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How did it all start?

2017 E-assessment in other cities.
2018 E-assessment announced to be mandatory in few cities.
2019 E-assessment Scheme 2019.
2021 Section 144B inserted in Finance Act 2021.

143(3A)

CG may make a scheme, by notification for purposes of making assessment of total income or loss of assessee u/s 143(3) or s.144 so as to impart greater efficiency, transparency & accountability by:

Eliminating interface between AO & assesse in the course of proceedings to the extent technologically feasible;
Optimising utilization of resources through economies of scale & functional specialization;
Introducing team-based assessment with dynamic jurisdiction.

143(3B)

The CG may, for the purpose of giving effect to the scheme made U/S 143(3A), by notification, direct that any of the provisions of this Act relating to assessment of total income or loss shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification

Provided that – No direction shall be issued after the 31st March, 2022

143(3C)

Every notification issued under sub-section (3A) and sub-section (3B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament

143(3D)

Nothing contained in sub-section (3A) and sub-section (3B) shall apply to the assessment made under sub-section (3) or under section 144, as the case may be, on or after the 1st day of April, 2021.

Section 144B shall be inserted after section 144A by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1-4-2021

NEAC(National E-Assessment Unit)

The purpose of this centre is to facilitate the conduct of e-assessment proceedings in a centralized manner, which shall be vested with the jurisdiction to make the assessment in accordance with the provisions of this scheme.

All communication among the other units or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this scheme shall be through the National e-Assessment Centre.

Regional E- Assessment Unit

Its major function is to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make the assessment in accordance with the provisions of this scheme.

Assessment Unit

It shall perform the function of making assessment, which includes identification of points or issuing material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making assessment.

Assessment Unit- Procedure

Issuance of Notice

Within 30 days in case of Limited scrutiny.
Within 45 days in case of Complete Scrutiny.
Focused questionnaire.

Analysis of reply to Notice

Cross verify with information available on record.
Decide whether Technical unit /Verification Unit is required; Inform NEAC for such requirement.

submissions of draft order

Issue is examined and utilized for the purpose of preparation of draft order.
Submit for RMS within reasonable time and not later than 15 days of receipt of complete and final information required for submission of draft order.

Passing assessment order

ensure that the assessment order has properly framed the issue in dispute and incorporated all facts relevant to the issue.
Ensure initiation of penalty , if required.

Assessment Unit- Procedure

What happens when no response is received by AU??

Where no verification is required and where return can be accepted –Returned income is accepted u/s 144 and orders are passed.
In other case:-

Issue of Reminder.
Request for physical verification to VU after recording approvals.
After receipt show cause as to why assessment should not be framed ex-parte u/s 144 of the Income-tax Account.
In case no response is received, the person is marked as non –responsive; VU will then do address verification.

What happens to cases reopened u/s 148 of the Act?

Section 148A has been introduced in FA 2021.
The FAS states that the jurisdiction for reopening of an assessment under Section 147 shall rest with the Officer who enjoys territorial jurisdiction over the Taxpayer.
Accordingly the reasons for such reopening would be recorded by the AO and thereafter the reassessment would be framed by NeAC.
Where a taxpayer files objections against the reasons recorded for reopening, it would be necessary to ensure that the same is disposed of by the AO in time, so that the assessment proceedings by NeAC can be conducted and completed within the prescribed time limit.

Verification Unit

The AU can also request NeAC for conducting of certain inquiry or verification, by a Verification Unit (VU) or seek technical assistance from a Technical Unit (TU).

When a VU is entrusted by NeAC to conduct an inquiry or verification by resorting to the provisions under Section 131 through the issue of summons and recording of a statement under Section 133 or 133C, the VU would do the needful in this regard.

Technical Unit

An AU can approach the NEAC for seeking Technical Assistance for providing Technical Inputs on issues such as Transfer Pricing, Legal, Technical, Data Analytics, Forensic, Accounting, Information Technology, Valuation and Audit. On certain issues such as Forensic, Valuation etc., the concerned TU will need to independently deal with several persons, including the taxpayer.

The Technical units will be like the back office of experts. These units are not answerable to any ReAC and they are answerable only to Principal Commissioner NeAC. They are functional specialists, so as to ensure that the consistency of decision making is implemented throughout the country.

Review Unit

The RU is mandated to examine the following:

Verify if proper enquiry is done
Relevant material is on record
The order are speaking orders
Arithmetical corrections
Any improvements which may be required

Practical Issues- Related to Submissions

The submissions should be in understandable Language.
The concerned Assessment Unit may not have an open mind to appreciate the merits of the Taxpayer’s submissions.
The reply to notice u/s 143 (2) shall be made within prescribed time.
If there are multiple issues of a complex nature raised under a single notice, there is no clarity if we can submit response in parts.

