TaxTMI 
TaxTMI 
Standard Operating Procedure (SOP) for Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Review Unit (RU) under the Faceless Assessment provisions of Section 144B of the Income-tax Act
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.... in implementation of the SOPs if any practical difficulty or conflict with the statute is noticed, then the provisions of Statute shall prevail. 4. These SOPs are strictly for departmental use only. 5. This is issued with the prior approval of the CBDT. Enclosed: As above. Yours faithfully, (Ashish Abrol) Commissioner of Income-tax-1, National Faceless Assessment Centre, Delhi Standard Operating Procedure (SOP) under the Faceless Assessment provisions of Section 144B of the Income-tax Act Index of contents S no Heading/Sub-heading Page no SOP - Assessment Unit A Assignment of cases 1 B Preliminary Examination and Action 1 C Initial Questionnaire u/s 142(1) 2 D Process for issuance of notice u/s 142(1) 3 E Grant of adjournment to notice u/s 142(1) on request of assessee or suo-moto adjournment 4 F Analysis of Information submitted in response to questionnaire u/s 142(1) and Issue of Additional Questionnaire 4 G Non compliance of notice u/s 142(1) 4 H Assessment Procedure in case of non-compliance of notice u/s 142(1) & passing of best....
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.... Faceless Assessment provisions of Section 144B of the Income-tax Act The Principal Chief Commissioner of Income Tax, National Faceless Assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP for Assessment Unit (AU) under the Faceless Assessment provisions of Section 144B of the Income-tax Act. This is issued under Section 1446(6)(xi) of the Income-tax Act. A. Assignment of cases Following class of cases, other than cases excluded u/s 1446(2), shall be assigned to AU: A.1 CASS category A.2 Compulsory Scrutiny Cases A.3 Set Aside Cases A.4 Reopened Cases B. Preliminary Examination and Action B.1 On initial assignment of case, AU must verify whether the case has been correctly assigned for Faceless assessment, and refer to NaFAC if not correctly assigned. B.2 Refer the case for transfer, if it falls under the exclusions under Section 1446(2), B.2.1 Within 5 days of assignment, or B.2.2 Within 5 days of receipt of information on the basis of which the case is identified as covered under exclusion under Section 1446 (2). B.3 In reopened cases: B.3.1 Where no return of Income is fi....
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....tial questionnaire shall be: D.2.1 With regard to the initial notice - D.2.1.1 Response time of 15 days from the date of final generation of notice. D.2.1.2 Response time of 15 days may be curtailed, keeping in view the limitation date for completing the assessment. D.2.2 With regard to subsequent notices - D.2.2.1 Response time of 7 days from the date of final generation of notice. D.2.2.2 Time may be curtailed keeping in view the limitation date for completing the assessment. D.3 Where there is no response to the initial notice under Section 142(1) within the compliance date: D.3.1 AU shall issue a communication (as per prescribed proforma - Annexure AU-1), on all registered email IDs of the assessee available on ITBA/ Insight, with a request to comply within 5 days. D.3.2 The communication will only refer to non-compliance, without giving specific details of the case, so as to ensure that confidentiality of the queries, raised in the questionnaire accompanying the notice under section 142(1), is maintained, and the assessee responds through the e-filing portal only. E. Grant of adjournment to notice u/s 142(1) on request of assessee or suo-motu adjo....
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.....2 All attributes of the communication, including PAN, AY, address at which the letter is sent, speed post tracking ID, date on which letter is sent, mobile number on which SMS is sent along with the date and time of sending, will be updated in the database accessible to AU on Insight; G.3.3 To ensure completeness of record, the AU shall enter all the details referred in Para G.3.2 above, along with the date of delivery, if any, of the Speed Post letter in the Case History. H. Assessment Procedure in case of non-compliance of notice under Section 142(1) & passing of Best Judgement assessment under Section 144 of the Act in a fair & reasonable manner H.1 Where variation prejudicial to the assessee is proposed in non-responsive cases, a Show Cause Notice for passing order under Section 144, containing such variations, shall be issued. H.2 In cases referred to VU, such SCN shall be issued ordinarily after receipt of Verification Report. H.3 If assessee complies with the requirements of the notice at any stage/SCN, AU shall proceed to make assessment under Section 143(3) as per procedure prescribed under Section 144B and not under Section 144. H.4 If assessee doe....
