India: Indian Tax Office Going Digital – Tax Assessments To Be Faceless

Last Updated: 1 October 2019
Article by Ritu Shaktawat and Raghav Bajaj

In furtherance of its widely promoted objective of ensuring efficiency and transparency in tax administration, the Government has notified the much-awaited E-assessment Scheme, 2019 vide Notification No. 61/2019 (Scheme) to provide a framework for conducting assessment proceedings by:

  • eliminating the interface between the tax authorities and the taxpayer in the course of proceedings to the extent technologically feasible;
  • optimising utilisation of the resources through economies of scale and functional specialisation; and
  • introducing a team-based assessment with dynamic jurisdiction.

The e-assessment initiative of the Government, which is expected to be rolled out next month, marks a landmark development as it is aimed at a complete overhaul of the manner in which assessments are conducted by the Income-tax department (Department). Please see below our analysis.


Under the Income-tax Act, 1961 (IT Act), taxpayers are assessed by the jurisdictional tax officers depending on the place of residence / incorporation of the taxpayer. Currently, though the selection of a case for scrutiny is done primarily with the help of a 'Computer Aided Scrutiny Selection' mechanism (based on pre-defined parameters), the assessment itself is done by the jurisdictional tax officer manually involving personal hearings before the officer. This involves a high level of personal interaction between the taxpayer (or its authorised representative) and the Department.

To overcome the concerns posed by such a mechanism, 'e-assessment' was first introduced in the year 2016 on a pilot basis with the objective of reducing the interface between the Department and the taxpayers. Thereafter, in the year 2018, the IT Act was amended to enable the Government to notify a scheme for the purposes of conducting e-assessments - in furtherance of which, the Government has notified the Scheme.

Key features of the Scheme

  • It applies to scrutiny assessments (i.e. assessments conducted under Section 143(3) of IT Act).
  • It empowers the Central Board of Direct Taxes (CBDT) – the apex body for direct taxes' administration in India – to (i) set up several units (discussed below) for the purpose of e-assessments, (ii) specify the territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases to be covered by the Scheme.
  • It provides that taxpayers shall not be required to appear either personally or through its authorised representative in connection with any proceedings under the Scheme before the income-tax authorities.
  • The cases selected for scrutiny shall be allocated to assessment units in a random manner (with the help of suitable technological tools, including artificial intelligence and machine learning) and notices shall be issued electronically by a central cell, without disclosing the name, designation or location of the tax officer.
  • The central cell shall be the single point of contact between the taxpayer and the Department.

Units to be set up for e-assessments:

The Scheme empowers the CBDT to set up the following units to facilitate the conduct of e-assessments:

S No Unit Key functions
1. National e-assessment Centre
(National Centre)
  • To facilitate the conduct of proceedings in a centralised manner
  • To act as the single point of contact for all communication between (i) the taxpayer and the Department, or (ii) the various units of the Department set up pursuant to the Scheme.
2, Regional e-assessment Centres To facilitate the conduct of proceedings in the cadre controlling region of a Principal Chief Commissioner.
3. Assessment units To perform the function of making assessment, which includes:
  • identification of points or issues material for the determination of any liability (including refund) under the IT Act,
  • seeking information or clarification on points or issues so identified,
  • analysis of the material furnished by the taxpayer or any other person.
4. Verification units To perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements.
5. Technical units To perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter which may be required in a particular case or a class of cases, under this Scheme.
6. Review units To perform the function of review of the draft assessment order, which includes checking:
  • whether the relevant and material evidence has been brought on record,
  • whether the relevant points of fact and law have been duly incorporated in the draft order,
  • whether the issues on which addition or disallowance should be made have been discussed in the draft order,
  • whether the applicable judicial decisions have been considered and dealt with in the draft order,
  • arithmetical correctness of modifications proposed, if any.

Procedure to be followed for e-assessment:

The Scheme lists down the procedure to be followed by the Department for the purpose of e-assessment. In summary, it provides as under:

  • The notice for assessment will be served on the taxpayer by the National Centre and the taxpayer will have to file its response within 15 days.
  • Thereafter, the National Centre will assign the case selected for the purposes of e-assessment under this Scheme to a specific 'Assessment unit' in any one Regional e-assessment Centre through an automated allocation system (i.e. with the help of suitable technological tools, including artificial intelligence and machine learning).
  • The 'Assessment Unit' may make a request to the National Centre for
    • obtaining such further information, documents or evidence from the taxpayer or any other person, as it may specify;
    • conducting of certain enquiry or verification by 'Verification unit'; and
    • seeking technical assistance from the 'Technical unit'.
  • The 'Assessment unit' shall, after taking into account all the relevant material available on record, make a draft assessment order, and send a copy of such order to the National Centre. The 'Assessment unit' shall also provide details of the penalty proceedings to be initiated therein, if any.
  • The National Centre shall examine the draft assessment order (with the help of suitable technological tools, including artificial intelligence and machine learning to reduce the scope of discretion), whereupon it may decide to:
    • finalise the assessment and serve a copy on the taxpayer, or
    • provide an opportunity to the taxpayer, in case a modification is proposed, to show cause as to why the assessment should not be completed as per the draft assessment order – in such a scenario, the taxpayer shall be entitled to seek personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit under this Scheme, and such hearing shall be conducted exclusively through video conferencing – the CBDT shall establish suitable facilities to provide access to taxpayers where required, or
    • assign the draft assessment order to a 'Review unit' in any one Regional e-assessment Centre (with the help of suitable technological tools, including artificial intelligence and machine learning), for conducting review of such order.
  • After completion of assessment, the National Centre shall transfer all the electronic records of the case to the tax officer having jurisdiction over the relevant taxpayer, for – (a) imposition of penalty; (b) collection and recovery of demand; (c) rectification of mistake; (d) giving effect to appellate orders; (e) submission of remand report, or any other report to be furnished, or any representation to be made, or any record to be produced before the appellate authorities or courts, as the case may be; (f) proposal seeking sanction for launch of prosecution and filing of complaint before the Court.

Penalty proceedings:

In addition to the above, the Scheme also provides that for initiation of penalty, any of the aforesaid units may send recommendation to the National Centre, whereupon the National Centre shall (i) serve a show-cause notice on the taxpayer, and (ii) act as the communication channel between the taxpayer and the concerned unit which recommended the initiation of penalty.


The Hon'ble Finance Minister, while presenting the Budget 2019-2020 on 5 July 2019, had remarked in her speech that "This new scheme of assessment will represent a paradigm shift in the functioning of the Income Tax Department".

With a view to optimise the use of resources and to reduce the scope of discretion, the Scheme envisages usage of suitable technological tools (including artificial intelligence and machine learning) by the National Centre for the purpose of doing allocations inter se the different units set up pursuant to the Scheme and the examination of the draft assessment orders.

While this transition to an anonymous mode of assessments is a forward-looking step, interestingly, the Scheme also provides that the National Centre may at any stage of the assessment, if considered necessary, transfer the case to the jurisdictional tax officer.

The National Centre was set up in Delhi last week and after an initial high-level review of the infrastructure (including computer systems, internet and software facilities for the tax officers), the Scheme will be rolled out next month (Source: Economic Times). Once implemented successfully, it will indeed reduce discretion and may improve the quality of tax assessments which should work well for the taxpayers' confidence in the tax administration.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions