Faceless scrutiny of income tax return.. Here is all you need to know

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Individual will be required to respond to the notice or order received through the registered account only.

The E-assessment Scheme 2019 aims to eliminate human interface, reduce corruption and bring in transparency.

The idea of faceless E-assessment was mooted in the Budget 2018 by the late Finance Minister, Arun Jaitley, who announced the proposal to introduce the new assessment scheme to replace the old assessment system of manual scrutiny and face-to-face interaction with tax authorities.

The new scheme, called the ‘E-assessment Scheme, 2019 (Scheme), was notified by CBDT on 12 September, 2019. It will be an online system, which will use artificial intelligence, machine learning and technology tools to randomly and automatically allocate cases for assessment within the Income Tax Department. It aims to eliminate human interface, reduce corruption and bring in transparency.

 

Salient features of the Scheme:

The Scheme will have dedicated E-assessment centres such as the National E-assessment Centre, Regional E-assessment Centre, assessment units, verification units, technical units and reviewer units with each centre and unit having a clearly defined role and process to follow.

# National E-assessment Centre (NEC): NEC will be a single point of contact for the taxpayer as well as for all units conducting assessment. NEC will interact with the taxpayer to obtain evidence, issue notices, receive information, issue draft assessment order, raise demand, etc, and also interact with all units for smooth conduct and completion of assessment proceedings. All communication between the NEC, the taxpayer and various units would be done online and would be digitally signed.

# Regional e-assessment Centre (REC): REC will ensure smooth conduct of E-assessment under the region of a Principal Chief Commissioner.

# Assessment units (AU): AU will perform the function of scrutinising tax returns, analysing submissions made and evidence submitted by the assessee and make requests, if any verification or technical assistance is required.

# Verification units (VU): VU will perform the function of making enquiry, cross verification, examination of records or witnesses and recording statements, as may be required for verification.

# Technical units (TU): TU will give advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or other technical matter required for conducting assessments.

# Review units (RU): RU will review draft assessment order (DAO) to check if all material evidence, relevant points of fact and law, relevant tax case laws have been included in the DAO. It will also ensure the arithmetical accuracy of modifications proposed and perform other functions as may be required for review.

Procedure for assessment:

NEC will issue notice under section 143(2) online by uploading the digitally signed copy on the registered income tax account or by sending notice to the assessee’s registered email address or uploading the copy on a mobile app. A real time alert will be sent through SMS or the mobile app informing the same to the assessee

The assessee is required to respond within 15 days of receipt of notice.

On the issue of a notice, NEC will allocate the case to any AU through an automated allocation system. The AU will then identify issues, seek clarifications from the assessee and may request for verification or enquiry through VU or seek technical assistance through TU. Accordingly, NEC will initiate request to the respective units through an automated allocation system.

On receipt of all information, AU will prepare a DAO accepting the returned income or modifying the returned income or send the DAO to NEC for review. NEC will accordingly finalise the order or modify it or send the DAO to RU for review. Accordingly, it may send the DOA along with demand notice and penalty notice, where applicable, to the assessee or issue a showcause notice to the assessee.

In case of a showcause notice, the assessee will submit the response within the timeline specified in the notice. Considering the response, the NEC may either finalise the DAO or ask the AU to prepare a revised DAO.

On receipt of the revised DAO, the NEC will verify if any modification prejudicial to the taxpayer’s interest is proposed. Accordingly, the NEC will give an opportunity to the assessee to show cause as to why assessment should not be finalised as per the revised DAO; otherwise, NEC will finalise the assessment.

On completion of assessment, all records will be electronically transferred to the jurisdictional assessing officer (AO) only for imposition of penalty, recovery of demand, rectification of mistake, giving effect to appellate orders, submission of remand report or representation or for placing of any record before Commissioner (Appeals), Appellate Tribunal or Courts and for initiating prosecution or filing of complaint before the courts.

