Faceless assessment scheme

Faceless assessment means carrying out of income tax assessment procedure without human interface with the use of technology wherein, a centralized NeAC (National Electronic Assessment Centre) shall be the medium of communication with the assesses and department with the use of Artificial intelligence, algorithms. The Cases shall be assigned to the department through automated allocation system. There will be no direct contact of A.O with assessee.

Faceless assessment applies to Scrutiny assessment and Best judgement assessment.

Birth of Faceless assessment (Brief History):-

√ In 2016, the government had introduced e-assessment on a pilot basis and extended it to 102 cities in 2017 with the aim to cut down the interface between the I-T department and the taxpayers.

√ “With the experience gained so far, we are now ready to roll out the E-assessment across the country,” Finance Minister Arun Jaitely said in his Budget speech for 2018-19 tabled in Parliament.

On 1^St February,2018 Former FM Mr. Arun jaitely in Finance act,2018 came up with insertion of three sub clauses 143(3A), 143(3B)&143(3C) to section 143(3) of IT Act,1961.

Sec.143(3A) gave power to CG to make a scheme for e-assessment by notification in the official Gazette.

√ On 5^th july 2019, former FM Mrs. Nirmala sitharaman had announced the e-assessment scheme in her budget speech.

√ On 12^th September 2019, CG in exercise of its power conferred u/s 143(3A) came up with e-assessment scheme wide notification no.61/2019 & 62/2019 in the official gazette.

√ On 13^th August 2020, PM Mr. Modi Launched “Transparent Taxation-Honoring the Honest” that rolled out a faceless assessment scheme, appeal and right’s charter for taxpayers.

√ So,The Faceless assessment scheme is nothing but e-assessment scheme itself.

Need for faceless assessment:-

“The vision of Prime Minister is to empower the taxpayers, to provide a transparent system and to honour the honest taxpayer,” the FM Nirmala sitharaman said, after PM Modi launched the “Transparent Taxation – Honoring the Honest” platform

The faceless assessment has been devised for greater transparency, greater efficiency and accountability to the assessment process by:-

• Technologically eliminating face time with A.O.;
• Enhancing transparency involved in assessment proceedings;
• Optimizing utilization of the resources through economies of scale and functional specialization.

Exclusions to scheme:-

• Any assessment that includes serious frauds, major tax evasion, sensitive and search;
• The system also excludes International Taxation and Black Money Act & Benami property.

Faceless assessment scheme framework:-

♦ National E-Assessment Centre(NeAC):-

• A National e-assessment Centre which is been set up in New delhi to facilitate the conduct of e-assessment proceedings in a centralized manner.

♦ Regional e-assessment Centres(ReAC):-

• Regional e-assessment Centers situated in different states across India will conduct of e-assessment proceedings. Cases shall be provided by NeAC through automated allocation system without any human interface.

♦ Assessment Unit(AU):-

• All the assessment for the case selected shall be carried out by assessment units which includes, identification of points or issues material for the determination of any liability (including refund) under the Act, etc.

♦ Verification Unit(VU):-

• Verification units, to perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, etc.

♦ Technical Unit(TU):-

• Technical units, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, etc.

♦ Review Units(RU):-

• Review units, to perform the function of review of the draft assessment order, which includes checking whether the relevant and material evidence has been brought on record, whether the relevant points of fact and law have been duly incorporated in the draft order, etc.

Procedure for Faceless assessment:-

1) Serving notice to assessee:-

• NeAC shall serve the notice on assessee along with the reasons for selection of case.
• Assessee may file response to above notice within 15 days to NeAC.

2) NeAC shall assign the case to AU & AU shall make draft assessment order:-

• With the use of AI and automated allocation system NeAC then shall assign the said case anonymously to AU of any one regional ReAC.
• After getting assigned with the case AU shall make request to the NeAC for:-

• After getting the above requests from AU, NeAC shall:-

NOTE– Request shall be made by NeAC to VU or TU or RU etc. of one of the ReAC through automated allocation system with the use of Artificial intelligence. It will be devoid of any human interference hence making it faceless.

• After AU is provided with the respective assistance as requested to NeAC , AU shall make in writing a draft assessment order & send its copy to NeAC.

3) Sending the draft assessment order to NeAC:–

• NeAC on receiving the draft order from AU it may take any of the three steps, either:-

i. Finalise the draft assessment order

ii. Provide an opportunity to assessee in case of any modification

iii. Assign draft order to RU for the conduct of review

4) NeAC shall Provide Opportunity to assessee in case of modification:–

• When against the draft assessment order any opportunity is provided to assessee:-

Then assessee may either:-

This process shall continue unless the draft asst. order is finalized.

5) NeAC may assign the draft order to RU for the conduct of review:-

RU shall after doing the review of draft asst. order it may either:-

The above process shall continue unless the revised draft order is finalized.

6). After Finalization of assessment:-

The NeAC shall after completion of assessment, transfer all the electronic records of the case to Assessing Officer having jurisdiction over such case for: –

a) Imposition of Penalty

b) Collection and recovery of demand

c) Rectification of mistake

d) Giving effect to appellate orders

e) Submitting reports to be produced before Commissioner (Appeals)/Tribunal/courts as the case may be

f)  Proposal seeking sanction for launch of prosecution and filing of complaint before the court

NOTE:-With the overriding power, NeAC if considered necessary, at any stage of assessment proceedings can transfer the case to A.O. having jurisdiction over such case. Thereby meaning,such case shall  proceed with normal assessment procedure & not with faceless assessment scheme.

Issues concerning Faceless assessment scheme:-

• The employee associations of Income Tax have said that the restructuring carried out in the Department to implement the Faceless Assessment Scheme is making 97 percent of the workforce feeling left out.

Employees working at Income tax department fears that they will be made redundant and might lose their work to computers and automation of work.

• It will be burdensome to the assesses to scan and upload the tons of papers as there will be no direct physical contact with the department.