Faceless e-assessments will motivate honest taxpayers: Pramod Chandra Mody, chairman, CBDT
CBDT chairman says the centralised process will improve “the quality of assessments”.
Pramod Chandra Mody, chairman of the Central Board of Direct Taxes that frames policies for the I-T department, says NeAC is “trying to create an atmosphere in which honest taxpayers feel motivated to file returns voluntarily”. In an interview with ET, he says the centralised process will improve “the quality of assessments”. Mody also termed as “baseless” the allegations levelled against him by a senior tax official of reportedly putting pressure on her to bury a case. Edited excerpts:
Were faceless e-assessments brought in after complaints of taxpayer harassment?
The main reason was to improve tax assessment quality. The quality is bound to increase since we have an Assessment Unit [to identify issues, seek info and analyse material for draft assessment orders]. It is supported by a Technical Unit [to provide legal, accounting, forensic, valuation and data analytics advice]. That in turn is backed by a Verification Unit [to inquire, examine books and witnesses and record statements by video-conferencing]. Finally, all this is filtered by a Review Unit [to review draft assessment orders]. With these many levels, chances of any high-pitched assessment will be eliminated. Earlier, there was no remedy for the taxpayer other than to file an appeal. But here, before an order is passed, course correction can be done internally.
There is an impression that many tax officials were forced to retire due to charges of corruption and “tax terrorism”.
We have created a dedicated hierarchy of officers. Assessments will be done exclusively by them. We are trying to create an atmosphere in which honest taxpayers feel motivated to file returns voluntarily. At the same time, delinquents will be dealt with strictly as per law. There is nothing I have proposed without practicing it myself before. I have acted strictly on my officers and now I am asking taxpayers to do their job of filing returns on time and give focused responses. The whole exercise is aimed at eliminating the trust deficit that may have developed [between taxpayers and tax officials].
What if a taxpayer wants to meet and explain his case?
Two situation may arise. One, the AU [Assessment Unit] wants to probe a case further if it is not satisfied with the response. In that case, the matter will be assigned to a VU [Verification Unit] again by an automated random allotment system. Whether it goes to X or Y [official] will be decided by the computer. So there is transparency. In the other case, if an assessee insists he wants to be heard, a video-conferencing will be arranged where the assessee will be put on a call with a third person who need not be the same person framing the assessment.
Is there a threshold that only cases falling under particular criteria will be scrutinised?
If we have set, say, 10 parameters, then a case may be picked up on seven or may be just two parameters. If less number of parameters match, there will be limited scrutiny. If it is more, we will go for complete scrutiny. Everything depends on the points of consideration set by us.
What are those points of considerations?
They are confidential.
But with PAN, a tax official can easily look into a taxpayer’s identity and history. How will you end subjectivity then?
I agree, but that level of identity elimination is practically impossible. Even if I were to camouflage the name and address of the assessee, some clue to his identity will be there in the communication he is doing or in the transaction details he is submitting. It is inevitable. Now if an assessee in Mumbai is being assessed by someone in Varanasi, it does not matter for the assesse who the person he is assessing is. It is just another case. Moreover, he is not alone. It is a team effort. At AU level, the assessment officer works with a full team. And other units come into play at various stages. So vertically as well as horizontally, there is a team-based effort, which was not the case earlier. All these units have been created recently.
E-notices have been sent to 58,322 assessees. What’s next?
When the finance minister [Nirmala Sitharaman] said in her budget speech [on July 5] that an e-assessment system will be rolled out in a phased manner this year itself and later she gave a deadline of Vijayadashami [October 8], my first target was to launch the project. We have met our first goal. I just need more cooperation from taxpayers: they should file returns on time to allow cases to be completed faster. Instead of giving tangential replies, they should give focused and direct responses with proper evidence. When I am being specific in my queries, you [the taxpayer] too should be to the point.
Does NeAC have the capacity and manpower to handle a large volume of e-verification cases?
Yes, I definitely have the capacity to handle any surge. The very fact in one day, I could accept 50 lakh returns, that too-glitch free [on the last day of tax deadline], shows the robustness of my system.
What is the role of artificial intelligence in e-assessments?
Third-party cases will get allotted on an automatic basis using AI so that subjectivity is eliminated and more objectivity is brought in. It will also ensure uniformity for all cases with similar parameters. It should not happen that if 10 cases fulfill parameters for verification, only half of them get picked up. All cases falling under the same parameter would automatically get picked up using AI. The idea is to concentrate on bigger case and take a uniform approach. At the same time, smaller cases will not be put through a difficult phase.
Will rural people be able to communicate electronically?
A person who has filed his returns in the electronic mode is expected to stay updated on any communication received. Had he not been savvy, he would not have been able to file his returns on the portal.
How is the new ‘dynamic jurisdiction’ an improvement over assigning of tax cases to an assessing officer?
Till some time ago, any I-T case was attached to an AO [assessing officer]. Any communication from the I-T department to the taxpayer and vice-versa happened only through this AO. We started e-assessment from last year and started communicating in the electronic mode. Now, instead of a jurisdiction AO, we will have dynamic jurisdiction under which a particular case in a particular locality will not be assessed by that AO who owns the PAN of that assessee.
Alka Tyagi, as chief commissioner of income tax (unit 2) in Mumbai, in a letter to the finance minister in June reportedly accused you of putting pressure on her to ‘drop proceedings’ in a ‘sensitive case’. Any comments?
The allegations are baseless and I would not like to respond to them.