My short experience with faceless assessments scheme show that it is not manned by Officers having good knowledge or grip over law. In many cases they are not even going through submissions made seriously and are reverting back with the same questionnaire or little modification sticking to their stand. This is giving raise to uncalled for litigation and cause mental agony to tax payers. Though I have with me few such illustrations to suggest lack of knowledge or application of mind to the issue, one simple issue about not providing interest on unsecured loans, I am attaching questionnaire. It is proposed by centre to treat such non provision of interest as income under section 68 of IT.Act. This gives raise to doubt about knowledge of the officer of provisions of law. Would CBDT review the show cause or questionnaires through an expert committee and do needful to rectify the situation so that other tax payers are not troubled.
My short experience with faceless assessments scheme show that it is not manned by Officers having good knowledge or grip over law. In many cases they are not even going through submissions made seriously and are reverting back with the same questionnaire or little modification sticking to their stand. This is giving raise to uncalled for litigation and cause mental agony to tax payers. Though I have with me few such illustrations to suggest lack of knowledge or application of mind to the issue, one simple issue about not providing interest on unsecured loans, I am attaching questionnaire. It is proposed by centre to treat such non provision of interest as income under section 68 of IT.Act. This gives raise to doubt about knowledge of the officer of provisions of law. Would CBDT review the show cause or questionnaires through an expert committee and do needful to rectify the situation so that other tax payers are not troubled.
About the Author: Details are awaited
Pdf file of article: Click here to Download
Posted on: March 24th, 2021
I have come across a question asking a Co-operative society claiming deduction u/s 80P to furnish registration certificate u/s 12a and 80G. Which clearly shows the level of knowledge of the officer dealing the case. Really a funny question.
In my one case there was no house property, but there were repeated questions regarding details of house property, documentary evidence for interest paid on housing loan.
In another case the schedule AL was marked that all assets and liabilitie3s are included in the balance sheet filled up still they asked more than once to show cause as to why schedule AL has not been filled up.
Yet another addition u/s 68 was made in case of a charitable trust which received donations in cash, a complete list of all donors with names, addresses, amount, receipt numbers was submitted stating the cash donations to be unexplained cash credits and charging income tax u/s 115BBE.
In a case of trader the accounts were duly audited, day to day stock records were maintained, there was a gross profit of around 10%, but there was a net loss of 1% due to interest payments and other administrative expenses. The assessee was asked to furnish bills, vouchers etc. In response the assessee requested that it would not be possible to submit all bills etc. being bulky and requested to please let him know which bills etc. were to be produced. The books of account were rejected stating the assessee failed to produce bills, vouchers etc. and a net profit of 6% is applied. No show cause notice was issued nor any draft assessment order was issued.
In yet another case the assessee is a real estate dealer sold plots and borne expenses on stamp duty and registration of sales deed and this fact was clearly mentioned in every sale deed that all expenses of sales are borne by the assessee. All the sales were not less than the stamp duty value. The assessing officer stating that the net sale value (sale consideration minus registration expenses) is lesser than the stamp value and therefore provisions of s.43A are attracted and made additions without giving any show cause notice.
This is how the faceless assessments are going on.
I do agree with the author that the officers handling cases are doing the job half-heartedly or they do not apply the law rightly.
Anyway we have to go by the scheme and face the rigours of errors made by the learned assessing officers.
I will summarize the state of affairs wrt faceless assessments as PATHETIC. I am at present facing a peculiar situation where the AO is alleging that in case a loan has been given by a company after receiving funds from another company, then the recipient company (assessee) of that loan has to be assessed for such money u/s 69A since it is a layering of funds. The lender company is having net worth of 100 crores and NIL loans taken, still its financial capacity to advance a loan of Rs. 5 crores is doubted and SCN issued to borrower assessee. Even the Asstt order of immediately preceding assessment year for the lender company shows healthy assessed income (more than 5 crores), still the AO is adamant on his stand. Being faceless, there is no alternate but to get assessed with addition u/s 69A, then go for appeal in CIT(A), and possibly this matter will be rested at High Court level only since the total stakes are high (15 crores), resulting into un-necessary cost to the assessee and paper work. In addition, writ in HC also needed since it will be a high pitched assessment and the Deptt will try coercive approach to recover tax demanded. Have other instances too of brazen incompetency of assessing officers. Maybe, this being the first year, things will take sometime to settle down but CBDT really needs to look into it immediately.
The faceless scheme is New but he officers are the same
I may add that the Response period being allowed is 2 to 3 days including holidays and the notice requires a large no. of details and practically calling for copies all bills of all the expenses, salary payouts etc, which is not possible