Practical Issues- Related to documents

The e-filing website does not permit a taxpayer to upload more than 10 attachments, not exceeding 10 Mb each.
The description of Other category cannot be same for files / documents which are being uploaded.
All the files have to be scanned and all the data needs to be transformed in reduced size.
The documents should be legible and it is difficult as the quality degrades after reducing the file size.

Practical Issues- Related to VC

Good Communication requires Uninterrupted Internet.
The reason for requesting for VC has to be proper.
The Department is not adequately trained for VC.
The Department Personnel would be blurred at all times during VC.

Practical Issues- Personal Hearing

Principle of Natural Justice

[2021] 127 taxmann.com 637 (Delhi)

Dept. is bound to consider request for personal hearing before passing Faceless Assessment

It was held as under:-

Uses of word ‘may” in section 144B(7)(vii) cannot absolve revenue from obligation cast upon it to consider request made for grant of personal hearing; where revenue served a show-cause notice-cum-draft assessment order on assessee proposing to vary income disclosed by assessee and thereafter without affording a personal hearing to assessee passed impugned assessment order, same was liable to be set aside.

Income Tax Portal

Other Issues

What will happen if the documents are in Vernacular Language and AU is situated in other state?

There are government-approved setups which handle the job of converting vernacular languages. Department will deal on its own to convert the vernacular languages. However, in such cases, the documents should be explained in our submissions.

What shall be the binding nature of the Judicial Pronouncements in the regime of dynamic Jurisdiction?

The taxpayers jurisdiction will prevail over the ReAC location

How can a taxpayer submit (to an Assessment Unit) a clarification on or rectification of any information or document submitted earlier during the assessment proceedings?
Once the response is filed, there is no way to submit any letter/information on the portal for clarification until next letter is issues by the department.

Role of Jurisdictional Officer

Collection and Recovery of Demand

Rectification u/s 154 of the Act

Give effect to Appellate Orders

Proposal for launch of prosecution Proceedings

Faceless Eco system for faceless Appeals

NAFC

NFAC is located at Delhi comprising of Principal Chief Commissioner of Income-tax, Commissioner of Income-tax (‘CIT’), Additional/ Joint CIT, Deputy/ Assistant CIT- to facilitate the conduct of e-appeal proceedings in a centralised manner.

RFAC

At present, 4 RFAC (Delhi, Mumbai, Kolkata and Chennai) have been notified. Each RFAC comprises of Chief Commissioner of Income-tax (‘CCIT’) and other income-tax officers to facilitate the conduct of e-appeal proceedings.

AU

AU shall have the following authorities:
One or more Commissioner (Appeals);
Other income-tax authority, ministerial staff, executive or consultant to assist the Commissioner (Appeals).
AU to perform the function of disposing appeal, which includes admitting additional grounds of appeal, directing the National e-Assessment Centre or the Assessing Officer for making further inquiry, seeking information or clarification on admitted grounds of appeal, providing opportunity of being heard to the appellant, analysis of the material furnished by the appellant, review of draft order etc.

Practical Issues

Tracking of Notice of Hearing via email, mobile or Income Tax portal.

Ensuring that the submissions contains the facts properly and the objective is achieved.

Application u/r 46A is submitted in proper manner and reflecting under which clause the case of the assessee falls and why?

In case a clarification is seeked, the information asked should be thoroughly processed and should pertain the relevant year which is under Appeal.

Important Aspects- Faceless Assessment and Appeals

Knowledge of tax payers Business and Industry.

Advising Clients on close monitoring of various compliances including withholding taxes.

Maintenance of supporting documentations in support of various tax positions.

Proactively identifying potential issues under assessment, collating & maintaining supporting documents.

Gaining knowledge of industry specific issues, critical industry agnostic issues, and preparing for submissions.

Repository of data about different issues raised, positions taken in assessments, etc.

Strategic thinking and discussions with tax payers while making submissions – approach, contents, timing, timelines, quality, supporting documentation, ramifications, reconciliations, etc.

Preparation of submissions needs to be carefully done considering the following:-

Careful review of notices, discussions with tax payers, understanding the perspective

Quantity and quality of submissions – crisp and precise

Assessing the impact of submissions on other areas such as TP, GST and FEMA

Appropriate use of judicial precedents

Continuous Tracking of notices with clients and on ITBA

Review of Draft Assessment Orders and Objection raised and making appropriate submissions