Introduction :-

Owing to one of the positive outcome of Covid-19 pandemic & inspiring from the successful implementation of Faceless assessments in developed countries like HMRC – UK’s Digitised Approval based Assessment, SAT (Servicio de Administracion Tributataria) in Mexico, SPED(Sistema Público de Escrituração Digital) in Brazil, , Japan and many other Indian government has reinforcement of the Faceless Assessment Scheme 2020 & Faceless appeal Scheme 2020 for making entire direct tax administration :-

  • Seamless
  • Painless and
  • Faceless

Features :-

Eliminating Person-to-Person Contact: – Faceless Assessment Scheme 2020 aims at eliminating person-to-person contact to the extent technologically feasible; for greater transparency in assessment procedures. Name & other details of the Assessing officer shall not be disclosed.

Automated Cases Allocation: – Allocation of the cases shall be done by assessment unit of NeAC (National E-Assessment Centre) via Regional E-assessment Centre through an automated allocation system, based on artificial intelligence and machine learning.

Introducing a team-based assessment with dynamic jurisdiction ie E – assessment will now be handled by two officers thereby increasing the level of monitoring.

Optimising utilisation of the resources :- through e-assessment it is aimed to achieve economies of scale and functional specialisation, timely completion of the cases, reduces chances of corruption and bribery, Cloud storage, paperless work, data security.

Improvement in Quality of Assessment :- Consistent view on various issues. Ensuring that the assessments are technically sound. Also avoiding prolonged and unwanted litigations.

Governed by principal of Natural Justice :- Faceless E-Assessment shall be governed by principal of Natural Justice. Natural Justice can be derived from the Article 14 & Article 21 of Indian Constitution. The concept of Natural Justice shall include :-

  • The notice requirement means that the people affected by the decision must be told about the important issues and be given enough information to be able to participate meaningfully in the decision-making process.
  • The fair hearing requirement means that the people affected are given a reasonable opportunity to present their point of view and to respond to facts presented by others, and that the decision-maker will genuinely consider what each person has told them when making the decision.
  • The no bias requirement means that the person making the decision must act impartially when considering the matter, and must not have any relationships with anyone that could lead someone to reasonably doubt their impartiality.

Which assessments shall be covered under Faceless Assessment Scheme 2020 ?

The assessment of total income/loss u/s 143(3) & Sec 144 of the Income Tax Act 1961

Following Assessment shall not be covered under Faceless Assessment Scheme 2020 :-

  • Assessment of Escaped income u/s 147.
  • Search Assessment u/s 153A or u/s 153C.
  • Set-aside Assessments

Structure :-

National E-Assessment Centre (NeAC) which shall be centralised body at Delhi)

Functions of Above Units :-

  • AU:- Identification of issues and seeking information & clarification for the same. Analysis of material information received & thereby making draft assessment order.
  • VU:- Enquiry & Cross Verification , Examination of Books, Recording of statement, Examining Witnesses
  • TU:- Advice on Legal, Transfer Pricing, Valuation, IT, Accounting, Forensic, Management & Technical Matters
  • RU:- Checking whether relevant & material evidences is on record, relevant points of facts, relevant law & case laws are incorporated

Summarized Procedure for Faceless E-Assessment

1) The NeAC shall serve a notice on the Assessee under S 143(2) in following cases:-

  • Taxpayer has filed ROI u/s 139 or in response to notice u/s 142(1) or 148 & AO issued notice u/s 143(2) or
  • Taxpayer has not filed return in response to notice u/s 142(1) ; or
  • Taxpayer has not filed return in response to notice u/s 148 & notice u/s 142(1) issued by AO

2) Assessee needs to file his/ her response within 15 days from the date of receipt;

3) The NeAC shall assign the case to AU via automated allocation system

4) AU may make following request to NEC:-

  • Obtain further information, documents or evidence from the Assessee or
  • Conduct enquiry/verification by the VU or
  • Seek technical assistance from TU;

5) NeAC shall act accordingly and provide the data asked by AU for completion of assessment. To obtain further information, documents or evidence from the Assessee NeAC shall issue appropriate notice

6) The assesse shall reply to the said notice within specified time limit.

