The Faceless Income Tax Assessment in India is a great initiative by the Government of India and it has been introduced with the objective that it will make the assessment procedure more transparent, efficient, and accountable unlike before. This new scheme is expected to bring a paradigm shift in the technological aspect of the assessment and has made the future scrutiny of tax assessment in India more reliable with the help of artificial intelligence. It is one of the most advanced transformations in the taxation field in India.
It will also infuse confidence amongst the foreign and multinational companies which want to set up business in India however are circumspect about the overall present tax assessment regime of India
In this article, we will try to answer some of the frequently asked questions relating to Income Tax Faceless Assessment for our better understanding.
Q.1. How the taxpayer will know they are being selected for the Income Tax faceless assessment?
Ans. The taxpayer will receive an Income Tax notice of assessment as per Section 143(2) of the Income Tax Act, 196, signed by an officer of the National e-Assessment Centre (NeAC). The notice is sent to the registered e-filing tax account of the individual. Also, an alert for the same is sent to the registered number and e-mail id of the person. The notice will clearly mention that the said notice is for conducting Income Tax faceless assessment.
Q.2.What should be done in case an Income Tax notice is received?
Ans. In case a taxpayer receives an assessment notice, the following procedure is to be followed by them-
- Login to the registered e-filing account on the income tax portal. If there is an issued notice duly signed by the NeAC officer, it implies that the person’s case has been selected for proper scrutiny under the new faceless assessment procedure.
- The taxpayer is required to file a response against the received notice through their e-filing portal within the stipulated time period and date as specified in the notice. The reply should be filed in a comprehensive manner along with documentary evidence and each and every point in the notice shall be properly clarified and explained.
- In case, the assessee could not reply to the notice within the specified time mentioned in the notice, the assessee can also seek an adjournment for a maximum period of 15 days by login in to the same portal.
Q.3.What happens after the reply for the notice u/s 143(2) is filed by the taxpayer?
Ans. One of the following situations is likely to happen after the reply for the Income Tax notice is filed by the taxpayer.
- NeAC will forward the reply filed by the assessee to any assessment unit through an automated electronic system located anywhere in India.
- In case the assessment unit is completely satisfied by the reply of the taxpayer, it will draft assessment order. With the help of the automated Risk Management Strategy (RMS) tool, it is identified whether the case required any further review from the Review Unit. In case there is no review or any modifications after review, then the assessment order is finalized and issued to the taxpayer.
- If any further information or modification is required by the Assessment Unit, then notice under section 142(1) is issued to the taxpayer along with a questionnaire on the e-filing account and the registered mail id. The individual is required to file the relevant information and attach the supporting documents wherever required. This is to be done electronically through the taxpayer’s registered account.
- A Show Cause Notice with the Draft Assessment Order copy is issued to the taxpayer, in case the Assessment Unit is not satisfied with filed replies and further wants to make modifications in their income. A reply must be filed by the taxpayer to the Show Cause Notice. Also, the assessee can demand a personal hearing through video conference mode. However, video conferencing is conducted only when it is approved under the guidelines applicable.
- A final assessment order is issued with annexures to the taxpayer after proper consideration about the reply to the drafted assessment order or the Show Cause Notice.
This completes the procedure of Income Tax Faceless Assessment.
Q.4. In case the taxpayer is not satisfied with the Assessment, what should be done?
Ans. Once the assessment is completed, the digital records related to it are transferred to the Assessing Officer of the taxpayer’s jurisdiction. He/she is in charge of the work done post-assessment. The taxpayer can-
- File an application of rectification to the assessment officer.
- File an appeal through the e-appeal portal of the National Faceless Appeal Centre (NFAC) against the penalty order or the assessment order issued to them.