Faceless collection of information

260(1)

The Central Government may make a scheme, by notification, for the purposes of calling for information under section 252, collecting certain information under section 254, or calling for information by prescribed income-tax authority under section 259, or exercise of power to inspect register of companies under section 255, or exercise of power of Assessing Officer under section 256 so as to impart greater efficiency, transparency and accountability by—

• (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;
• (b) optimising utilisation of the resources through economies of scale and functional specialisation;
• (c) introducing a team-based exercise of powers, including to call for, or collect, or process, or utilise, the information, with dynamic jurisdiction.

260(2)

The Central Government may, for the purpose of giving effect to this scheme made under sub-section (1), by notification, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as specified in the notification.

260(3)

Every notification issued under sub-sections (1) and (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

Explanation

Section Summary:

Section 260 of the Income Tax Act introduces a faceless collection of information scheme aimed at improving efficiency, transparency, and accountability in the tax administration process. The Central Government is empowered to create a framework where information collection, processing, and related activities are conducted without direct interaction between taxpayers and tax authorities. This scheme leverages technology and team-based approaches to streamline operations and reduce human intervention.

Key Changes:

1. Faceless Interaction: The new scheme eliminates physical interaction between taxpayers and tax authorities, replacing it with a technology-driven, faceless process.
2. Team-Based Approach: Powers to collect, process, and utilize information are exercised by teams rather than individual officers, ensuring dynamic jurisdiction and functional specialization.
3. Flexibility in Application: The Central Government can modify or exclude certain provisions of the Income Tax Act to implement this scheme effectively.

Practical Implications:

• For Taxpayers: Taxpayers will no longer need to physically interact with tax authorities for information requests or inspections. This reduces compliance burdens and potential harassment.
• For Businesses: Companies may face more streamlined but rigorous scrutiny, as information collection and processing will be centralized and technology-driven.
• For Tax Authorities: The scheme enhances operational efficiency by leveraging economies of scale and reducing manual intervention, leading to faster and more transparent processes.

Critical Concepts:

• Dynamic Jurisdiction: The authority to handle cases is not fixed to a specific officer or location but is assigned dynamically to teams based on workload and expertise.
• Functional Specialization: Teams are organized based on specific functions (e.g., information collection, processing), ensuring expertise in handling tasks.
• Notification-Based Modifications: The Central Government can issue notifications to adapt or exclude existing provisions of the Income Tax Act to align with the faceless scheme.

Compliance Steps:

1. Stay Updated: Taxpayers and businesses should monitor notifications issued by the Central Government regarding the faceless scheme.
2. Digital Readiness: Ensure all records and information are maintained digitally to facilitate seamless submission and processing.
3. Timely Response: Respond promptly to any faceless information requests or notices to avoid penalties or delays.

Examples:

• Scenario 1: A taxpayer receives a faceless notice under Section 252 requesting details of certain transactions. Instead of visiting a tax office, the taxpayer submits the information online through the designated portal. A specialized team processes the information and issues a response without any physical interaction.
• Scenario 2: A company is subject to a faceless inspection of its register under Section 255. The tax authority accesses the required information digitally, and a team reviews it without requiring the company’s physical presence.

This section represents a significant shift toward a more modern, efficient, and transparent tax administration system in India.