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....y refer to the proximate VU for physical verification. (Refer SOP for VU) J.10 Where VU reports non-compliance of notice u/s 133(6)/ 131 and refers for initiation of penalty, AU shall initiate penalty proceedings. K. Reference to VU where assessee seeks Cross examination of Witness not having digital footprint K.1 The AU shall schedule a VC for the assessee using 131(1)(b) tab, through ITBA, containing date, time and link of the VC; K.2 VC should generally be scheduled giving at least 15 days to facilitate service of summons to the witness by VU; K.3 Reference shall be made to VU having physical proximity to the Witness, along with details mentioned in Para K.1; K.4 The Cross Examination of the Witness by assessee on the scheduled date and time shall be conducted in the presence of the VU and the AU through VC; K.5 AU/VU may re-examine the Witness after conclusion of cross-examination; K.6 Where VU reports that reasonable adjournment is sought by the Witness for an alternative date and time, AU may reschedule VC and make a fresh reference to VU, following the procedure as per this Para; K.7 Where VU reports that the Witness is available at some other addr....
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....dered it appropriate to invoke provisions of Section 142(2A) and has not forwarded the reference to the concerned PCCIT, AU shall proceed to complete the assessment as per procedure prescribed under Section 1446. N. Process of Assessment N.1 Show Cause Notice (SCN) shall be issued in the prescribed format (Annexure AU-7), in all cases where any variation prejudicial to the assessee is proposed - N.1.1 SCN shall be drafted after conduct of all necessary enquiry/verification and collection of relevant information. N.1.2 SCN should contain: N.1.2.1 Complete description of the issues involved; N.1.2.2 Details of dates of all notices/opportunities given; N.1.2.3 Details of dates of compliance/non-compliance of the assessee; N.1.2.4 Summary of all submissions of the assessee, to demonstrably reflect application of mind and consideration of all submissions; N.1.2.5 Specific Information/material proposed to be used against the assessee; N.1.2.6 Variations proposed on the basis of reasonable inferences drawn. N.1.3 To ensure adherence to the principles of natural justice and reasonable opportunity to the assessee, timelines to be given for obtainin....
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....ducted and response of assessee, if additional SCN/Questionnaire is issued as per Para N.4.3 above. N.5.2 Draft Order shall be prepared within 3 -5 days of completion of Risk Analysis/ Review Report. N.5.2 Draft Order in case of Eligible Assessee shall be passed under Section 144C(1) using the specific functionality for 144C in ITBA; N.5.3 All draft orders are to be sent to NaFAC, using the specific functionality in ITBA. N.6. Final Assessment Order N.6.1 In cases other than that of eligible assessee: N.6.1.1 On receipt of Draft Order, AU shall: N.6.1.1.1 Initiate all relevant penalty proceedings on the ITBA, where applicable, and N.6.1.1.2 Pass final assessment order within 3 days of communication by NaFAC. N.6.2 In case of Eligible Assessee: N.6.2.1 Upon receipt of communication, about acceptance of the draft order from the assessee within the specified time under Section 144C(2), AU shall: N.6.2.1.1 Capture the response in ITBA; N.6.2.1.2 Initiate all relevant penalty proceedings on the ITBA, where applicable, and; N.6.2.1.3 Pass final order as per provisions of Section 144C, within 3 days of communication. N.6.2.2 Upon receipt of commun....
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....ce or delay in response by assessee/ third party; P.1.2 Relevant events that hamper/delay the assessment process such as technical and systems issues, delays in response etc. Q. Handling PAN marked as Fraud PAN by ITBA Q.1 Where PAN has been marked as Fraud, the AU shall refer the matter to VU through Insight. Q.2 AU must ensure that where adverse Report is received from VU, the same is: Q.2.1. Forwarded to Technical Unit through ITBA for appropriate action, if required; Q.2.2 Forwarded to JAO through ITBA, for information; Q.2.3 Taken into account while passing the Assessment Order by the AU. R. Handling Clarifications sought by VU / TU R.1 Clarification may be sought by VU or TU through inter unit communication functionality. R.2 AU must respond to clarification within 2-3 days of receipt. S. Other Miscellaneous functions to be performed by AU S.1 Role of AU with reference to Sec 241A of the Act: S.1.1 Upon receipt of information through MIS / NaFAC, regarding the determination of refund becoming due u/s 143(1), AU shall examine the case records of the relevant PAN/AY. S.1.2 Where grant of refund is likely to adversely affect revenue....
