Faceless assessment notice u.s. 133.6 of Income-tax Act:

[DEV KUMAR KOTHARI]

Faceless assessment notice u.s. 133.6 of Income-tax Act:

Practice of calling un-necessary and elaborate documents to verify transactions of any assesse, that too at very short notice is not good- objectivity is lost. This can lead to unnecessary litigation also in due course.

Enquiry by Assessing Officer (AO):

For the purpose of making assessment AO of any assessee may need information and document from the assessee. In case of need of cross examination and confirmation facts and figures required for assessment of assessee, alone should be sufficient.

Primarily the assessee himself can satisfy the AO about the same.

However, in some cases further enquiry from parties having transactions may be required, in view of facts and circumstances of the case and also as per guidelines for extent and quality of enquiry required.

Enquiry about purchases of assessee:

An assessee might have purchased goods from many parties. The goods are subject to GST and therefore there are standard documents prescribed and required. These can be provided by assessee of any AO. And when a matter is being scrutinized, the assessee is expected to provided the same in form of details, documents, returns of GST.

The AO can have reasonable satisfaction from the same. In case of any doubt or extra ordinary circumstances  he may require information and documents from parties having transactions with the assesse of the AO.

In case of purchases of his assessee the AO  should require from any supplier summary details like quantity purchased , value of goods  purchased and payments made and outstanding and some specimen  documents for evidencing of supply made by the supplier to his assessee.

There seems no purpose in asking the supplier lot of documents, which includes annual accounts and returns. By collection of such information and document, the objectivity and purpose is lost.

It usually became a case of call for information and keep in files.

The AO of any assessee while making enquiry from suppliers or customers or fund provider or having any type of  transactions must keep enquiry and collection of information and documents which are required for the purpose of assessment of his assessee.

However, from information and documents called from other parties having dealings with his assesse , it appears that as if he is making an enquiry of the supplier, customer or any party having transactions with his assessee.

It seems that while issuing notices, the AO forgets that he has to make assessment of his assessee and not assessment of party from whom he is calling to furnish information and documents.

Physical hearing – of earlier days:

We can recall that well trained , experienced, honest  officers used to call from his assessee as well as from parties having dealing with his assessee keeping in mind the objective of the enquiry in hand. They avoided collection of un-necessary documents which have no relations with his assessee.

However novice officers  (including IRS) officers and officers having tendency to treat and harass assessee or other parties used to ask for un-necessary details, kept parties waiting at his doorstep, with directions that he will not leave the office without his permission with threat of penalties which he could impose.

We can recall scenario of many visitors attending officers with volumes of records.

In case of face less assessment:

We experience that in case of faceless assessment proceeding also unnecessary information and documents are being called.

For example information called by AO of dealer from manufacturer:

A notice u.s. 133.6 is reproduced below ( but without personal information of assessee and other party for privacy)  . The assessee of the concerned AO is a wholesale cum retail dealer of notice who is manufacturer.

Short comments are given by author  and highlighted by underlining:

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

 INCOME TAX DEPARTMENT

To,  .....  LIMITED India                                 Only name and India is mentioned , address of notice  / adressee is missing.

PAN: .......  Assessment Year: 2021-22 Date:    /10/2022 DIN: ITBA/AST/S/133(6)/2022 -23/  .........

Notice under section 133(6) of the Income-tax Act, 1961

Ms/ Mr/ M/s,

in connection with the assessment proceedings in the case of  ......     .... PAN for the Assessment Year 2021-22, kindly furnish the following information:

M/s  .....  , PAN :    has claimed to have made purchases from you during FY 2020-21 relevant to A.Y. 2021-22. In this regard, you are hereby required to furnish the following details of purchases made by  .................., PAN :   ......... from you during the FY 2020-21 relevant to A.Y. 2021-22.

                                                   

1. Confirmed copy of account of M/s  ............... in your books of account for the year under consideration.

                                                                 This can be considered relevant and proper.  

2. Details of payment/part payment w.r.t. purchases made by the aforesaid A ssessee with documentary proof such as mode of payment etc.

                              Usually these details are given in confirmation/ ledger copy or these can be asked incorporated therein.

3. Copy of your Income Tax Return (not ITR V) and GST Returns for AY 2019-20, 2020-21 & 2021-22.

                                    These seems  irrelevant and un-necessary. At least at initial stage. Only in case of  very large and significant transactions which constitute major revenue of supplier these may have some relevance, if at all.  

4. Copy of your financial statements viz. Audit Report along with Balance Sheet and Profit & Loss Account with complete annexures thereto for AY 2019-20, 2020-21 & 2021-22

               These seems  irrelevant and un-necessary. At least at initial stage. Only in case of  very large and significant transactions which constitute major revenue of supplier these may have some relevance, if at all.  

5. Furnish documentary evidence to substantiate the genuineness of the said purchase including supporting evidences of transportation of goods purchased by the aforesaid Assessee during FY 2020-21 relevant to A.Y. 2021-22.

                                      At initial stage confirmation of account and summary details of transactions can  be considered  sufficient.

2. The Information is required to be furnished by 17/10/2022 electronically by uploading it through your registered e-filing account at www.incometax.gov.in

                                                         Time allowed is very short.

3. Failure to furnish the above information by the due date may lead to penalty u/s 272A(2) of the Income-tax Act, 1961 @ Rs. 500/- per day of default.

This sounds as threatening. this is not proper, at least at first instance of seeking information that too at very short notice. By mentioning this in one sense, it can be made a case to impose even if complete information and documents could not be furnished within short time allowed.

Assessment Unit/Verification Unit/Technical Unit/Review Unit Income Tax Department.   

NOTE: To know the originator Unit of this Communication, kindly see the Digital Signature.

To avoid mistakes this could have been made specific in notice instead of asking  notices to see elsewhere by way of note, to see at signature .

General observations:

As discussed in beginning of article, this notice shows calling of information and documents  un-necessarily and  untimely.

Some officers  seems to have adopted practice just to generate notices through system and post to parties without looking at information available to him through resources and records of his own assessee.

This can lead  to extra burden on senior officers in course of supervision and audit parties of department and CAG and also issue of notices for revision, reassessment , if records are collected but there is no evidence of examining the same by AO and senior authority / audit party may have different conclusions leading to unnecessary proceedings.