Personal Finance

Budget introduces tax e-appeal, e-penalty

Parvatha Vardhini C | Updated on February 08, 2020

Widens the scope of e-assessment

Worried about harassment by the Tax Department? Sweat no more.

Over the past few years, filing and processing of returns, issue of notices and refunds have been moved online. E-proceedings and e-assessment for select cases have also been introduced.

The Budget has now brought in e-appeals and e-penalty to this fold.

It has also widened the scope of e-assessment.

Budget changes

An e-assessment scheme has been operational since October 2019 and is applicable if your tax return is taken up for further scrutiny under Section 143(3) of the Income Tax Act.

The scheme will now be extended to Section 144 cases, too. Otherwise called the ‘best judgement assessment’ cases, these are cases where if the assesse has not filed returns or responded to notices, the tax officer will determine the assessee’s tax liability based on the material he/she has gathered (after giving the assessee an opportunity to be heard).

Secondly, on similar lines as e-assessement, the process of filing appeals and of imposition and payment of penalties will also be moved online.

Presently, appeals before the first Appellate Authority, ie, Commissioner (Appeals), are filed electronically. But the process of disposal of appeals require personal presence.

It is now proposed to introduce an online system for the disposal of the appeals as well.

Similarly, penalty cases will also be disposed electronically.

Section 274 of the I-T Act provides for the procedure for imposing a penalty.

For this, in response to a show cause notice issued by the assessing officer, the assessee or his/her authorised representative is still required to visit the office of the officer. The advent of an e-penalty scheme will help avoid this face-to-face interaction.


Face-to-face communication can lead to harassment of assessees.

The main benefit of moving the processes online is — it avoids the scope for malpractice on the side of the Tax Department.

Online interaction helps do away with the need for the taxpayer to be present physically in a particular place and time.

So, hassles and expenses associated with travel are avoided.

Problems such as non-receipt or delayed delivery of notice or other communications will no longer arise.

One of the main criticisms of the e-assessment scheme was that it was impersonal or faceless only if an assessee agreed with the assessment. If he/she didn’t, he/she has the right to appeal to the Commissioner (Appeals) relevant to the jurisdictional assessing officer, followed by the Appellate Tribunal, a High Court and the Supreme Court.

But all these processes are not present online. This drawback has been addressed, at least to an extent, by the announcement to introduce e-appeals.

The narrow scope of the e-assessment scheme was another sore point. E-assessment is predominantly applicable only to select scrutiny assessment cases.

Assessment can be done in the conventional mode in non-PAN cases, in cases where the IT return is filed manually and the assessee does not have an e-filing account, in cases where the existing assessment is set aside and a fresh one is ordered, in Section 144 cases (best judgement assessment), Section 147 cases (income escaping assessment), or in cases where complexities or administrative difficulties may stand in the way of conducing it online.

In this context, the inclusion of best judgement assessment cases under e-assessment is a good incremental step in widening its scope.


Though an online system brings down the scope for corruption, experts point out that there should be a provision for personal hearing if the assessee feels he/she will be be able to explain the case better in person.

Under e-assessment, personal appearance through video-conferencing is allowed under two scenarios.

One, when the assessing officer has passed a draft assessment order modifying the taxpayer’s returned income and the taxpayer makes a request for a personal hearing in this regard.

Two, for examination or recording of the statement of the taxpayer or any other person.

Published on February 08, 2020

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