It is not uncommon for a new reform-oriented initiative to face some teething problems during the initial stages of its implementation and practice. This is why the practical results of such ‘electronic assessment’ for the pilot periods were not very encouraging and the majority of assessments were switched back to manual mode, at the instance of assessees. Also, the lack of willingness of assessees themselves towards this progressive change has resulted in not so forthcoming and expected good results.
Practical Issues are:
1. Limitations in uploading Supporting Attachments and Files along with a Response
In the existing ‘schema’ of the ‘e-Proceedings’ functionality, the maximum number of attachments or files which can be attached along with a single ‘response’ to any notice is 10 and the maximum ‘size’ of one attachment which can be attached along with a single ‘e-response’ is ’50 MB’ of data. Earlier, the maximum size was 5 MB only. So, in the new scheme of ‘e-Assessment 2019’, the issue of space constraint has been resolved to a great extent but it is still insufficient considering practicality.
While submitting a single response, in case the size of one attachment file exceeds the maximum specified size of 50 MB, then the assessee has to split the attachment into two or more file attachments, in such a manner that the size of one attachment does not exceed 50 MB. These files may be named as ‘Filename, 1’, ‘Filename, 2’, ‘Filename, 3’, and so on. And, in case the maximum specified limit of attachments of 10 pdf files gets exhausted then the assessee should opt for another ‘partial response’ to continue with uploading the remaining attachments.
At times, the process of scanning of files or their conversion to pdf files for uploading is cumbersome and tedious and involves a lot of time. So, this file conversion becomes an irritant and hinders the smooth and uninterrupted uploading of supporting attachments.
2. High Probability of Making Huge & Unjustified Additions/ Dis-allowances
The Indian Income Tax Act is a complex piece of legislation and its sections are amenable to different and divergent interpretations by the assessing authorities and the assessees. Also, the complex nature, structure and commercial rationale of financial transactions in today’s dynamic and ever-demanding business environment, is an inherent feature of all tax assessments.
Due to lack of experience in the private sector, many officials who have worked only in the Income Tax department are not in a position to comprehend commercial transactions and the reasons for a transaction being structured in a specific fashion. This will prompt them to make undesirable additions to the income reported on the Income Tax return. However, during Personal Interaction, Assessee or his/her representative had the opportunity of explaining it, when authorities did not get convinced merely by written submissions.
But, in case of complete ‘e-Assessment’ proceedings without involving any personal interface between the assessee and the assessing authority, and the lack of verbal/oral explanations, clarifications and representations, may result in many arbitrary additions and adjustments by tax authorities. This will lead to an increase in the probability of prolonged litigations and disputes practically.
3. Network Infrastructures in the country and Server Capacities of the current module
Technological glitches may surface at the time of hearing, through video calls due to network connection issues. Even with personal hearing through video conferencing, the department may misunderstand the contentions of the taxpayer due to such technological glitches.
Apart from this, the current e-filing website has around 56 HTTP requests for each page request at a time. (Lower, the better; Less than 30 is recommended) So, there is a serious room for improvement in that area as it affects user experience to an extent when the number of users increase at a time and even more when they are all uploading big-sized attachments. This is typically seen during the last days of the due date and many times the government has to extend the due dates for such reasons of handling more users at a time. But the extension of due dates in case of responses for the e-Assessment would prove the new scheme ineffective for its core motives.
4. Setting-up of Over-Ambitious Revenue Collection Targets
For the FY 2019-20, the annual revenue collection targets from direct taxes have been fixed at Rs. 13.35 lakh crores, and in fact, these are also downwardly revised targets from the earlier fixed targets of Rs. 13.78 lakh crores.
Instead of proving to be a taxpayer-friendly initiative, it may turn out to be a trouble maker for the taxpayers. Wherein, the assessing units, burdened and obsessed with the pressure of achieving such over-ambitious revenue collection targets, without involving any personal and verbal explanation, may end up making huge additions and disallowances, resulting in increasing amount of litigations and confrontations at the higher appellate stages.
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