Search and seizure, int'l tax cases out of faceless assessment ambit: CBDT

All income tax cases picked up for scrutiny, except those relating to search and seizure as well as international tax charges, will be assessed under faceless assessment beginning Thursday, the Central Board of Direct Taxes (CBDT) said.

All income tax cases picked up for scrutiny, except those relating to search and seizure as well as international tax charges, will be assessed under faceless assessment beginning Thursday, the Central Board of Direct Taxes (CBDT) said. The CBDT, which administers personal and corporate income tax, directed that "all assessment orders shall hereafter be passed by National e-assessment Centre through the Faceless Assessment Scheme, 2019", except those related to central charges and international tax cases.

The CBDT said this is being done to ensure that all the assessment orders are passed through Faceless Assessment Scheme, 2019. Nangia & Co LLP Partner Shailesh Kumar said the administrative order issued by the CBDT is part of implementation of taxpayers' charter unveiled by Prime Minister Narendra Modi on Thursday.   "This order provides that the tax department will now onwards conduct only faceless assessments, except cases pertaining to central charges (essentially dealing with search and seizure cases) and international tax cases. This will substantially reduce interaction between taxpayers and tax authorities in assessment proceedings," Kumar said.   He said this will also help in speedy completion of assessment proceedings by tax authorities, as they will solely rely on written submissions filed by taxpayers instead of personal meetings/ discussions, which are sometimes more time consuming.

Cases involving search and investigation (i.e. central charges) and international tax issues have been kept out of faceless assessment scheme, merely because of sheer complexity of issues generally involved in these cases, for which face to face interaction may still be required, Kumar added. "While, in principle, this is a welcome step taken by the government, still on implementation side, it will be important how tax officers handling faceless assessments understand cases based on written submissions only and a lot will also depend on quality of written submissions filed by taxpayers," he said.

In absense of clear and to the point submissions, it may result in unwarranted additions/ adjustments and future tax litigation, Kumar said. "So, both tax authorities and taxpayers need to be extra careful." Under faceless scrutiny assessment, a central computer picks up tax returns for scrutiny based on risk parameters and mismatch and then allots them randomly to a team of officers. This allocation is reviewed by officers at another randomly selected location and only if concurred, a notice is sent by the centralised computer system. All such notices need to be responded electronically without the requirement of visiting a tax office or meeting any official. Since its launch on October 7, 2019, and the subsequent implementation, till July 2020 a total of 58,319 cases were assigned for first phase of faceless assessment, based on computer algorithms.

Out of these, around 8,000 cases have been disposed of till July, with assessment orders issued without any additions and 291 cases wherein additions are proposed to be made have been submitted to the risk management unit.  AKM Global tax Partner Amit Maheshwari said "in continuation on the push towards e-assessment, henceforth all assessments (barring a few cases) would be passed by National e-Assessment Centre. Also,it has been clearly mentioned that an assessment which is not in conformity with this would be deemed to have never been passed". To facilitate better taxpayer services, the CBDT has reduced the percentage of I-T returns picked up for scrutiny.

Income tax returns picked up for scrutiny have reduced to 0.25 per cent of the total ITRs filed in the assessment year (AY) 2018-19, from 0.55 per cent in AY 2017-18. The number was 0.71 per cent in AY 2015-16 and 0.40 per cent in AY 2016-17. Currently, most of the functions of the Income Tax Department starting from the filing of return, processing of returns, issuance of refunds and assessment are performed in the electronic mode without any human interface.

Taking forward faceless assessment process, the CBDT will launch "faceless appeal" beginning September 25..

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