Income-tax Faceless Assessment: There is no need to meet the local Income Tax Department officer in case one receives a scrutiny notice, the tax department said in its latest public message on the new faceless assessment scheme. With the internet-based faceless assessment being used now, the “face of the Income Tax Department is changing”, it said. The department said a person or an assessee need not worry if they receive a tax scrutiny notice from the department.
India will perhaps be the first country to implement such a system, CBDT chairman PC Mody told ET, adding that it will reduce litigation and unnecessary irritants to taxpayers while allowing both taxpayers and tax officers to continue to work from home amid the rising number of Covid-19 cases in India.
“Faceless income tax is here to help. No need to meet your local income tax officer to explain your income and tax. “Reply electronically on the income tax department portal (website),” it said. Such replies will be reviewed by a faceless income tax team located in different cities of India, it added.
Central Board of Direct Taxes (CBDT) Chairman Mody said all such notices need to be responded to electronically without the requirement of visiting a tax office or meeting any official.
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 centralized computer system.
Earlier during assessment proceedings in scrutiny cases, taxpayers or tax professionals were required to make multiple visits to the income tax office. There were allegations and some incidence of discretion and subjective approach, which often resulted in high-pitched assessments.
“Ultimately taxpayer does not know who the assessing officer is. This will improve the confidence of taxpayers as their compliance burden of visiting tax offices is reduced,” Mody said.
Why the income tax department is betting on the faceless assessment of taxpayers?
No territorial assessment officer:
The tax department believes that faceless assessment will reduce the arbitrariness of the taxman and will avoid harassment of taxpayers. The team-based assessment is subject to review and allows dynamic jurisdiction that that provides a stress-free environment for the taxpayer.“We have eliminated the interface with a territorial assessment officer. Questionnaires are sent electronically and taxpayers can respond on email,” CBDT Chairman PC Mody said to ET Now.
The tax department will be sending emails and SMSes to identify taxpayers to verify their financial transactions and the taxpayer can confirm, deny, and give clarity on those transactions so that there are no mismatches. “The new form 26AS For income tax filing will put the onus on taxpayers to edit confirm or deny any information. It will reduce mismatches significantly and thereby push voluntary compliance and eliminate irritants,” CBDT Chairman said.
The digital nature of the process will ensure that the turnaround time is far less for assessments to be done. The government hopes that faceless assembly will reduce tax litigation significantly.
Expansion in tax base:
The improved compliance is expected to significantly offset the gaps in tax collections too. Form 26AS is set to give the taxman details on specified Financial Transactions in various categories like cash deposits, sale or purchase of immovable property, Financial market transaction. The government aims to make the Statement of Financial Transactions even wider. “We will add more information to Form 26AS of ITR. It will cover more ground and will aid in the expansion of the tax base,” the CBDT Chairman added.