Amendment in ‘Assessments and Appeals’ in Finance Bill 2020

1. Amendment in Section 254(2A) as No stay to be granted by the ITAT unless 20% of the Disputed Tax is Deposited [Applicable from Assessment Year 2020-21]

The ITAT may pass an order granting a stay on the merits of the application made by assessee. The provision governing stay are covered by the following provisos to Section 254(2A):

1. First proviso authorizes ITAT to grant a stay of 180 days on the merits of the application made by assessee;

2. Second proviso authorizes ITAT to grant a further stay, if, the delay is not attributable to assessee. However, the aggregate of stay under first proviso and second proviso should not exceed 365 days;

3. Third proviso states that after lapse of above time frame, the order of stay shall stand vacated even if the delay is not attributable to assessee.

The Finance Bill 2020 proposes an amendment in the first proviso that ITAT can grant stay under the first proviso only if the assessee has ‘deposited’ or ‘furnished security’ to the extent of 20% of his tax liabilities (i.e. tax, interest, fee, penalty or any other sum payable under the provisions of this Act).

Consequential amendments have also been made to second proviso to Section 254(2A).

2. Amendment of Section 250 on Faceless Appeal is proposed up to CIT(A) from Assessment Year 2020-21

E-filing of appeals before CIT(Appeals) has already been enabled through e-Filing portal. However, the process that follows after filing of appeal is neither electronic nor faceless. In order to further harness the power of technology and to achieve the motto of faceless assessment at CIT(A) level, an appellate system, with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals), has been proposed to be introduced.
Section 250 has been proposed to be amended to authorize the Central Government to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability by:

1. eliminating the interface between the CIT(A) and the appellant in the course of appellate proceedings to the extent feasible technologically;

2. optimising the utilisation of the resources through economies of scale and functional specialisation;

3. introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more CIT (Appeals).

Necessary directions to this regard may be made by the Central Government by 31-03-2022. The directions may specify that any of the provisions of this Act relating to jurisdiction and procedure of disposal of appeal shall not apply or shall apply with such exceptions, modifications and adaptations.

3. Amendment towards Approval of CIT / Director is required to conduct Survey Under Section 133A [Applicable from Assessment Year 2020-21]

As per Section 133A, survey can be conducted by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax only after obtaining the approval of the Joint Director or the Joint Commissioner.
In order to prevent the misuse of the aforesaid provision, power of survey has been proposed to be rationalized as under:

(a) Where some in formation has been received from the prescribed authority

Survey can be conducted by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax only after obtaining the approval of the Joint Director or the Joint Commissioner

(b) In any other case

Survey can be conducted by a Joint Director or a Joint Commissioner or an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax only with the prior approval of the Director or the Commissioner.

4. Amendment with Reference to ‘Dispute Resolution Panel’ (DRP) [Applicable from Assessment Year 2020-21)

Section 144C of the Act mandates the Assessing Officer to forward the draft assessment order to the eligible assessees, if he proposes to make any variation in the returned income or loss which is prejudicial to the interest of such assessee. The eligible assessee may file his objection to the DRP only with respect to such variation. Eligible assessee for this purpose means foreign companies and any person in whose case transfer pricing adjustments have been made under section 92CA(3) of the Act.

The Finance Bill, 2020 proposes that Draft Assessment Orders shall be forwarded to assessee if it is prejudicial to the interest of assessee and even if it is not resulting in variation to returned income or loss. Further, the meaning of an eligible assessee has been proposed to be extended to include non-resident as well.

5. Amendment of Section 144 to expand the scope of e-Assessment Scheme to cover Best Judgment Assessments [Applicable from Assessment Year 2020-21)

The Finance Act, 2018 inserted Section 143(3A) to implement eassessment scheme for the regular assessment carried out by the Assessing Officer under Section 143(3).

The Finance Bill 2020 proposes to expand the scope of e-assessment to cover the best judgment assessments under Section 144. The Central Government can issue necessary directions in this regard by 31-03-2022.

6. Amendment of Section 288 that Insolvency Professionals can Act as ‘Authorized Representative’ (Applicable from Assessment Year 2020-21]

Section 288 provides the list of the persons who can appear before any Income-tax Authority or the Appellate Tribunal, on behalf of an assessee, as his “Authorised Representative” for the purpose of any of his income-tax proceedings.

Insolvency and Bankruptcy Code, 2016 empowers the Insolvency Professional or the Administrator to exercise the powers of the Board of Directors or corporate debtor to act as an “Authorised Representative” in front of the authorities.

Thus, the Finance Bill 2020 proposes to amend Section 288 to provide that Insolvency Professional can also appear before any Income-tax Authority or the Appellate Tribunal on behalf of an assessee as his “Authorized Representative”.

7. Amendment in Finance Bill 2020 to Widened the Scope of Form 26AS (Applicable from 01-06-2020]

Form 26AS is a tax passbook which contains information of all taxes paid by or on behalf of an assessee, being TDS, TCS, Advance-tax, Self-assessment tax, etc. The Government is planning to enlarge the scope of Form 26AS to cover information regarding various transactions made by a person such as transactions in securities market. These information on one hand will be useful for the Assessing Officers to cross check the details furnished in return of income by taxpayers. On the other hand, taxpayer would be able to easily compute his tax liability and file return as all information would be pre-filled on basis of Form 26AS.

In order to achieve this objective, a new section 285BB is proposed to be inserted to provide that income-tax authority or any other person authorised in this behalf shall make available an annual financial statement to the assessee containing informations of various financial transactions made by him during the year.

Consequently, section 203AA, which provides for issuance of Form 26AS by the Income-tax department in respect of TDS, is proposed to be deleted as section 285BB would extend the scope beyond the information about tax deducted.