Income-tax scrutiny all set to go electronic

The Central Board of Direct Taxes (CBDT) has mandated ‘e-proceeding’ for all income-tax scrutiny in 2018-19.

It has also specified seven situations where e-proceeding will not be mandatory this year. These include search cases, cases where returns were filed in paper mode and the assessee doesn’t have an e-filing account, and geographical areas with limited bandwith.

‘E-proceeding’ refers to the communication of data and documents between the Income-Tax Department and assessees through electronic mode, and where the assessments are done electronically.

In 2015, the CBDT had undertaken — on a voluntary basis — a pilot project of email-based assessment in five metros. This was extended to two more in 2016.

With the latest CBDT instruction, assessees will be required to produce their response/evidence to any notice issued by the Assessing Officer electronically, through their accounts on the e-filing portal.

The CBDT has also listed down four situations where personal hearing/attendance may take place, despite assessment proceedings being carried out electronically.

Commenting on the CBDT move, Aseem Chawla, Managing Partner, ASC Legal, told BusinessLine it reaffirms the resolve of enhancing transparency in tax policy.

“It is high time the legacy of uncertainty and element of unpredictability are done away with. The given directives are a step in the right direction,” he said.

Amit Maheshwari, Partner at Ashok Maheshwary & Associates LLP, said this will substantially reduce the administrative work for tax professionals as well as the I-T Department. However, the success will depend on how glitch-free the e-assessment facility is, he added.

Greater transparency

Amit Agarwal, Partner, Nangia Advisors LLP, said the CBDT move will provide a significant boost to the transparency and objectivity of tax assessments. It is widely perceived that the conduct of e-proceedings could significantly reduce the arbitrary approach of tax officers in framing assessments, he added.

Manual selection

In another separate instruction to its field formations, the CBDT has come up with guidelines for manual selection of returns for ‘complete scrutiny’ in 2018-19. The guidelines specify six parameters for manual selection.

The guidelines will address taxpayers’ apprehensions over the conversion of their limited scrutiny cases (issue-based scrutiny) to full scrutiny cases (comprehensive scrutiny), said Agarwal.

This assuages taxpayers’ fears about the handling of their assessments by overzealous tax officers, he added.