Authorities have power to grant adjournments, but this power has to be exercised judiciously.
New Delhi: In a paradigm shift from the traditional manual assessment, the Government last year had launched a pan-India based faceless and a jurisdiction-less assessment scheme. Under this scheme, assessments for Assessment Year 2018-19 had to be conducted as per the procedure initially notified under section 143(3A) and (3B) which was subsequently made a part of the law by inserting section 144B in the Income-tax Act, 1961 (the Act). The stated objectives of introduction of the faceless assessment scheme as per sub-section (3A) of the Act are to ‘impart greater efficiency, transparency and accountability by (a) eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible; (b) optimisingutilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment with dynamic jurisdiction.
As per publicly available information, more than 1 lakh orders have been passed by the tax authorities and in 90% of the cases no additions have been made. This is a very encouraging beginning, and one must applaud the efforts of the tax department in implementing the scheme. However, in some cases, the procedure laid down by the department for completing the assessments has not been followed by the officers because of which taxpayers have dragged the authorities to the courts. A summary of the issues raised before the courts is detailed below: (a) Request for adjournments not granted; (b) Insufficient time given to furnish details; (c) No draft assessment order issued to the assessee and variations carried out without giving a show cause notice; (d) Order passed before expiry of time granted in the show cause notice; (e) Request for personal hearing not granted; (f) Objections not considered. A perusal of the faceless assessment scheme indicates that the authorities have power to grant adjournments, but exercise of this power is at the discretion of the officer concerned and therefore this power has to be exercised judiciously. In all cases where the reason of approaching the Court was ‘requests for adjournments not granted, the officers acted in a haste to complete the proceedings without considering the genuine difficulties being faced by the assessee. The reason for seeking adjournments were that insufficient time was given by the department to furnish the details.
The faceless scheme mandates that if there is a variation proposed to the returned income, a show cause notice and thereafter the draft assessment order has to be issued to the taxpayer to give an opportunity to rebut the variations as proposed. In a few cases, assessment orders have been passed in sheer disregard to the provisions of the scheme and therefore the taxpayers had no option but to approach the Court for relief. Another matter which reached the Court was that the officer passed the order without even waiting for expiry of the time given to the taxpayer to respond in the show cause notice.
The scheme also envisages that a taxpayer can request for a hearing through videoconferencing mode. However, grant of this hearing is at the discretion of the officer and an approval needs to be taken from the Chief Commissioner for this purpose. In few cases it was observed that the taxpayers had requested for a hearing through videoconferencing but the same was not granted. In all such cases the High Courts have set aside the orders passed and have held that wherever a request for hearing through video conferencing has been made the same has to mandatorily be granted.
In a very recent decision of the Hon’ble Bombay High Court in the case of Mantra Industries Limited, the Court passed serious observations on the administration of the faceless scheme and held that ‘Assessment orders passed without application of mind are liable to be set aside and invite substantial costs to be imposed on such Assessing Officer.’ The Court noted that the responses field by the assessee were not considered by the Officer as was evident from the assessment order, but the concerned officer had filed an affidavit that the responses were considered.
The objective of introduction of the faceless scheme as laid down in the Act is to ensure efficiency, transparency and accountability and therefore this raises an important question that why such lapses occurred in the administration of the faceless scheme. Were the officers not trained and sensitized properly and who is accountable in such cases. The Board should also be mindful of the taxpayer’s charter which was made a part of the statute by inserting section 119A in the Act. Amongst many actionable points which have been committed by the Board, two issues are relevant for this deliberation. Point No. 9 of the Charter provides ‘hold its authorities accountable’ and Point N. 12 reads as ‘provide a fair and just system’. The Board must immediately review these lapses in line with these commitments and ensure that the sanctity of the Charter is not diluted. The words of Sir Winston Churchill aptly sum up the task before the Board: “However beautiful the strategy, you should occasionally look at the results.”
Sachin Vasudeva is Senior Partner, SCV & Co. LLP Chartered Accountants.