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....hysical verification is required, regardless of the presence of digital footprint. C. Modes of Verification C.1 In instances referred in Paras B.1 and B.2, wherever possible, VU may conduct enquiry/ verification in an electronic manner; C.2 VU may also access information on public domain and portals of regulatory agencies/ databases; geospatial analysis/GIS reports available on Insight and other resources; C.3 Address Verification: Verification of address and person/business at the address; C.4 Physical Verification: Physical examination of the tangible assets including property, plant and equipment; C.5 Document Verification: Inspection, examination of books, examination and collection of specific record, document, supporting document etc available with government agencies, financial institutions or third parties; C.6 Issue of Summons and recording of statement on oath u/s 131(1)(b) in physical mode. C.7 Follow up with reporting entities/ SFT Filers/Financial Institutions etc. D. Procedure for Handling References received from AU D.1 On receipt of reference from AU, the VU shall: D.1.1 Examine the reference to ensure it is: D.1.1.1 Complete and ....
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....anating from the enquiry; F.1.6 Statements recorded by VU, if any; F.1.7 Complete report of proceedings; F.1.9 Reference to AU to initiate penalty for non-compliance to notice u/s 133(6) or 131, if any; F.1.10 Hindrances faced in the verification process, if any. Government of India Ministry of Finance Central Board of Direct Taxes National Faceless Assessment Centre New Delhi Dated: 03.08.2022 Subject: Standard Operating Procedure (SOP) for Technical Unit (TU) Under the Faceless Assessment provisions of Section 1448 of the Income-tax Act The Principal Chief Commissioner of Income Tax, National Faceless Assessment Centre, with the prior approval of the Central Board of Direct Taxes, New Delhi, lays down the following SOP for Technical Unit (TU) under the Faceless Assessment provisions of Section 144B of the Income-tax Act. This is issued under Section 144B(6)(xi) of the Income-tax Act. A. Scope of Technical Assistance: A.1 As per Section 144B (1)(iv)(c) -technical assistance sought by AU on matters related to: A.1.1 Determination of Arm's Length Price A.1.2 Valuation of Property A.1.3 Withdrawal of Registration, Approval,....
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....of the High Court or ITAT, having jurisdiction over the location of the PAN, will have precedence in the absence of judgment of Supreme Court; E.1.4 Apply tools for interpretation of statutes such as Explanatory notes and Memorandum to the Finance Bill. E.2 Ensuring Consistency in Interpretation E.2.1 In the absence of a binding decision, all interpretations must be referred to the PCIT of the TU; E.2.2 PCIT, along with his team, shall ensure that as far as possible, consistency is maintained in the interpretation of the issue. E.3 Report E.3.1 Report to the AU must be specific and answer the questions posed by the AU along with detailed reasoning. E.3.2 Report must be sent to the AU within 10 days of receipt of Reference / Clarifi­cation by AU. E.3.3 Time to send the report may be curtailed keeping in view the time barring date of the case. E.3.4 After submission of Report to the AU, interpretation arrived by the PCIT of the TU and his team, along with the facts and circumstances and reasoning, shall be forwarded to NaFAC for compilation of Guidance Notes. F. Procedure for Rendering Technical assistance on TP References F.1 TP References may re....
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.... documents; H.2.2 Reference has the signature of PCIT of the AU. H.2. TU must examine: H.2.1 Whether the request for information is sought from the foreign jurisdiction, with which India has DTAA/ TIEA/ any other agreement covered under Sec­tion 90 or 90A; H.2.2 Whether the request made by the AU conforms to the Manual on Exchange of Information issued by CBDT. H.3 The reference shall be forwarded to the concerned 1S, FT&TR (Competent Authority) within 7 days of receipt of request/ clarification from AU. H.4 The acknowledgement of reference sent by the Competent Authority shall be com­municated to the AU within 2-3 days of receipt. I. Procedure for handling reference relating to withdrawal of Registration, Approval, Exemption 1.1 On receipt from AU, TU must ensure that Reference is complete and contains the req­uisite documents as per prescribed format. (Annexure) 1.2 Reference to concerned Approving Authority shall be made as per Para D.4 within 2-3 days of receipt/ clarification. 1.3 Where reference was made under proviso to Section 143(3) [refer to J.5.1 of SOP for AU], the decision of the Approving Authority shall be forwarded within 1-....
