Common Issues, and Solution for improvement of functioning of NFAC
Issue 1: SCN was issued granting only 24/48 hours for reply.
Solution: According to Section 148A of the Income Tax Act, 1961 minimum time of seven days is to be given to an assessee for filing reply to the show cause notice.
Issue 2: Assessment proceeding done by NFAC without issuing SCN to the assessee.
Solution: It is mandatory for NFAC to issue Show Cause Notice (SCN) and the draft assessment order calling for objection of the assessee before the assessment order can be finally passed and a demand is raised.
Issue 3: Request for personal hearing had not been considered
Solution: NFAC shall allow the request for personal hearing via video conference and communicate the date and time of hearing to the appellant through the National Faceless Assessment Centre.
Issue 4: Assessing Officer, after providing link for video conferencing, has not given password.
Solution: NFAC shall while providing link for video conference, shall communicate the password also.
Issue 5: Request for adjournments are not considered.
Solution: NFAC has to consider adjournments wherever possible and if rejected, assessees are to be informed about the same with reason.
Issue 6: Impugned order has been passed before the time prescribed for filing the reply in SCN, it is evident that the impugned order has been passed with pre-set mind.
Solution: NFAC has to strictly adhere to the time schedule given in the SCN to the assessee for filing response.
Issue 7: The assessee could not file response as the portal was not working. The department ignored such issues and passed final assessment order.
Solution: In such instances the NFAC has to verify from the trusted sources of the Department that whether there were any issues in the portal as claimed by the assessee and even if there are no issues, can consider giving one more chance to the assessee because all the technical glitches can not be proved.
Issue 8: NFAC passes orders without considering the ROI filed in response to the notice issued
Solution: Before passing any order the NFAC has to make sure that the ROI is filed or not.
Issue 9: Assessment orders are passed without either discussing or rejecting the objections given by the assessee, for the draft Assessment Order. Simply the draft assessment orders are issued once again as the final assessment order.
Solution: If there are objections by the assessee to the Draft Assessment order, they are to discussed in the order and if rejected they are to mentioned stating the reasons for rejection
Issue 10: Time limit for passing orders – as of now whether there is anytime limit is not known
Solution: Fixed time limit is to be prescribed from the date of the first notice by NFAC till the final assessment order is passed; say three months or so
Issue 11: From the questions raised by NFAC it is understood that back records are not made available to NFAC and hence irrelevant questions are raised, which results in waste of time at both ends.
Solution: Back records are to be made available to the NFAC as soft copy or otherwise the NFAC has to get the required information about the past assessment records from the Department before raising questions.
Issue 12: Very old cases, completed u s 143(3), are opened without any valid fresh information/reason and much time is spent on probing issues considered in the original assessment order passed us 143(3).
Solution: NFAC should not re-visit the issues considered in the original assessment orders without any fresh information.
Issue 13: As of now it is very difficult to file the rectification petition and even if filed they are to be attended to by the Assessing Officers, which they never attend.
Solution: Option to file rectification petition u s 154 is to be made available and the petition is to be disposed off within 30 days by NFAC and till such time the collection of the demand raised is to be stayed. If the rectification petition is not replied within 30 days, the order passed already should be treated as null and void and the NFAC has to pass fresh orders.
Issue 14: NFAC raises general query i.e without any particular issue. In one case the information sought was Please file evidence and documents in support of the ‘Grounds of Appeal’ and in another case it has directed the asessee to file details of all deposits in one SB Account with a Bank as to the name address of the depositor, source of funds, PAN with supporting documents and evidence, wherein the total deposits were more than Rs. 3 Crores and number of entries were more than 600.
Solution: The questions raised by the NFAC should be specific to the point and it should be realistic. For the purpose of raising questions, information should not be sought. It should be remembered that the compliance part of the same should be realistic and useful for the Department for further investigation.
Issue 15: At present granting stay of the demand lies with the Assessing Officers, who are not in the picture at all in the assessment proceedings
Solution: Since, now total stay is not granted and the assessee has to necessarily pay 20% of the demand, it should be made automatic i.e if an appeal is filed it is sufficient, 20% of the demand is paid before filing the appeal and the evidence for payment of the 20% of the demand should filed along with the appeal, which will save lot of time in making a stay petition to the Assessing Officer and in granting stay for the 80%.
Observations and Suggestions for improvement of functioning of NFAC
| S. no: | Observations/Suggestions |
| 1 | Though the scheme is called FACE LESS, it is not 100% face less since the assessing office at the NFAC end can contact the assessee at any time because he knows the name, address and contact details of the assessee, whereas the assessees only do not know who is doing the assessment proceedings |
| 2 | Data should be collected for the percentage of orders to the total orders passed against which writs were filed in High Courts and out which the percentage orders cancelled by the High Courts and re-assessment ordered in order to change the course assessment proceedings, if required, based on the results, so that much time and money can be saved at both the ends |
| 3 | Likewise data should be collected for the percentage of orders against which appeals were filed and out which the percentage of orders of NFAC, which were struck down at the level of CIT (Appeals)/ITAT/High Court in order to change the course assessment proceedings, if required, based on the results, so that much time and money can be saved at both the ends |
| 4 | Assessees are receiving notices stating that their case are being selected for scrutiny and this being is only an information there need not be any option for response for notices/information. As of now since the ‘response option’ is made available in the site, the assessees have to acknowledge the notice and state that they are ready to furnish the details, if any, called for, in future. For such notices the ‘response option’ should not made available. |
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