To strengthen the efforts of “Reforming and Simplifying Our Tax System”to bring greater efficiency, transparency, and accountability, the Hon’ble Prime Minister Narendra Modi, while addressing to the Nation on 13.08.2020, launched a platform ‘Transparent Taxation – Honoring the Honest’. The new platform includes tax reforms through as Faceless Assessment, Faceless Appeal and Taxpayer`s Charter. Faceless Assessment Scheme (“FAS”) along with Taxpayer’s Charters is applicable from 13.08.2020 only whereas, the Faceless Appeals shall come into force on 25.09.2020.
This write-up is all about the key amendments introduced by the Hon’ble CBDT vide Notification No. 60 dated 13.08.2020 and Notification No. 61 dated 13.08.2020 modifying the earlier ‘E-assessment Scheme, 2019’ notified on 12.09.2019 and highlights of scheme. The key amendments and highlights of the said Faceless Assessmentare as follows:
1. E-Assessment Scheme, 2019 is now Faceless Assessment Scheme, 2019.
2. Scheme shall now also cover ‘Best Judgment Assessment’ u/s 144 of the Act.
3. Procedure relating to assessment contained under chapter XIV of the Act shall also apply to Faceless Assessment.
4. Procedure of assessment has been changed. The National e-Assessment Centre (“NeAC”) have been given concurrent jurisdiction and accordingly, it shall intimate the assessee that assessment in his case shall be completed under the said Scheme.
5. Faceless assessment shall be done in following cases:
a. Where Assessee has filed return of income u/s 139 or in response to a notice issued u/s 142(1) or u/s 148(1) and notice u/s 143(2) has been issued by the AO or;
b. Where has not filed return in response to a notice issued u/s 142(1) or;
c. Where has not filed return in response to a notice issued u/s 148(1) and notice of notice u/s 142(1) has been issued by the AO .
6. Search assessment u/s 153A of the Act is not covered under FAS and as clarified vide Order u/s 119 of the Act dated 13.08.2020, the assessment orders in the cases assigned to Central Charges and in cases assigned to International Tax Charges would also not be covered under FAS.
7. Faceless Assessment, by NeAC would be carried out along with the coordination of (i) assessment unit for drafting of assessment order,(ii) verification unit for further inquiry, (iii) technical unit for technical assistance, (iv) review unit for reviewing the draft of assessment order.The cases for Faceless assessment would be allocated through automated random allocation system.
8. The Scheme now also provides for seeking adjournment or extension of time limit for filing his response by the assessee.
9. Hearing in person or through authorized representative before any income-tax authority at the National / Regional e-assessment Centre or any other unit, shall not be allowed except in special circumstances after necessary approvals.
10. Personal hearing in special circumstances would be provided through the Video Conference by using any telecommunication application software which supports video telephony. Further, any examination or recording of statement of assessee or other person (except recording of statement during survey u/s 133A) shall also be conducted through video conferencing.
11. An exception to the earlier rule that ‘all communications between the NeAC and the assessee / AR shall be exchanged exclusively by electronic mode’ is drawn in case of enquiry or verification conducted by the verification unit under circumstances to be specified.
12. For authentication of electronic records, FAS allows the assessee authenticating the electronic records by ‘electronic verification code’ as per rule 12 of the Income Tax Rules, 1962. However, NeAC shall be required to authenticate the electronic records by digital signature only.
13. Under the FAS, transfer of the cases shall take place in following manners: –
a. Principal Chief Commissioner / Principal Director General of National e-assessment Centre, at any stage of the assessment, may transfer the case to the jurisdictional Assessing Officer with the prior approval of the Board.
b. After levying the penalty for non-compliances and issuing demand notice with respect to the same, electronic records of such penalty proceedings shall be transferred by the NeAC to the Assessing Officer having jurisdiction over the said case.
c. Assessment records after passing of assessment order shall be transferred by NeAC to the Assessing Officer having jurisdiction over the said case.
14. It is pertinent to note that FAS as notified by Notification(s) dated 13.08.2020, does not cover faceless proceedings for consequential penalty arising out of the additions made to total income in assessment order passed under this Scheme. However, it is likely that government with the object of bringing greater efficiency, transparency and accountability may soon notify the faceless penalty proceedings as necessary amendment in this context, has already been brought in the Act by Finance Act, 2020 after inserting Section 274(2A) and Section 274(2B)of the Act.
*(Pankaj Soni (Associate) | Chir Amrit Legal LLP