In furtherance of its widely promoted objective of ensuring efficiency and transparency in tax administration, the Government has notified the much-awaited E-assessment Scheme, 2019 vide Notification No. 61/2019 (Scheme) to provide a framework for conducting assessment proceedings by:
➢ eliminating the interface between the tax authorities and the taxpayer in the course of proceedings to the extent technologically feasible;
➢ optimising utilisation of the resources through economies of scale and functional specialisation; and
➢ introducing a team-based assessment with dynamic jurisdiction.
The e-assessment initiative of the Government, which is expected to be rolled out next month, marks a landmark development as it is aimed at a complete overhaul of the manner in which assessments are conducted by the Income-tax department (Department). Please see below our analysis.
Under the Income-tax Act, 1961 (IT Act), taxpayers are assessed by the jurisdictional tax officers depending on the place of residence / incorporation of the taxpayer. Currently, though the selection of a case for scrutiny is done primarily with the help of a ‘Computer Aided Scrutiny Selection’ mechanism (based on predefined parameters), the assessment itself is done by the jurisdictional tax officer manually involving personal hearings before the officer. This involves a high level of personal interaction between the taxpayer (or its authorised representative) and the Department.
To overcome the concerns posed by such a mechanism, ‘e-assessment’ was first introduced in the year 2016 on a pilot basis with the objective of reducing the interface between the Department and the taxpayers. Thereafter, in the year 2018, the IT Act was amended to enable the Government to notify a scheme for the purposes of conducting e-assessments - in furtherance of which, the Government has notified the Scheme.