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....o NaFAC for compilation of Guidance Notes for future references. B. Timely submission of Review Report B.1 Review Report should be generally submitted to NaFAC within 5 days of receipt of reference. B.2 The date of submission to NaFAC should be advanced keeping in view the limitation date for completing the assessment. (Ashish Abrol) Commissioner of Income Tax -1, National Faceless Assessment Centre, New Delhi Standard Operating Procedure (SOP) under the Faceless Assessment provisions of Section 144B of the Income-tax Act Index of contents - Annexures S.no Heading/Sub-heading Page no Formats for Assessment Unit (I) 1 Format of Communication to be issued through "Issue letter functionality" to all available mails of assessee in case of non-compliance of Initial notice u/s 142(1) - SOP D.3.1 (I) 2 Format for reference to Verification Unit through Insight - SOP G.J.4 (II) 3 Format for reference to Technical Unit through ITBA for assistance/advice on legal issue - SOP Para L (III) 4. Format for reference to Technical Unit through ITBA for assistance/advice on Transfer Pricing adjustment - SOP Para L....
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....on proposed to be done in physical enquiry Justification for physical enquiry as to how they fall in Para J of SOP for AU. Date and time of email by which approval of PCIT AU taken Yours faithfully, Assessment Unit, Income Tax Department (Kindly attach relevant documents with the reference) **Each reference should have one pin-code enquiry only. Kindly enter correct pin-code while making reference. *** Kindly read Insight QRG for Verification reference for further information. AU-3 Format for reference to Technical Unit through ITBA for assistance/advice on legal issue -SOP Para L To, The Technical Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Reference for assistance/advice on legal issue Madam/Sir, Kindly refer to the above subject. Your assistance/advice is being sought on legal issue(s) as detailed hereunder: < Tables can be added as per number of issues > 2. Issue < n >: 1 Section(s) (if specifiable) 2 Brief description of issue being referred < Free text > 3 Contention of assessee (Reply of assessee on the issue may....
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.... Text > 6 Any other remarks < Free Text > 7. Valuation required as on 2. Complete Address and e-mail of the Assessee :- 3. The report in the matter may kindly be forwarded by Yours faithfully, Assessment Unit, Income Tax Department AU-6 Format for making reference to TU for withdrawal of Approval, Registration, Exemption, etc by Approving Authority - SOP Para L To, The Technical Unit, PAN: Name of the assessee : Assessment Year: Date: Sub : Reference for withdrawal of Approval, Registration, Exemption, etc by Approving Authority Madam/Sir, Kindly refer to the above subject. Your assistance is being sought for withdrawal of Registration, approval, exemption as detailed hereunder: 1 Name 2 PAN 3 Assessment Year 4 Address 5 Section under with Approval/Registration/Exemption granted. 6 Proposal containing findings in assessment proceedings based on which withdrawal of approval/Registration/Exemption is proposed. To be attached. 7 Copy of final draft order after approval of Unit Head (to be downloaded....
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....ary of information/evidence collected which proposed to be used against it attach documents if required). 3.4 Reasons for inference drawn that no variation is required on this issue. 4 In cases where variation is proposed - 4.1 Update the table of opportunities given (at point 2 above) to include the details of SCN or additional SCN issued and further notices including personal hearing through VC given. 4.2 Use the text of SCN issued to reproduce:- • Complete description of issues involved (issue wise) • Synopsis of all submissions of the assessee relating to the issue and indicating the dates of submission • Summary of information/evidence collected which proposed to be used against it attach documents if required) • Variation proposed on the basis of inference drawn 4.3 Synopsis of the reply of the assessee to SCN and additional SCN(if any) 4.4 Summary of information evidence collected after SCN (if any). 4.5 Point-wise rebuttal of reply of the assessed including analysis of any case law relied upon. 4.6 Conclusion drawn 5 Table of variations: SI No Description Amount (in INR) 1 Inc....
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.... per Return of Income filed 2 Income as computed u/s143(1)(a) 3 Variation in respect of issue of < > (if any) 4 Variation in respect of issue of < > (if any) 5 Total Income/Loss determined 6 Assessed under section XX of the Income-tax Act. Penalty proceedings under section XX,XX etc have been initiated through notice(s) issued separately. Computation of income and demand notice u/s156 of the Act is attached. {Editable to meet the requirements of case} TU-1 Format for Seeking clarification - SOP TU B.1 To, The Assessment Unit, Sub : Clarification from AU Madam/Sir, Kindly refer to the above subject. Your assistance/advice is being sought on legal issue(s) as detailed hereunder Format for seeking clarification from AU 1. Clarification in respect of question number - XXX 2. Description of clarification sought - ............................................................................................ 3. Brief reasons for seeking clarification - ........................................................................................ ............................
