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FACELESS-ASSESSMENT-SCHEME
FACELESS ASSESSMENT
Background
Faceless Assessment is a significant development in the field of taxation in India. It refers to the use of technology to conduct tax assessments, without the need for face-to-face interaction between the taxpayer and the tax officer.
The concept of Faceless Assessment was introduced under the Income Tax Act, 1961, through the Finance Act, 2020. It is aimed at ensuring transparency, efficiency, and impartiality in the assessment process, while reducing the scope for corruption and harassment.
Under Faceless Assessment, tax assessments are conducted through an automated system, which assigns cases randomly to tax officers across the country. The identity of the taxpayer is kept anonymous throughout the process, and all communication between the taxpayer and the tax officer is done through electronic means, such as email, SMS, or the taxpayer's online account.
The system uses data analytics, artificial intelligence, and machine learning to analyze taxpayer data and detect any discrepancies or inconsistencies. The tax officer then examines the case and makes a draft assessment order, which is reviewed by a separate team of officers to ensure accuracy and consistency.
If the taxpayer disagrees with the assessment, they can request a personal hearing through video-conferencing. The hearing is conducted by a separate team of officers, who have no prior knowledge of the case. The final assessment order is then issued by the designated officer, who is randomly assigned to the case.
Introduction of e-Assessment Scheme,2019
The 'e-Assessment Scheme, 2019' was notified by the Ministry of Finance vide notification dated 12.09.2019. In the first phase, the Income Tax Department had selected 58,319 cases of regular assessment under section 143(3) of the Income Tax Act, 1961 for assessment year 2018-19 under the 'e-Assessment Scheme, 2019'. on pilot basis. The remaining regular assessment cases for the assessment year 2018-19 were being conducted in the traditional manner by the jurisdictional assessing authorities through the e-Proceeding functionality in the e-filing portal of the Income Tax Department.
Further, the coverage of the 'e-Assessment Scheme 2019' has been extended to all regular assessments under section 143(3) of the Income-tax Act, 1961, best judgment assessments under section 144 of the Income-tax Act, 1961, and the Income-tax Act Income escaping assessment under section 147 of the Act, 1961.
On 13th August, 2020 Hon'ble Prime Minister Shri. Narendra Modi has launched a new platform for transparent taxation to 'honor the honest taxpayers'. The move reflects the perceived changed nature of tax administration in India. The emphasis of this taxation platform is on faceless assessment, faceless appeal and taxpayers' charter. The objective of the platform is to achieve faceless assessment, faceless appeal and implement the taxpayer charter. Whereas, Faceless Assessment and Taxpayer's Charter has been implemented with immediate effect, Faceless Appeal will be effective from September 25, 2020
Accordingly, the Central Board of Direct Taxes, vide notification dated 13th August, 2020, has amended the "e-Assessment Scheme 2019" so as to provide that the same shall come into force with effect from 01.01.2020. On the 13th August, 2020, the "e-Assessment Scheme 2019", to be called the "Faceless Assessment Scheme 2019", and all income-tax assessments (subject to certain exceptions) shall be made in the faceless manner. Further, the CBDT in its order dated August 13, 2020 has directed that henceforth all assessment orders shall be passed through the Faceless Assessment Scheme 2019 by the National e-Assessment Center (NEAC).
Features of Faceless Assessment
The Faceless Assessment Scheme, introduced under the Income Tax Act, 1961, has several key features that are aimed at promoting transparency, efficiency, and impartiality in the tax assessment process. Some of the main features of the scheme are:
Random allocation of cases: Cases are allocated randomly to tax officers across the country, to ensure impartiality and reduce the scope for corruption and harassment.
Anonymity of the taxpayer: The identity of the taxpayer is kept anonymous throughout the assessment process, to ensure that the assessment is based solely on the facts and data submitted by the taxpayer.
Electronic communication: All communication between the taxpayer and the tax officer is done through electronic means, such as email, SMS, or the taxpayer's online account, to ensure transparency and reduce the scope for personal interaction.
Data analytics and artificial intelligence: The system uses data analytics, artificial intelligence, and machine learning to analyze taxpayer data and detect any discrepancies or inconsistencies, which helps to identify cases for scrutiny.
Multiple layers of review: The draft assessment order is reviewed by a separate team of officers to ensure accuracy and consistency, and a final assessment order is issued by the designated officer, who is randomly assigned to the case.
Video-conferencing for personal hearing: If the taxpayer disagrees with the assessment, they can request a personal hearing through video-conferencing, which is conducted by a separate team of officers who have no prior knowledge of the case.
Overall, these features of the Faceless Assessment Scheme are aimed at making the assessment process more efficient, transparent, and fair for taxpayers, while also promoting compliance and reducing the scope for tax evasion and corruption.
Structure of Faceless Assessment
The structure of Faceless Assessment under the Income Tax Act, 1961, is designed to ensure that the assessment process is conducted in a fair, transparent, and efficient manner. The key components of the structure are:
National e-Assessment Centre (NeAC): The NeAC is the nodal agency responsible for managing the entire Faceless Assessment process. It is responsible for allocating cases to various assessment units and monitoring the progress of assessments.