During the course of assessment proceedings, any unit may initiate penalty proceedings for non-compliance of any notice, direction or order and may recommend to the NEC to serve notice to the assessee.

Any appeal from the order of the NEC will be filed before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer.

During the assessment proceedings, no personal appearance will be allowed before the income-tax authority at NEC or any other units. In case personal hearing is required, to make oral submission or present the case, it shall be done only through video conferencing.

The E-assessment Scheme, 2019 is a welcome step towards standardisation and easing of assessment procedure. However, its success and ensuring that ease of doing business is achieved will depend on its careful implementation

DIR-3 KYC for Financial year 2018-19 has been extended

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Due Date for DIR-3 KYC is now extended to 14th October 2019 from 30th September 2019

As per Ministry of Corporate Affairs, if any person has been allotted “Director Identification Number” and the status of such DIN appears to be Approved then such Director needs to file a form to update DIR-3 KYC details in the system. Disqualified directors are also required to file form DIR-3 KYC.

For the financial year ending on 31 st March 2019, the individual shall submit e-form DIR-3 KYC or web form DIR-3 KYC-WEB, as the case may be, on or before the 14th October 2019 (extended from 30 September, 2019).

As per the said notification:

  1. eForm DIR-3 KYC is to be filed by an individual who holds DIN and is filing his KYC details for the first time or by the DIN holder who has already filed his KYC once in eform DIR-3 KYC but wants to update his details.
  2. Web service DIR-3-KYC-WEB is to be used by the DIN holder who has submitted DIR-3 KYC eform in the previous financial year and no update is required in his details.

Due Date for above is now extended to 14th October 2019 from 30th September 2019.

What happens if eForm DIR-3 KYC is not filed within the specified due date?

As per MCA notification Dated 25th Jully 2019, If a Director, fails to file eform DIR-3 KYC before the expiry of the due date, then MCA21 system will mark his/her DIN as ‘De-activated’ with reason as ‘Non-filing of DIR-3 KYC’.

However, the de-activated DIN shall be re-activated only after eform DIR-3 KYC is filed along with payment of Rs. 5000.

In order to avoid any delay which would result in payment of Rs. 5000, the Directors are advised to file the same before the due date.

MCA Notification – DIR 3 eKYC

Please also read the FAQs on DIR-3 KYC

CBDT extends the due date for filing ITRs & Tax Audit Reports from 30 th September to 31, October 2019

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The Central Board of Direct Taxes (CBDT) has decided to extend the deadline for filing of ITRs and Tax Audits Reports by a month. Given the relentless demands by Chartered Accountants (CAs) and tax consultants, the CBDT has given a breather till October 31. It will also provide some respite to smaller companies too, who are struggling with GST filings.

Last night, the CBDT tweeted: “On consideration of representations recd from across the country, CBDT has decided to extend the due date for filing of ITRs & Tax Audit Reports from 30th Sep, 2019 to 31st of Oct, 2019 in respect of persons whose accounts are required to be audited. Formal notification will follow”.

This category of ITR is to be filed by those entities that are assessed under section 44AB of the Income Tax Act such as companies, partnership firms, proprietorship among others and their accounts are to be audited before filing.

The new deadline is also required because the CBDT has been intermittently changing the background software required for filing the ITRs.

There was a change in the ITR 6 software utility. Since all tax-filing is now software-driven, the CBDT will require some time to rework the filing process due to the changes in the software.

The old belief that there would be loss in revenue of the Government, if there is a delay in filing ITRs and Tax Audit Reports is wrong as a considerable share of revenue has already got collected due to Tax Deducted at Source and Advance Tax payments.

Filing ITRs and Tax Audit Reports is primarily an administrative exercise to inform the Income Tax Department about the payable tax. By extending the deadline, there would be no revenue loss to the Government. It will give some relief to the CAs fraternity and smaller companies who are struggling with various tax compliances, he said.

