Faceless Assessment – A New Concept

In a bid to make the taxation procedure and its follow-up as transparent as possible, the central government has launched a new platform, details of which are explained by Jayesh Dadia

On August 13, 2020, Prime Minister Narendra Modi launched a platform for transparent taxation and has unveiled faceless assessments, faceless appeals and taxpayers’ charter. The main features of faceless assessment are analysed as under:

Objectives - To ensure complete transparency in government operations. - To eliminate the need for an assessee to visit or meet any Income Tax official for any assessment proceedings. - To ensure better quality of assessment. - To reduce number of disputes and litigations. - To make tax administration corruption-free. 

Faceless Assessment Under faceless assessment, tax payers do not have to visit the Income Tax Department and therefore will not come face-to-face with any Income Tax officials. The tax assessee can attend the proceedings online and upload all the details electronically. The entire correspondence from the issue of the notice till receipt of the assessment order will be in a digital format and assessment will be finalised on merits. 

Relevant Sections Section 143(3A), (3B) and (3C), Section 2(23C) define hearing, including communication of data and documents, through the electronic media. This is through two notifications, namely, Nos. 60 and 61 dated August 13, 2020. 

ITS’ Applicability All the assessments pending as on August 13, 2020 except those related to central charge (search and seizure) and International Tax. It is applicable to all the assessees including corporate.

The Digital System The system will work under the national e-assessment centres (NeACs) – the backbone of the faceless assessment – and will be located at Delhi. Eight regional e-assessment centres (ReACs) will work under the NeACs with the support of other centres such as assessment units (AUs), verification units (VUs), technical units (TUs) and review units (RUs).

Working and Structure - The NeAC shall serve a notice under Section 143(2) on the tax assessee specifying the issue for selection of his or her case for e-assessment. - The assessee is required to file response to NeAS within 15 days from receipt of such a notice. - The NeAC shall assign the case to a specific AU in any one ReAC. - The AU will go through the response from the tax assessee, and if required, may request NeAC to refer VU for some inquiry, refer TU for some technical assistance and seek more information from the assessee. - The NeAC shall issue an appropriate notice to the tax assessee for obtaining further information document or evidence required by AU, TU and VU for conducting faceless assessment. - The assessee and other persons to whom the notice is issued by the VU shall file their responses. - The AU, after taking into account submission of the assessee and findings of VU and TU if any, shall prepare the draft order. - The NeAC may approve the draft order or refer the draft order to the RU in any one ReAC through an automated allocation system. - The assessee’s response on the draft order received by RU shall be assigned to another AU again through an automated allocation system. The new AU shall issue a notice to the assessee giving further opportunity to file submission, if any. - Final assessment will then be completed and will be informed to the assessee. 

Benefits to Assessee The new assessment proceedings avoid human interface between the assessee and the Income Tax Department. The entire assessment proceedings shall be conducted in a digital form with no need for personal appearance. Details, documents or response can be uploaded from home or office. This will ensure a fair trial.

Conclusion The new scheme therefore looks transparent. However, its effectiveness and efficiency will be proved only after implementation.