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....sp; Telephone and Fax 5. Contact details of Pr. CIT/CIT/Pr. DIT/DIT concerned Name Designation Address Email Telephone and Fax 6. Name of the foreign taxpayer/holder of information if referred to in the request (Row 15 of Part B) Part II of Form A Request for Information from ----------------------(name of the country/jurisdiction) 1. To: 2. From: 3. Contact Point Name: Email: Telephone: Fax: 4. Legal Basis: 5. Reference numbers and related matters Reference number: Initial request: Please check the box: Yes No If no, please provide reference number(s) and date(s)of any related request(s): Acknowledgement needed: Please check the box: Yes No Number of attachments to the request: Total number of pages for all attachments: 6. Urgency of reply Urgent reply required due to: Please check the box: Statute of limitation Suspected fraud Court case Other reasons (please specify)....
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.... of this Form should be filled up by the Pr.ClT/PrDlT/ClT/DlT concerned and sent to the Competent Authority, i.e., JS (FT&TR-I) and JS (FT&TR-II), as the case maybe. The request for information in this Form should not be routed through the office of pr.CClT/pr.DGlT/CClT/DGlT but a copy may be sent to that office for information. 1. Part I contains basic information about the taxpayer under investigation/examination in India and the officers making the request. This Part needs to be filled up for record purposes and is not sent to foreign authorities. 2. Part Il is modelled on the lines of the template formulated by the OECD and is essentially the same as Annexure-D of the Manual on Exchange of Information issued in 2013. Part Il of Form A is forwarded to the foreign authorities and thus all the relevant information mentioned in covering letters, assessment orders etc. must be captured in this Part ll. The background note, summary of the case, factual analysis etc. should be included in Part Il and if necessary, Annexures may be added to this Part of the Form. Since the information sent is treated as confidential by the tax authorities in other jurisdictions, copies of relevan....
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....ct should be monitored by the Pr.ClT/Pr.DlT/ClT/DlT concerned and appropriate action should be taken wherever required. Instructions for filing up Part I of Form A 1. The purpose of filling up Part I of Form A is to have basic records of the taxpayer under investigation in India and the contact details of the officers making the request in the office of the Competent Authority so that the information provided by the foreign authorities or their requests for clarifications are sent to the correct jurisdiction. 2. In Row 1, the name, full address, PAN and the current jurisdiction of the taxpayer under investigation in India should be mentioned. 3. The country/jurisdiction to whom the request is made should be mentioned in Row 2. 4. The contact details of officers handling the Investigation presently should be mentioned in Rows 3, 4 and 5. 5. The name of the foreign person/entity or the holder Of the information in a foreign country if mentioned in the request may be stated in Row 6 for statistical purposes. Instruction for filling up Part II of Form A 1. Part Il of Form A is essentially the same as Annexure-D of the Manual on Exchange of Information Issued in ....
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....te of birth/date of incorporation, full address and other details as available in the records should be mentioned here. As explained in Para 2.2.2 of the Manual on Exchange Of Information, the tax treaties do not restrict administrative assistance to residents of either Contracting States and thus information about residents Of third countries can also be requested. However, relevance Of the information about residents Of third countries vis-a-vis the person under investigation in India must be clearly explained in the request. Row 8 Under the laws Of certain countries/jurisdictions, the taxpayer or the holder of the information has certain rights including a right to be informed or notified that a request concerning him for information under a tax treaty has been made. The requesting country, however, in certain exceptional cases can make a request that the taxpayer/holder of information may not be so notified. If a request to refrain from notifying the taxpayer(s) concerned is made, the reasons for the same must be clearly explained. Such reasons could be that the information is of a very urgent nature and the process of prior notification to the taxpayer will delay supply ....
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.... that they can be answered directly on the basis of documents and other information available and the details requested should be specific. The information requested should be foreseeably relevant to the administration or enforcement of the Indian tax laws and their relevance should be clearly explained in light of the background information provided. Information in the form of "fishing expedition" should not be requested. In some cases, it has been observed that a large number of Questions are asked in the request for EOI even though some of the questions do not appear to emanate from the issues under investigation and the relevant questions which should actually be asked are not specifically stated. Request for voluminous information should be avoided as it may become counter-productive on account of the following reasons: The request may be considered as having been made in a casual and perfunctory manner and may be responded to accordingly by the foreign tax authorities More critical information which is actually required may be missed by the foreign tax authorities in a request with a long list of questions and the useful information may not be received Though the foreign tax ....