7) Where request for conduct enquiry/verification or request to provide technical assistance is made by AU to NeAC, the NeAC shall assign the task to VU/TU as the case may be by automated allocation system

8) Where the assessee fails to comply with the notice issued under section 142(1) or with a direction issued under section 142 (2A), NeAC shall serve upon such assessee a notice under section 144 Best Judgement Assessment after giving the assesse a reasonable opportunity of being heard

9) Assessee further fails to respond to time limit specified in Notice under section144, NeAC shall intimate the failure to AU

10) AU shall after considering all the material available records, shall draft an assessment order along with levying penalty on assessee and will forward thecopy of draft assessment order to NeAC

11) NeAC shall ask the RU to review the draft assessment order. RU shall either confirm the draft or suggest for any alteration or modification in the draft assessment order.

12) The National e-assessment Centre on receiving final draft assessment order shall follow following procedure.

  • finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or
  • provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order

Are you ready to adapt to the changed version of assessment ?

As it is rightly quoted We cannot direct the wind, but we can adjust the sails”. Thus our approaches need to be changed as follows :-

1) Diligently & timely filing IT Return thereby avoiding any possible error during filing.

2) Ambivalent issues to be noted well in advance during audit or filing IT Return & documented properly for future references.

3) Gearing up the technology, Changes in ERP systems, Adequate IT infrastructure should be in place to ensure time-bound compliance with the law.

4) All Submission should be well-researched, precisely-articulated & drafted properly. Same should be proof read before submission so as to avoid any grammatical mistakes.

5) Annexures to be prepared for supporting your replies with numbers, relevant case laws so as to avoid fuss & overcrowding in your main body of the submission.

6) Language while draft the replies should be cogent and up to the point thereby avoiding ambiguity. Kindly note our objective should be to make things as simple & understandable to AO failing to which will lead to :-

    • AO may conclude the assessment based on his understanding. or
    • He may ask to him visit in person

7) Submission to be indexed and numbered appropriately i.e. your reply should be Point wise for every contention raised by AO & co-relating the same with the documents filed. Such indexing, numbering and cross referencing practice in submission will ease out work of AO and thereby decreasing the chances of confusion and thereby lead in timely completion.

8) Technically sound team with expert level knowledge of Income Tax Act & updates so as to respond to technical queries raised by NeAC in time bound manner.

Our Experience with Faceless E-Assessment

Case 1

Matter :- Individual Assessee with the Returned Income of Rs. 2.78 crores had received notice u/s 143(2) by NeAC Delhi. Timely submission were made by us comply to data requirement as per the notice.

Result :- Order u/s 143(3) received with no addition made, without any grease.

Case 2

Matter :- A Private Limited Company was in receipt in notice u/s 142(2) by NeAC Delhi where-in information was asked in relation to baseless additions which was made in previous year in taxable income of of the assesse

1) outstanding credit purchases amounting to Rs. 3.14 crore &

2) outstanding other current liabilities amounting to Rs. 1.27 crore

via irrational order passed in earlier year, the same matter was lying in appeal. We responded timely with NeAC & meticulously submitted all the information pertaining to purchases, creditors & other outstanding current liabilities to prove the genuineness in connection with above case & same was accepted by NeAC.

Result :- NeAC found out that matter was genuine and went against the previous irrational order & issued Order u/s 143(3) received with no addition made, without any grease.

Case 3

Matter :- In this case of a prominent builders every year assessment used to get closed with grease. However the builder was in receipt in notice u/s 142(2) by NeAC, having returned income of Rs. 98 Lakhs seeking for submission of requisite information. Timely submission were made by us comply to data requirement as per the notice.

Result :- Order u/s 143(3) received with no addition made, hassle free.

Conclusion

Thus owning to the various merits of the Faceless Assessment scheme we can say that Faceless E-Assessment is a remarkable reforms that have been implemented by the Indian Government, the Honourable Prime Minister, Shri Narendra Modi, revolutionising the way of assessments of tax returns are conducted and digitise the interactions between taxpayers and the Income Tax department. We are of the opinion that upon experiencing seamless & hassle-free implementation of Faceless E-Assessment by Direct Tax Department, same module should be implemented in GST as well by CBIC. Thereby making the entire tax administration:-

  • Seamless
  • Painless and
  • Faceless

*****

Disclaimer : The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and / or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional. In case of any query or any clarification required you can reach me out at [email protected]

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