The Finance Minister Nirmala Sitharaman introduced a faceless e-assessment scheme in the Union Budget 2019. It reduces human interaction between the taxpayer and the Income Tax Department (ITD).
The E-Assessment Scheme was launched on 7th October 2019 under the Income Tax Act, 1961. The new e-assessment scheme is expected to improve transparency and aid faster disposal of cases.
- What is e-Assessment?
- Process under e-Assessment Scheme
- Highlights of e-Assessment Scheme
- Benefits of e-Assessment Scheme
What is e-Assessment?
e-Assessment Scheme is a process for faceless scrutiny of Income Tax Returns. It eliminates physical interference between the taxpayer and the assessing officer.
Under the new scheme, all communication between the Income Tax Department(ITD) and the taxpayer will happen electronically. All internal communication within the ITD for a particular case will happen electronically.
National e-Assessment Centre (NeAC) is set up to facilitate the new scheme. This NeAC can assign the case to any Regional e-Assessment Centre(ReAC) through an automated allocation system
Process of e-Assessment
The step-by-step process under e-assessment:
- Notice u/s 143(2) will be served.
The Notice under section 143(2) served by the NeAC will specify the issues for the selection of the case for assessment.
- The taxpayer will have fifteen days to submit a response for scrutiny with the NeAC.
The NeAC will assign the case to an assessment unit in any of the ReAC, through an automated allocation system.
- After the case is assigned, the Regional Centre can request the NeAC for:
1. Information like: documents or evidence from the taxpayer or any other person
2. Conducting certain verification or enquiry
3. Technical assistance from the technical unit
- If the NeAC, accepts the regional unit’s request for documents.
They will forward it to the taxpayer.
- After gathering the required information, the assessing unit will pass a draft order, by either:
1. Accepting the ITR prepared of the taxpayer,
2. Or modifying the ITR of the taxpayer and send a copy to the NeAC. The assessing units will mention penalty proceeding – if any.
- The NeAC will review and examine the draft assessment using an automated examination tool, and decide to:
1. Finalize the assessment order and serve the demand notice to the assessee,
2. Provide the assessee an opportunity to present their case. They will have to explain – why the assessment should not be completed as per the draft assessment order.
3. Assign the order for a review to another Regional e-Assessment Centre through an automated allocation system
- The NeAC after completion of the assessment will transfer all the electronic records of the case to the Assessing Officer when:
1. Imposition of Penalty
2. Collection or Recovery of demand
3. Rectification of mistake
4. Submission of any reports – like remand report, etc.
5. Proposal seeking sanction for the complaint before the court.
Note: The NeAC can reassign the case to the Assessment Officer having jurisdiction over such cases at any stage of the assessment if it feels necessary.
Highlights of e-Assessment Scheme
- Use of an automated examination tool for Risk Management. The ITD stated they will use Artificial Intelligence and Machine Learning to view the scope of discretion of the Income Tax officers.
- Team-based assessment with dynamic jurisdiction is expected to increase efficiency and standardize processes.
- The NeAC i.e. National e-Assessment Centre is based in Delhi headed by Principal Chief Commissioner of Income-Tax.
- The NeAC will assign the cases using automated allocated systems to the Regional e-Assessment Centre (ReAC).
- ReAC will comprise of Assessment unit, Review unit, Technical unit, and Verification unit.
- 8 ReACs are set up across India in:
Benefits of e-Assessment Scheme
The expected benefits of the e-Assessment Scheme 2019:
- Higher Transparency
- Increased Efficiency
- Lower litigations
- Faster disposal of cases
A fully automated process with almost no human interaction. It is expected to ease compliance. This will further reduce the cost and anxiety for the taxpayer.
In terms of Notification No. 62/2019 dated 12th September 2019, the provisions of section 92CA shall apply to the assessment made in accordance with the E-Assessment Scheme 2019.
After logging in to the Income Tax Portal, select the ‘e-Proceedings’ link from under the ‘e-Proceeding’ tab, where you will be able to submit your e-proceedings.