Faceless Assessment in Income Tax- What & How?

The central government had introduced the Faceless Assessment Scheme in Year 2019.

Assessment is the method which is used to evaluate the information and other details filed by the assessee with the Income tax department.

Based on assessment or evaluation, the income tax officers issue the order or notice. The notice may be for presenting the additional documents and proofs which may be required by the officers. 

Previously, it was all used to be done through exchange of physical papers and sometime presence of assessee may be required before the officers.

Faceless assessment has been brought to simplify the current taxation system. Under it, all the proceedings related to assessment will be done online an assessee is not required to be physically present before the officer.

The faceless assessment scheme is one of the biggest direct tax reforms in India based on the key principals of efficiency, transparency and accountability.

Some Features of Faceless Assessment Scheme:

• Selection of scrutiny cases using data analytics and artificial intelligence.
• Abolition of territorial jurisdiction. Return of taxpayer of one city can be scrutinized by the assessing officers based in other cities.
• Random allocation of cases to the assessment units.
• Centralized issue of notices using unique document identification number.
• No need to visit income tax office and no human interfaces during scrutiny and assessments.
• All responses to be submitted electronically.
• Single point of faceless contact between the officer and assessee.
• Draft assessment order to be provided to assessee for response before finalization.
• Draft assessment in one city, review in another city and finalization in the third city.
• Ease of tax compliance.

Process of Faceless Assessment:

• Assessee will receive a notice under section 143(2) of the Income tax act digitally signed by NeAC (National e assessment center) officer in the efiling account of the assessee. Real time SMS and email will also be sent.
• Assessee is required to file the response to the notice issued under section 143(2). Assessee should give a comprehensive reply within the date and time specified in the notice. The reply should be made only through efiling account and not physically.
• If the assessment unit is satisfied with the reply, draft assessment order should be prepared subject to a computer run risk management strategy (RMS) tool. RMS shall identify if the case needs to be reviewed by the review unit. If there is no review, then final assessment order shall be received by the assessee.
• If the additional details or information is required by the assessment unit, then a notice under section 142(1) shall be issued to the assessee in his efiling account and registered email ID. A reply along with the supporting documents are required to be filed by the assessee through efiling portal with the time limit prescribed in the notice.
• If the assessment unit is not satisfied with reply and want to make a modification in the Income, a show cause notice along with the draft assessment order may be issued to the assessee. Assessee can reply to the issued show cause notice.
• If the assessee wants to have a personal hearing through video conferencing, he may put a request for the same. When approved, the hearing will be done through the same.
• After considering the reply to the notice, show cause notice, personal hearing, a Final Assessment Order will be issued to the assessee. After the same, the assessment will be considered as complete.
• If the assessee is not satisfied with the assessment order issued, he may go for an e-appeal. The same can be filed through National Faceless Appeal Center (NFAC).

This faceless assessment schemes are now limited to certain cities and cases that the government decides and amend from time to time. It is in an evolving stage now and will take time to come in full force. The government visualize to take it to all the assessment cases in the future where it is feasible to follow it.