| Reassessment notices - Individuals / NRIs - Track your Tax Portal! |
The Central Board of Direct Taxes (CBDT) in India introduced the Faceless Reassessment Scheme by way of a notification in March 2022. This notification aimed to remove the interface between the Assessing officers and taxpayers during reassessment proceedings, thereby replacing it with a Faceless approach. Furthermore, the Scheme proposed to select cases for reassessment through an automated random allocation in accordance with the risk management strategy formulated by CBDT.
Following the same, many taxpayers, including Non-Resident Indians (NRIs), have been receiving show-cause notices under the Faceless Reassessment Scheme in respect of income escaping assessment. In the context of NRIs, it has been observed that such notices are often in the context of time deposits and high-value accounts maintained by the NRIs with banks and are issued based on information collected from database available with tax department through reporting of financial transaction by various parties including banks, Registrar and Transfer Agents etc. It has been contended that the income represented in the form of such assets (deposits and accounts) has escaped assessment as the taxpayers have not filed a return of income in India. Therefore, it has been alleged that the source of such time deposits and accounts remains unexplained, and the interest income received remains undisclosed. Accordingly, the show cause notices require the taxpayers to explain why reassessment proceedings should not be initiated in their case by way of issuance of a notice.
Being a Faceless Scheme, such show-cause notices are being uploaded in the Income Tax portal of the taxpayer and thereby may go unnoticed. This issue of missing out may arise, especially in the case of the NRIs who do not have taxable income or if income is taxable below the threshold limits and thus may not be filing income tax returns in India. Accordingly, such NRIs may not be actively monitoring the Income Tax portal. Another challenge is that in many cases, these notices contain strict timelines and a failure to respond to the same results in assessment proceedings being reopened in the taxpayer's case.
The failure to respond to the show-cause notices results in taxpayers missing out on the opportunity of being heard. Considering the same, it becomes pertinent for taxpayers to continuously monitor their Income Tax portal to track such notices and respond to them in time. You can simply login into your account at https://www.incometax.gov.in/iec/foportal/ and check the ‘e-Proceedings' section under the ‘Pending Actions' tab to track such notices.
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