Government Initiative to make All Assessment and Litigation Faceless and Digital

Scope of the Faceless Assessment Scheme:

The faceless assessment under the new assessment scheme is to be made with respect to all the specified persons, areas, cases or income by the Central Board of Direct Taxes (CBDT). Also, the CBDT has clarified that the term defined as assessment under Section 143(3) of the Income Tax Act, 1961, will be undertaken as the true meaning of the assessment in all the scenarios. In the Section 144, through the Finance Bill 2020, including the Best Judgment Assessment by Assessing Officer has to been proposed to be included for the faceless assessment scheme.

Structure of Faceless Assessment Scheme:

The CBDT has set up the following Centers and Units for conducting the faceless assessment or e-assessment all over the country through online mode-

  1. A National e-Assessment Centre (NeAC) has been set up on the central level for facilitating the conduction of the e-assessment procedure and proceedings in centralized manner.
  2. Regional e-Assessment Centers (ReAC) have been set up in 8 different cities under the jurisdiction of the Principal Chief Commissioner at regional level for conducting the faceless assessment. These ReACs are in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune.
  3. Under the ReAC, various units have been set up to carry forward the assessment process. These units built up in accordance with the new assessment scheme and are as follows-
  • Assessment Units
  • Verification Units
  • Technical Units
  • Review Units
  1. NeAC is the main communication channel for communication and coordination between the above units and to the taxpayer or assesses.

Procedure for conducting Faceless Assessment Scheme:

One is required to understand all about the faceless e-assessment for all the assessments in the future. The procedure for conducting the faceless assessment under the new Scheme is as follows-

  1. The faceless assessment procedure starts with the NeAC issuing a notice under the Section 143(2) of the Income Tax Act, 1961. The notice must specify all the issues and problems due to which the taxpayer has been selected for a detailed faceless assessment.
  2. The taxpayer is given around 15 days-time period to file a response for the received notice.
  3. One of the specified assessment units under one of the Regional centers is being provided the selected assessment case through an automated system.
  4. The assessment unit after receiving the faceless assessment case can request the NeAC for one or all of the following-
  • To obtain detailed information, documents, data and evidences from assesses or the person specified as important in the case.
  • To conduct further verification, investigation or enquiry through the Verification unit.
  • And to seek all the possible technical help and assistance from the technical unit in various areas such as- Accounting, Data Analytics, Information Technology, Legal, Management, Technological etc.

Depending on the request made by the assessment unit the NeAC further takes an action on the same to help the assessment unit with the faceless assessment proceedings.

  1. Once the material is gathered or received, the assessment unit takes all that into account and drafts and assessment order. The drafted order is sent to the NeAC.
  2. If the drafted order contains a modified income return to be paid by the taxpayer or assesses, the assessment unit specifies the penalties levied on assesses in detail in the order.
  3. The draft assessment order is examined by the NeAC and checks for its compliance as per the strategy of risk management specified by the CBDT.
  4. The NeAC after receiving the draft assessment order can do any one of the following-
  • It can finalize the order of the faceless assessment and provide a copy of the same to assesses, along with a demand notice of the penalties to be paid.
  • If there are modifications in the order then a show cause notice can be served to the taxpayer.
  • The order can be assigned to the review unit for further assistance.
  1. After reviewing the draft order for the faceless assessment the review unit can intimate any suggestions o modifications that are required to be made in the order to the NeAC.
  2. In case there are modifications to be made the NeAC has to send it back to the assessment unit to take care of all the suggestions. If the assessment order is passed by the review unit then NeAC, serves the same as final order to the taxpayer.
  3. The taxpayer is given ample opportunity to be heard in the whole faceless assessment case.
  4. The new E-assessment service scheme has also empowered the NeAC to transfer the assessment case to any jurisdictional tax officer as it may seems right at any given stage.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.