Step wise process for E Assessment of Scrutiny Notice in Income Tax and Important points for taxpayers
Income Tax Department has Notified on 12 September 2019, Scheme which is called the E-assessment Scheme, 2019. Under the new scheme all the scrutiny assessment of Income Tax Returns will be done through automated allocation system with help of artificial intelligence and machine learning, which will be completely faceless e-assessment of income tax.
Following are the Steps for E Assessment of Scrutiny Notice in Income
1) Receiving Income Tax Notice 143(2) Scrutiny by Email by National e-Assessment Centre
Till date communication and deliver of Notice from Income Tax was manually to the registered address or address mention in Income tax Returns. This will be first time that Notice will be delivered electronically to register email address of the assessee. Further the Assesee will also receive an alert on Register Mobile Number.
Now from September 2019, the notice on the assessee under sub-section (2) of section 143,
specifying the issues for selection of his case for assessment; will be send on following email address
(a) the email address available in the electronic filing account of the addressee registered in designated portal; or
(b) the e-mail address available in the last income-tax return furnished by the addressee; or
(c) the e-mail address available in the Permanent Account Number database relating to the
(d) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India ;or
(e) in the case of addressee being a company, the e-mail address of the company as available on the
official website of Ministry of Corporate Affairs; or
(f) any e-mail address made available by the addressee to the income-tax authority or any person
authorised by such authority.
Further a real time alert will be sent to the assessee, by way of SMS on his registered mobile number, or by way of update on his Mobile App, or by way of an email at his registered email address, so as to alert him regarding delivery of an electronic communication;
Income Tax Department will soon come out with Mobile app which will be application software of the Income-tax Department developed for mobile devices which can be downloaded and installed on the registered mobile number of the assessee
So from now onwards it is very important for all assessee to put their email address and mobile number in E filing portal of Income Tax. Click to Know How to change update Mobile number and email id in your Income Tax E filing account.
2) Regional e-assessment Centres and National e-assessment Centre to be open
A National e-assessment Centre to facilitate the conduct of e-assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make assessment. Regional e-assessment Centres as it may deem necessary to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a Principal Chief Commissioner. This centres will use algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning to select notices for scrutiny. National e-assessment Centre shall assign the case selected for the purposes of e-assessment under this Scheme to a specific assessment unit in any one Regional e-assessment Centre through an automated allocation system;
3) Four Different Units named assessment units, verification units, technical units, review units, to be formed to conduct assessment
a) Assessment Unit:
To facilitate the conduct of e-assessment, to perform the function of making assessment, which includes identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee
b) Verification units,
To facilitate the conduct of e-assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification.
c) Technical units
To facilitate the conduct of e-assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter
d) Review units
To perform the function of review of the draft assessment order, which includes checking whether the relevant and material evidence has been brought on record, whether the relevant points of fact and law have been duly incorporated in the draft order, whether the issues on which addition or disallowance should be made have been discussed in the draft order, whether the applicable judicial decisions have been considered and dealt with in the draft order, checking for arithmetical correctness of modifications proposed, if any, and such other functions as may be required for the purposes of review,
All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.
4) How All Units will help in Assessment and process till Order is Final
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 assesse 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;
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 e-assessment 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; 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 through an automated allocation system;
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 eassessment Centres through an automated allocation system; The assessment unit shall, after taking into account all the relevant material available on the record, make in writing, a draft assessment order either accepting the returned income of the assessee or modifying thereturned income of the assesse, as the case may be, and send a copy of such order to the National eassessment Centre;
The assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any; 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 as per the draft assessment order 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; or (b) provide an opportunity to the assessee, in case a modification is proposed, 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; 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; The assessment unit shall, after taking into account the response furnished by the assessee, make a revised draft assessment order and send it to the National e-assessment Centre;
5) Hearing through Video Conference or electronic mode only
A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under this Scheme before the income-tax authority at the National e-assessment Centre or Regional e-assessment Centre or any unit set up under this Scheme.
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 such draft assessment order, the assessee or his authorised representative, as the case may be, 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, and such hearing shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony. The Board shall establish suitable facilities for video conferencing including telecommunication application software which supports video telephony at such locations as may be necessary,
5) Transfer to AO
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 such case
(a) Imposition of penalty;
(b) Collection and recovery of demand;
(c) Rectification of mistake;
(d) Giving effect to appellate orders;
(e) Submission of remand report, or any other report to be furnished, or any representation to be made, or any record to be produced before the Commissioner (Appeals), Appellate Tribunal or Courts, as the case may be;
(f) Proposal seeking sanction for launch of prosecution and filing of complaint before the Court;
The National e-assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case.
6) Penalty proceedings for non-compliance
The National e-assessment Centre shall, on receipt of such recommendation, serve a notice on the assessee or any other person, as the case may be, calling upon him to show cause as to why penalty should not be imposed on him under the relevant provisions of the Act. The National e-assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the same on the assessee or any other person, as the case may be.
7) Delivery of electronic record (New Way to Deliver Notice from Manual to Electronic)
(1) Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being the assessee, by way of-
(a) placing an authenticated copy thereof in the assessee's registered account; or
(b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised
(c) uploading an authenticated copy on the assessee’s Mobile App; and followed by a real time alert.
(2) Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert.
(3) The Assessee shall file his response to any notice or order or any other electronic communication, under this Scheme, through his registered account, and once an acknowledgement is sent by the National e-assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated.
(4) The time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000).
8) Conclusion and challenges
It is now mandatory for the taxman to make all communication with you online. Tax notices will be issued by a centralised e-assessment centre requiring taxpayers to reply only through digital mode. Through mobile app, real time alerts would be sent to assessees updating about progress in the case.
This new scheme of assessment will represent a paradigm shift in the functioning of the income tax department, reduce chances of corruption to significant extent.
Moving to digital from the decades-old system of manual scrutiny, the tax department would use data analytics, artificial intelligence, machine learning and other latest tools to ascertain misreporting or tax evasion. However, the digital capabilities may pose significant implementation challenges in India considering majority of population is not tech savy. Further coming out with Mobile Application would require smart phone with all the assesee which is not practically possible. It would be interesting to know if senior citizen would be exempt as it would be difficult for them to use technology for income tax scrutiny. Only time will say how successful the new scheme will be.