 

Read the Original CBDT Notification

File revised tax returns after rectifying errors

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Most of us collate all information relating to our annual income, investments and tax deducted at source (TDS) before proceeding to file our income tax returns. However, the income tax filing process is a fairly comprehensive exercise. We might miss disclosing an income due to oversight, or claim an exemption or deduction that is not due. What are the options available to us if we make a mistake while filing returns?

We may make an error due to insufficient information or mis-match between Form 16 / Form 16 A and Form 26 AS or any other reason. Errors may also occur in our calculation. The income tax law allows us to file a revised return, correcting the omission or mistake made by us in the original return.

Filing a revised return

You can file a revised return at any time before the end of the assessment year, or before completion of the assessment, whichever is earlier.

For example, for the AY 2019-20, you can file a revised return till 31 March 2020. However, if your assessment is concluded before that date, you cannot file a revised return after completion of your assessment. An income-tax assessment is made through a notice issued by the assessing officer where your income and taxes are determined through assessment proceedings. In some situations this assessment may be completed before the end of the assessment year. If this is the case, you can no longer revise your return.

The revised return has to be filed in the same manner as an original return. While filing, a taxpayer has to choose the option: ‘Revised u/s 139(5)’. A taxpayer has to quote the acknowledgement number and date of filing of the original return while filing the revised return. The revised return substitutes the original return.

You may have filed an original return within the due date, or you may have filed after the due date. A return filed after the due date is called a ‘belated return’. You can revise both—a return filed within the due date or a belated one. The time limit for revising is the same for both as discussed above, i.e., before the end of the assessment year or before completion of assessment, whichever is earlier.

You can revise your income tax return any number of times. However, you are required to mention the acknowledgement number of the original return filed. You must note that ‘revised return’ is an opportunity for revision allowed by the income tax department. Hence, one must not misuse it and revise a return only in the case of a mistake or omission in the original return filed. If you are making errors with revisions, it’s in your interest to seek professional help for your return filing.

As is done with an original return, do remember to e-verify your ‘revised return’ as well. Your ‘revised return’ would not be valid if the same is not e-verified. You can e-verify the ‘revised return’ using an OTP (one-time password) based on Aadhaar or net banking or EVC (electronic verification code). You can also send a signed copy of the ITR V to the Centralized Processing Centre, Bengaluru, within 120 days of filing the ‘revised return’.

Missed Income Tax Return (ITR) Filing Deadline? Here Are Your Options

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Individuals having an annual income of up to Rs2.5 lakh are not required to file income tax returns, according to Income Tax department.

Missed the August 31 deadline for filing income tax return (ITR) for financial year 2018-19 (assessment year 2019-20)? Well, you don’t need to worry as you can still file a belated return. The Income Tax (I-T) department has, however, stipulated a penalty fee ranging from Rs. 5,000 to Rs. 10,000 for filing a belated income tax return, according to its website – incometaxindia.gov.in. A belated return of income is furnished under section 139(4) of the Income Tax Act. The amount of penalty payable by the assessees filing a late return increases based on the degree of delay.

Here are key things to know about belated income tax return (ITR):
1. Any person who has not furnished a return of income within the time period allowed under section 139(1) of Income Tax Act can furnish return for any previous year – at any time before the end of the relevant assessment year or before completion of the assessment, whichever is earlier, according to I-T department.

2. A belated return attracts late filing fees under section 234F of the Income Tax Act.

3. Income Tax rules state that a fine of Rs. 5,000 is applicable if an individual files ITR after due date but before December 31.

4. The penalty increases to Rs. 10,000 if the asseesee file the return next year between January 1 and March 31.

5. Those who have an annual income of Rs. 5 lakh, however, are required to pay Rs. 1,000 for filing ITR after the due date.

What are the income tax exemption limits for an individual?

There are three categories of individual taxpayers- individuals (below the age of 60 years) which includes residents as well as non-residents, resident senior citizens (60 years and above but below 80 years of age) and resident super senior citizens (above 80 years of age). Individuals having an annual income of up to Rs. 2.5 lakh are not required to file income tax returns. For senior citizens (individuals between 60 years and 80 years of age), the limit is Rs. 3 lakh, and for very senior citizens (aged above 80 years), the limit is Rs. 5 lakh, according to the taxman.

