Only in about 8-10% of all the faceless assessment orders issued so far has any addition of taxable income been made, CBDT chairman P.C. Mody said
No extra taxable income has been added in the bulk of faceless assessment orders issued so far, Central Board of Direct Taxes (CBDT) chairman P.C. Mody said in an interview on Tuesday. The statement could help build confidence among taxpayers in the income tax department’s faceless assessment scheme.
Faceless assessment is a way of electronically processing tax returns picked up for scrutiny without personal interface between taxpayers and officials. Cases are selected for scrutiny for various reasons including mismatches, discrepancies, or suspected tax evasion. The scheme enables taxpayers to file replies from the comfort of one’s home or office, Mody said.
Only in about 8-10% of all the faceless assessment orders issued so far has any addition of taxable income been made, he said.
Out of the total 193,986 cases allocated for faceless assessment, the tax department has so far issued assessment orders in 106,374 cases, showed data shared by the CBDT. This statistic is significant as in most cases email explanations to queries raised by the department have been accepted as satisfactory. “This underscrores that the whole process is fair and objective," Mody said.
While the government’s idea is to avoid physical interface between taxpayers and officials, which the government believes could become a bargaining point, experts had raised doubts earlier whether taxpayers will be able to effectively explain complex transactions through electronic communication.
In the case of appeals also, CBDT is using a faceless approach. Mody said that more than 410,000 cases of appeal relating to multiple years have just been allocated for faceless processing and notices have been issued in more than 360,000 cases. “The responses are yet to come. As responses come, we will issue orders," Mody said.
The third area where faceless approach is adopted is the imposition of penalties. Where penalties have to be imposed under the Income Tax Act for violations such as non-deduction of taxes at source and concealment of income, proceedings will now be faceless. More than 500,000 cases have been referred to various tax units under the faceless penalty scheme, Mody elaborated.
The tax department is leveraging technology not only in assessment but also in making sure taxpayers report the correct income. Mody said that there is every reason for the tax authority to widen the scope of tax credit statement, form 26As, in this regard. This form captures large transactions of the taxpayer reported by institutions such as banks, mutual funds, and bond issuers.
“Now that we are utilizing that information for pre-filling tax returns, there would definitely be a case to include as much information about financial transactions as possible (in form 26AS)," said Mody.
The idea is to encourage voluntary compliance. “Incremental changes will keep on happening (in the scope of form 26AS). The idea is to capture all transactions in the account of the taxpayer," added Mody.