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

New Delhi: 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.

Meanwhile, the income tax surveys to collect information for scrutiny assessment will be undertaken only by the investigation wing and the tax deducted at source (TDS) directorate with effect from Thursday, the Central Board of Direct Taxes (CBDT) has said.

In an order, the CBDT said officers in Directorate General of Income Tax (DGIT) (Investigation) and Principal Commissioner of I-T/Chief Commissioner of I-T (TDS) "only and exclusively" shall be the competent authority for approving survey actions with effect from August 13, 2020.

"The survey action u/s 133A of the Act being an intrusive action, it is expected that the same should be carried out with utmost responsibility and accountability," the CBDT said, adding that with faceless assessment the department is moving towards minimal interface with taxpayers.

Nangia Andersen LLP Partner Aravind Srivatsan said the previous regime allowed taxmen from inspector onwards, jurisdictional assessing officer to initiate the survey with prior approval of joint commioner of income tax. "In effect the powers of the assessment authorities which were exercised in the normal course will now have to be backed by credible evidence to seek such approval from now permitted higher authorities. This shows the government intention to ensure only genuinely deserving cases would go through this procedure," Srivatsan said.

In an I-T survey, tax officers visit business premises of the taxpayer to gather information by way of examination of books of accounts, data stored electronically and also access email communication.