Introduction

In October 2015, the Central Board of Direct Taxes (CBDT) initiated a pilot project on the concept of using emails to correspond with tax payers at the time of scrutiny assessments. Under the pilot project, tax officers were to send questionnaires, notices etc. electronically and taxpayers had the option to respond through emails. The pilot project was introduced only in major cities for a limited number of cases. The objective of the project was to improve taxpayer services, enhance efficiency, and usher in a paperless environment for assessment proceedings.

In furtherance of the pilot project, the CBDT, on 23 June 2017, launched an “E-Proceeding” facility for an electronic conduct of scrutiny assessment proceedings.

“E-Proceeding” Facility

As per the E-Proceeding facility, the tax officer shall communicate with the taxpayers through the income tax e-filing website. The taxpayers are required to submit the responses along with attachments and evidences (as applicable) on the e-filing portal. The response submitted by the taxpayer will be viewed by the tax officer electronically. 

The E-Proceeding facility is available for limited scrutiny, complete scrutiny as well as compulsory manual scrutiny (formats for issue of selection notices under these circumstances have also been notified and they incorporate an aversion in relation to the said “E-Proceeding Facility”). However, where a compulsory manual scrutiny is being carried out in case of a search or a requisition, the assessment proceedings shall be conducted manually.

In addition to the above, the assessment proceedings may be conducted manually, if required, in the following situations:

  • where the manual books of accounts or original documents are to be examined,
  • where the tax authorities enforce personal attendance of a person under section 131 of the IT Act (i.e. summons for personal appearance),
  • where the examination of a witness is required by the taxpayer or the tax department, or
  • where a show-cause notice contemplating an adverse view is issued by the tax authorities and the taxpayer requests for personal hearing to explain his case.

The E-Proceedings facility has been introduced from the current financial year, and the CBDT has requested all taxpayers who do not have an account on the e-filing website to register themselves and create an account.

Comment

The E-Proceedings facility promotes the Government’s ‘Digital India’ campaign and is an environmentally friendly initiative promoting paperless assessment proceedings. In addition, the E-Proceedings facility shall provide the following benefits:

To the Taxpayer:

  • The E-Proceeding facility will substantially reduce the compliance burden on the taxpayer and facilitate information being provided to the tax officers in a quick and cost-efficient manner and will further bring in transparency in tax administration.
  • The E-Proceeding facility, shall reduce the time and costs spent on the logistics of making any submission before the tax authorities. The tax payers shall have the facility to make their submissions online from any place and at any time.
  • In case an adjournment or extension of time is required, the tax payer would not be required to travel to the tax office in order to obtain the same. It can simply be done on email.
  • The E-filing portal shall also act as a repository and assist the tax payer in maintaining complete information and records of all submissions made before the tax officer.
  • Since everything will be available in an organized manner, representation before the higher appellate authorities will be also simplified. 
  • Taxpayers retain an option to request for manual hearing in case they need to explain an issue for which a show-cause notice has been issued.

To the Tax Officer:

  • With the introduction of electronic service of notices, a lot of issues arising out of non-service of notices, questionnaires, etc. will be taken care of. Posting these documents on the portal itself will act as intimation to the tax payer (doing away with issues arising on service, like change in address of taxpayer, non-receipt or non-acceptance of notices, etc. 
  • The E-Proceeding facility shall assist the tax officers in maintaining a record of all assessment proceedings in an organized manner, and shall eliminate the risk of loss and damage of files.
  • The tax officers still retain their right to enforce the personal attendance of any tax payer or witness, if required and carry out manual proceedings in certain specified cases.
  • Tax officers will be able to devote more time to their core activities as well as assessment proceedings, as this initiative will save them a lot of time (that was earlier spent in sending notices, meeting taxpayers and their representatives even for basic things like submission of details, etc.).

This is a welcome move and will help both the taxpayers as well as the tax administration. This will make tax assessment proceedings less cumbersome and also time and cost effective for the taxpayers’ community.