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    Future of Tax Assessment

    INTRODUCTION: 

    Our personal life is highly dependent on technology for various purposes such as purchase of goods, communication, travelling, knowledge learning etc. 

    As many persons are connected with technology, Government stepped aiming towards utilisation of technology in the Income tax department. 

    MEANING OF ASSESSMENT: 

    Every taxpayer must furnish details of Income to the Income tax department, by filing his return of Income. The return filed will be then processed by department. The process of examining the return of Income by department for confirming its correctness is called “Assessment”. 

    TYPES OF ASSESSMENT UNDER THE ACT: 

    There are five major assessments as mentioned below: 

    ?Summary assessment U/s 143(1) ?Scrutinyassessment U/s 143(3) ?Bestjudgement assessment U/s 144 ?Incomeescaping assessment U/s 147 ?Assessment in case of search or requisition U/s 153A 

    ROAD MAP: 

    Jurisdiction Free 

    Assessment  

    Advanced

     

    143 (1)              E-Assessment

     

    Preliminary

    Manual                 Assessment

     

    Assessment

     

    E-filing 

    INTRODUCTION OF E-FILING INTO THE SYSTEM: 

    In India filing of Income tax in electronic way was introduced in September 2004. This was initially introduced on a voluntary usage basis for all categories of Income tax assessee. 

    But from July 2006, it was mandated for all corporate firms to e-file their Income tax returns, which now been mandated for all tax payers. 

    PRELIMINARY ASSESSMENT U/S 143(1) 

    ?ROIfiledu/s 139, or in response to a notice u/s 142(1), ?ROIprocessed in the following manner: 

    1. Total Income / loss computed after making the following adjustments, namely: -

     

     

    Future of tax assessment

      

    Arithmetical                                           Disallowance of loss

    claimed, if ROI is

    error

    belated

     

    An incorrect claim,

    if apparent 

    Disallowance of 

    deduction 

    claimed u/s 

    Mismatch with

    Mismatch  between 

    Audit Report                   Form 26AS / Form 16 / Form 16A and ROI 

    CHALLENGES FACED UNDER MANUAL ASSESSMENT PROCEEDING SYSTEM: 

    o     Income tax return filed by assessee will initially be processed by Centralized Processing Centre (CPC), located in Bangalore.

    • Adjustments made without human interface o Assessee is given intimations through e-mail.

    o   Assessee can file online responses for adjustment in demand, short credit of tax etc.

    o   Notice, summons, order etc - can also be made through e-mail as a valid transmittal mode.

     

     

    • But, when the case is selected for assessment, the return will be transferred to the jurisdictional officer for a detailed scrutiny.
    • During assessment proceedings, lot of paperwork is required to be done by the tax payer along with personal appearance which is time consuming.
    • It is hardship on the tax payer to visit the department now and then for finalisation of case.
    • On the other hand, Income tax officers also find difficult in timely processing of pending cases and can assess only 1% of total returns filed. 

    ADVANTAGES: 

    • Detail explanation can be made on various aspects o Avoidance of Miscommunication

    o Direct interaction with Assessing officer o Stage of Assessment proceedings 

    DISADVANTAGES: 

    • Time consuming process o Chances of Corruption o Cost of visits 

    o   Fear of facing Income tax officer 

    INTRODUCTION TO E-ASSESSMENT:

    To overcome problems faced by the assessee and the department on manual assessment proceedings, CBDT launched a pilot project for online assessment in October 2015(vide CBDT letter no. F. No. 225/267/2015-ITA-II, dated October 19, 2015), called as ‘E-Assessment’ 

    Under e-assessment proceedings, tax payer will be assessed through online communication mode (say e-portal, e-mail etc.,)

    Initially, e-assessment was introduced for non-corporate assessees of five major cities – Delhi, Mumbai, Bengaluru, Chennai & Ahmedabad. Later, it was extended to Kolkata and Hyderabad. The success of the project in financial year 2015-16 ushered the implementation of the E-assessment option nationwide in financial year 2016-17 onwards. 

    FEATURES OF E-ASSESSMENTS: 

    • Tax Payer has an optioneither to opt for E-assessment or manual assessment. Once an option of e-assessment is exercised, it is possible to switch to manual assessment at any stage.
    • Also, in case any technical issues arose for issuing the notices or for filing the responses digitally, either the department or the tax Payer can switch to the personal proceedings. 

    o     All notices will be served at the registered email address of the Tax Payer;

    o     Time Saving and Convenient process as the tax payer can respond through Income-tax portal at anytime from anywhere. 

    o     Responses of assessee and department will be copied to This email address is being protected from spambots. You need JavaScript enabled to view it. for audit trail purposes and the record of all communication will be available under ‘My Account’ tab 

    o     Faster conclusion of the assessment proceedings over the manual proceedings

    • Tax Officer will pass the order and communicate it through the registered E-mail address of the assessee 
    • Reduce visits by tax payers to I-T offices and their interface with the department. o Curbing of corruption along with harassment faced by assessee 

    o Non-personal interface between individual assessee and the tax department thereby increasing transparency 

    o   Cost saving in record keeping and appointing representatives

    o   Filing responses digitally in support of the claim without resorting to the lengthy arguments 

    JURISDICTION FREE ASSESSMENT: 

    Jurisdiction means power or legal authority. Jurisdiction generally describes any authority over a certain area or certain persons. Where AO has been granted jurisdiction over any area, then his powers will be limited to such area. He would have jurisdiction in respect of any person, whose principal office is situated in such area. 

    Jurisdiction may be assigned by Commissioners of Income Tax to Assessing Officers with reference to specified areas, persons or class of persons or Income or classes of Incomes. [(Section 124(1)]. AO can receive the return from the assessees within his jurisdiction and makes assessment. Jurisdiction is not a matter of choice of either the Assessing Officer or the assessee. Assessee cannot be given the discretion to choose his officer. 

    Income Tax Officer                                                                Assessee 

    The Income Tax Department is working on a new system of jurisdiction-free assessment. Under Jurisdiction free assessment, taxpayer would be assessed by a tax officer based in any part of the country. It is the measure to minimize interaction between the tax payer and the tax officer, to curb corruption and to ensure transparency. 

    The system envisages allocation of a particular taxpayer’s profile to any officer across the country

    through a software when compared to the existing Jurisdiction Free Assessment system, where taxpayers are assessed in the specific 

    region where they are based. Under this, identities of the tax payer and his AO will be kept confidential. Hence, new system will require amendment in the act. 

    For Example: If the tax department launches scrutiny against a person in Delhi, the software will provide the related correspondence and generate a unique identification number. 

    This number, or code, would be randomly assigned to an Assessing Officer (AO) say of Mumbai or Guwahati or anywhere else and because of this AO will not be able to identify the person against whom the scrutiny has been launched. The investigation will be pursued based on the case details and the relevant documents pertaining to the matter. 

    TAX OFFICE ANY PLACE 

    Unique 

    identification

    number 

    CONCLUSION: 

    o   E-Assessment is a welcome initiation by the CBDT, which will smoothen and fasten the Assessment process

    o    There will be possibility of covering more cases thereby generation of revenue to the Government 

    It’s not that we use TECHNOLOGY… We live TECHNOLOGY And sufficiently advance TECHNOLOGY is Indistinguishable from MAGIC…

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