Appellate
Tribunal/Court, as the case may be, or seek proposal for launch of
prosecution. [Clause 5(xx), E-Assessment Scheme 2019]
Thus, after the National
E-Assessment Centre has completed the assessment process, the case is
transferred to the Assessing Officer who takes appropriate action based on the
outcome of the E-Assessment.
6.
Can the e-assessment be challenged by the taxpayer?
Under the E-Assessment Scheme, the order of
assessment made by the National e-Assessment Centre can be challenged in appeal
before the Commissioner (Appeals) having jurisdiction over the jurisdictional
Assessing Officer. [Clause 7, E-Assessment Scheme
2019]
Thus, there exists a provision
for appeal.
7.
How will the E-Assessment scheme become vital in times of the COVID-19
pandemic?
The spread of the novel coronavirus is through
human contact. Large parts of the world remain in lockdown with vast losses to
the economy, in attempts to ensure social distancing and curb the spread of the
virus. It is evident that even when lockdowns are lifted, people will not be
able to freely move about and visit crowded places, till not just when the
virus is fully wiped out, but a vaccine is developed.
This implies that for a long period, human
interaction has to be limited. Government offices are places people are
compelled to often visit as part of their duties as citizens, but if the system
of E-Assessment is promoted further and made available for a larger number of
people, personal interaction between the taxpayers and the department can be
significantly reduced, which will ensure adequate social distancing.
Further, with time, people had anyway begun
preferring online systems and procedures for completing their various
liabilities towards the governments from the comfort of their home, saving on the
costs and harassment of repeatedly having to travel to the designates
government office.
In these ways, the E-Assessment
Scheme is actually the future of tax assessment, ensuring transparency, reduced
corruption, and assessment without human interaction, all from the safety of
the taxpayer’s home.
By Shiv Mangal Sharma
Advocate Supreme Court
