Indirect taxes have recently shifted from an individual assessments to a faceless e-assessment for taxable income. Indeed, India is one of the few countries worldwide to have implemented such a system. E-assessment will usher in a paradigm shift in taxation by eliminating the human touch from the Income Tax system’s tax assessment. Cases for scrutiny are assigned to assessment units at random using computer-generated automated algorithms. Then, without disclosing the identity of the assessment officer, notices are issued electronically by a Centre, the National e-Assessment Centre. The NeAC is a team-based organisation that serves as a single point of contact between the taxpayer and the I-T Department.
This scheme eliminates undesirable methods that emerge when there is a possibility of individual bias and subjective judgement. The method’s anonymity can deter high-pitched assessments and result in objective, truthful, and straightforward assessment orders that can be completed in a short period of time. The ministry of finance has announced the release of a revised Form 26AS that includes additional information about taxpayers’ high-value financial transactions, such as cash deposits/withdrawals and property purchases made during a fiscal year.
Taxpayers will no longer be required to visit territorial jurisdiction tax officers or the Internal Revenue Service upon receipt of tax scrutiny or assessment notices under the new system, obviating the need for face-to-face interactions. This can put an end to any harassment of honest taxpayers that is possible. Additionally, the system is expected to foster a significant increase in trust within the system by making the process transparent and taxpayer-friendly. The theme is intended to evoke a hassle- and harassment-free faceless assessment for honest taxpayers and to foster a non-adversarial and beneficial tax environment.
In broad terms, the centre shall serve a notice on the assessee outlining the criteria for assessing his case. The assessee may file a response to that notice within 15 days of receipt. Through an automated allocation system, NeAC would assign cases to specific assessment units, implying dynamic authority. At any stage where a modification that would be detrimental to the taxpayer is proposed, NeAC shall give the taxpayer an opportunity to be heard and explain its position prior to the judgment’s conclusion. This may include video conferencing representation. Once the assessment is complete, the centre will transfer all electronic records to the authorised tax officer for the purpose of imposing penalties, initiating prosecution proceedings, and recovering unpaid demands, among other things.
The most critical aspect of the new procedure is that it incorporates ‘best judgement assessment’ into the faceless Assessment Scheme. Previously, only jurisdiction AO could make a best judgement assessment in cases of non-cooperative taxpayers. Territorial AOs may eventually become aware of taxpayers and contact/convince them to cooperate with tax authorities in order to expeditiously complete assessment proceedings, particularly in cases where taxpayers miss notices unknowingly. Now, even in those instances where the payer does not adhere to the specified timeframe, the payer’s best judgement may be made in accordance with NeAC’s directions, which may result in an adverse best judgement for the taxpayer. As a result, it is preferable for taxpayers if notices issued during this scheme are issued on time.