Assessment Units (AUs): AUs are responsible for conducting the actual assessment of the taxpayer's case. The AUs are located across the country and are assigned cases by the NeAC.
Verification Units (VUs): VUs are responsible for conducting any verification or investigation required during the assessment process. VUs are separate from the AUs to ensure impartiality and independence.
Technical Units (TUs): TUs provide technical assistance to the AUs and VUs, such as data analysis and expert advice.
Review Units (RUs): RUs are responsible for reviewing the draft assessment orders prepared by the AUs, to ensure that they are accurate, complete, and consistent with the law.
Quality Assurance Units (QAUs): QAUs are responsible for ensuring that the Faceless Assessment process is conducted in accordance with the prescribed procedures and guidelines.
Overall, this structure ensures that the assessment process is conducted in a transparent, efficient, and impartial manner, with clear separation of functions and responsibilities. The use of technology and automated systems also helps to reduce the scope for personal bias and discretion, while promoting compliance and reducing the scope for tax evasion and corruption.
DIFFERENCE BETWEEN THE CURRENT ASSESSMENT AND FACELESS ASSSSMENT SCHEME
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S. No. |
Present Assessment System |
Faceless Assessment System |
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1. |
Case selection through:
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2. |
Cases were permanently assigned to a territorial jurisdiction |
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3. |
Issue of notices both manually and on system |
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4. |
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5. |
Wide discretion with officers leads to subjective approach and varying interpretations |
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Procedure of Conducting Faceless Assessment
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The National e-Assessment Centre (NeAC) shall serve notice to assessee. Assessee may reply within 15 days of receipt of notice. NeAC shall assign case to specific Assessment units (AU) in any one Regional e-Assessment Centre (ReAC) through automated allocation system. |
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AU may request to NeAC for -Obtaining information’s, documents or -evidence from assessee Conducting enquiry or -verification by Verification Unit (VU) Seeking technical assistance from Technical Unit (TU) |
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NeAC shall issue notice to assessee and assign request to VU and TU. After receiving documents from assessee and reports from VU and TU, NeAC shall transfer the same to AU |
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If assessee fails to comply with notice, then NeAC shall serve notice u/s 144 as to why assessment should not be completed to best of its judgement. |
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Assesee shall within the time frame file reply to NeAC. If assessee fails to file response than NeAC shall examine draft assessment order as per Risk Management strategy and automation examination tool where it may decide to -Finalize Assessment Order -Provide opportunity to assessee if modification is proposed -Assign Draft assessment order to Review Unit (RU) in any one ReAC through automated allocation system for conducting review of such order |
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The RU shall conduct review of Draft Assessment Order and may decide to concur with draft assessment order and intimate to NeAC or suggest modifications and send its suggestions to NeAC. |
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NeAC shall upon receiving concurrence of review unit finalize the Draft Assessment Order. NeAC shall upon receiving suggestions for modifications from RU, assign case to AU other than AU which has made draft assessment order through automated allocation system. AU shall after considering modifications suggested by RU send the final Draft Assessment Order to NeAC. |
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NeAC shall finalize Assessment Order or if modifications are proposed follow such procedure. Where Show Cause Notice (SCN) has been served to assessee, he shall furnish reply within time frame. NeAC shall -If no response of SCN, finalize assessment as per draft assessment order. -If response to SCN received, send response to AU and AU shall make draft assessment order and send it to NeAC. |
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NeAC shall after receiving revised Draft Assessment Order – -If modification is not prejudicial to interest of assessee with reference to Draft assessment Order, finalize Assessment Order -If modification is prejudicial to interest of assessee with reference to Draft assessment Order, provide opportunity of being heard. -NeAC shall deal with response with same procedure i.e. AU will make draft assessment order and so on. |
NeAC shall after completion of assessment transfer all the electronic records to Assessing Officer having jurisdiction over the said case for
-Imposition of Penalty
-Collection and recovery of demand
-Rectification of mistake
-Giving effect to appellate order
-Submission of remand report or any other report
-Representation of record before authorities
-Launch of Prosecution
NeAC may at any stage of assessment, transfer the case to Assessing Officer having jurisdiction over such case.
Exception to the Faceless Assessment Scheme
-Assessment orders in cases assigned to Central Charges (Block Assessment Cases u/s 153A/153C);
-Assessment Orders in cases assigned to International Tax Charges.
It has also been stipulated in the CBDT’s order, that any assessment order, which is not in conformity with the Faceless Assessment Scheme 2019, shall he treated as non-established and shall be deemed to have never been passed.
Conclusion
Overall, the Faceless Assessment procedure is designed to ensure that the assessment process is conducted in a transparent, efficient, and impartial manner, with clear separation of functions and responsibilities. The use of technology and automated systems helps to reduce the scope for personal bias and discretion, while promoting compliance and reducing the scope for tax evasion and corruption.
Article Compiled by:-
Mayank Garg
+91 9582627751
Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including newspapers, Journals, Bare Acts, Case Material. Charted Secretary etc.