The Central Government has notified amendments to its E-Assessment Scheme, 2019. The amendments were published by a notification dated 13th August, 2020 and is effective immediately.
The following are some of the critical aspects of the amendments:
- The Scheme is now called ‘Faceless Assessment’ instead of ‘E-Assessment’.
- The scope of the term ‘assessment’ has been widened to include Best Judgment Assessment under Section 144 of the Income Tax Act, 1961 (IT Act). Prior to this assessment referred only to scrutiny assessment under section 143 (3) of the Income Tax Act, 1961. Therefore ‘assessment’ under this scheme now refers to scrutiny assessment or best judgment assessment.
- The scheme also clarifies that ‘Rules’ for the purpose of this scheme, means Income Tax Rules, 1962.
- The amendment increases the prowess of technical units set up by the Central Board of Direct Taxes (CBDT) so as to include the function of audit. The technical units also provide advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter. These functions have been enhanced to include audit as well.
- The amendment has made the procedure for assessment more transparent and clear. It provides for three situations in which assessment shall be completed under this scheme:
- The assess furnished ITR under section 139 or in response to an inquiry before assessment [section 142(1) of the IT Act] or in response to a Notice for Income Escaping Assessment [section 148(1) of the IT Act], or
- The assessee has not furnished his ITR in response to a notice of inquiry before assessment or
- The assessee has not furnished his ITR for income escaping assessment and a notice of Inquiry before Assessment has been issued by the Assessing Officer ;
Further, the National e-assessment Centre can issue appropriate notice or requisition to the assessee or any other person to obtain information, documents or evidence requisitioned by the assessment unit. The amendment now gives the assessee or such other person the opportunity to furnish a reply to it within the specified time.
If he fails to respond to this notice or to the notice under section 142 (1) of the IT Act, 1961 or direction under (2A), he shall be given the opportunity to show-cause and file his response, on a specified date and time, as to why the assessment in his case should not be completed to the best judgment.
Additionally, if he fails to respond to the show-cause notice as well, it will be intimated to the assessment unit who will make a draft assessment order to the best of its judgment and sent a copy to the National e-Assessment Centre. In other cases, the draft assessment order shall be based on the assessment unit shall, after taking into account all the relevant material available on the record.
While making a draft assessment order, the unit must provide details of the penalty proceedings to be initiated.
Furthermore, where the draft assessment order is assigned to a review unit and the unit suggests modifications, the National e-assessment Centre shall assign the case to an assessment unit other than the original assessment unit by automated allocation. This assessment unit will then send a final draft assessment order to the National e-assessment Centre.