The Income Tax Department has, on its website, laid out a step-by-step guide for assessees to prepare and submit their income tax return (ITR) online.

 

Government mulls ceiling for audit firms amid crack down on lapses

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Governance lapses, negligence has loaded the banks with one of the world’s worst piles of bad debt.
A government-appointed panel on regulating auditors and the networks had suggested that the fee from non-audit services should not be more than 50% of the audit fee.

India is considering tougher rules for audit firms, including a cap on the number of listed companies they can examine, according to a person with knowledge of the matter, as the government seeks to tighten oversight after a recent spate of governance lapses.

In India, 70% of the about 1,800 companies that trade on the National Stock Exchange are audited by firms affiliated to EY, Deloitte & Touche, KPMG and PWC, according to Delhi-based Prime Database. Current rules stipulate that individual auditors can examine accounts of up to 20 companies, though there is no limit on number of audits for the company.

The Big Four in India operate through a network of local chartered accountants firms. One way for them is to partner as a member of a local firm. They can also allow their brand name to be used by sub-licensee of a member local firm. The ministry hasn’t decided if the cap on audits will be at the group level or on each member firm, the person said.

The government is planning to expand the list of services which can’t be offered by statutory auditors under the Companies Act. Currently, statutory auditors can’t offer nine services, directly or indirectly, including internal audit, investment banking, and actuarial services. There is no restriction on providing services such as taxation or restructuring and valuation.

One option is to tweak the present cap on fees that can be generated through offering non-audit services, the person said. This cap, fixed in 2002, says fees from non-audit work can’t be more than the aggregate statutory audit fees. A spokeswoman for the corporate affairs ministry declined to comment.

A government-appointed panel on regulating auditors and the networks had suggested that the fee from non-audit services should not be more than 50% of the audit fee.

Deloitte Ban
Governance lapses and negligence has loaded the nation’s banks with one of the world’s worst piles of bad debt. In some cases, allegations of fund diversion have surfaced, while the founders of some shadow banks have faced accusations of accepting kickbacks in exchange for loans.

The corporate affairs ministry earlier this month sought a ban on Deloitte Haskins & Sells and BSR & Co. for their role as auditors to IL&FS Financial Services, a part of the IL&FS Group that was seized by the government last year after a string of debt defaults.

Deloitte in an emailed statement said it’s fully compliant with Indian audit standards, while BSR said it would defend its position in accordance with the law.

Meanwhile, the banking regulator forbid EY affiliate S. R. Batliboi & Co. from taking on bank audits for a year and, in 2018, the markets watchdog banned the local unit of PricewaterhouseCoopers LLP for two years in relations to work from a decade earlier.

Source: Economic Times

Clarification on Auditor’s Certificate on Return of Deposits-DPT-3

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Clarification on Auditor’s Certificate on Return of Deposits pursuant to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014

This has reference to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014 and further amendments.

In this regard, the Ministry of Corporate Affairs vide its letter no. File No: P-01/08/2013- CL-V Vol. VI dated June 24, 2019 has clarified on the matter as under:

  • The Auditor’s Certificate is mandatory only in case of return of deposits.
  • For filing particulars of transactions not considered as deposits information contained therein as on 31st March of that year need not be from the duly audited Financial Statement.
  • Only in case of Return of Deposit information contained therein as on 31st March of that year should be from duly audited financial statement of the company.

Return of Deposits

Also in order to provide guidance to members, the Auditing and Assurance Standards Board of ICAI has issued Illustrative Auditor’s Certificate on Return of Deposits, which is available on the below cited link:

Illustrative Auditor’s Certificate on Return of Deposits as at [state the year end] pursuant to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014, as amended

(Chairman & Vice Chairman, Auditing and Assurance Standards Board)

June, 26th 2019