Introduction
With the advent of technology in tax administration, the Income Tax Department has taken a revolutionary step towards transparency, efficiency, and taxpayer convenience through the Faceless Assessment Scheme under Section 144B of the Income-tax Act, 1961.
This article provides a comprehensive yet simplified overview of the faceless assessment procedure, its structure, and the workflow, as well as the roles of various units involved in the process.
Authorities Involved in Faceless Assessment
To ensure seamless coordination and specialisation, the Central Board of Direct Taxes (CBDT) has established several dedicated units and centres:
| Centre/Unit | Purpose | Key Functions |
|---|---|---|
| National Faceless Assessment Centre (NFAC) | Central coordination hub | Routes all communications, assigns cases, manages workflow |
| Assessment Unit (AU) | Core unit for determining income/loss | Identifies issues, analyses documents, prepares draft proposals |
| Verification Unit | Ensures accuracy of records | Conducts inquiries, examines accounts, verifies facts |
| Technical Unit | Provides expert opinion | Covers legal, forensic, valuation, transfer pricing, data analytics, etc. |
| Review Unit | Ensures quality control | Verifies that all evidence and legal provisions are considered |
Workflow: Step-by-Step Faceless Assessment Procedure
Here is how the faceless assessment process unfolds:
1. Case Selection and Assignment
- The case is selected for faceless assessment.
- NFAC assigns the case to an Assessment Unit (AU) using an automated allocation system.
2. Initial Notices
- NFAC issues notice under Section 143(2) or Section 142(1).
- Assessee submits a response, which NFAC forwards to AU.
3. Assistance from Other Units (if required)
AU may request, via NFAC:
- Further info from the assessee
- Enquiry by the Verification Unit
- Technical assistance from the Technical Unit
4. Non-compliance with Notices
-
If the assessee does not respond, AU is informed and may issue a notice under Section 144 (Best Judgement Assessment).
Draft Order and Review Process
Based on assessee’s response and internal verifications:
1.No Adverse Variation:
-
AU prepares a proposal and sends it to NFAC.
2. With Adverse Variation:
- AU sends a show-cause notice to the assessee.
- Assessee may reply via NFAC.
- Final income/loss proposal is prepared.
3. Review Unit Involvement:
- NFAC forwards the proposal to the Review Unit.
- Review Unit checks and reverts back to AU.
- AU finalises the draft assessment order.
Draft Order – Next Steps
For Eligible Assessees (e.g., non-residents, or those with TPO adjustments under Sec 92CA(3)):
- Draft order served for response.
- They can accept or object (via DRP & NFAC).
For Others:
-
NFAC instructs AU to pass the final assessment order.
Role of Dispute Resolution Panel (DRP)
The DRP is a collegium of three Principal Commissioners/Commissioners who:
- Handle objections from eligible assessees.
- Issue binding directions to the AU for finalising the order.
Special Audit & Exceptions
In complex cases, AU may refer the matter for a special audit under Section 142(2A).
Exceptions to faceless assessments as per CBDT Order No. 187/3/2020-ITA-I dated 22.09.2021:
- Central charges cases
- International tax cases
- Cases without PAN or with ITBA technical issues
- Reassessments where limitation expired on 30.09.2021
Conclusion
The Faceless Assessment Scheme under Section 144B is a commendable initiative by the CBDT to:
- Minimise human interface
- Enhance transparency and accountability
- Ensure uniform application of the law
As professionals and taxpayers, understanding this mechanism is essential to ensure compliance and to use the new system effectively.
Great insight.