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Faceless Assessment

The Central Government introduced the Faceless Assessment Scheme to provide greater transparency, efficiency & accountability in Income Tax assessments. All provisions makes in Faceless Assessment comes under the Income Tax Act, 1961, are introduced to-

(a) Alienate the interface between the Assessing Officer & the person who are assessee at the time of proceedings, to the range that is technically feasible.

(b) Optimize the utilization of resources through the economies of scale and functional specialization; and

W.E.F. 13 August 2020, the e-assessment scheme of 2019 has been amended and hence is known as the Faceless Assessment Scheme. This scheme applies to scrutiny assessments & best decision assessments.

In September 2019, For providing better efficiency & accountability in the assessment proceedings via online systems, the CBDT (Central Board of Direct Taxes) had notified the E-assessment Scheme, 2019. Thereafter, the Central Board of Direct Taxes issued notifications to align the ‘E-assessment Scheme 2019,’ with the ‘Transparent Taxation-Honouring the Honest’ platform, which was launched on 13 August, 2020.

The central government has now passed the Taxation and Other laws on 29 September, 2020 to incorporate the Faceless Assessment Scheme under the provisions of Income Tax Act, 1961.

What Are The Features Of Faceless Assessment Procedure?

  • The NFAC (National Faceless Assessment Centre) will give a notice to the taxpayer under section 143(2). The taxpayer need to file his/her response within 15 days of receipt of the notice from the NFAC.
  • The National Faceless Assessment Centre will assign the case choose for the motive of faceless assessment to a unit in any RFAC (Regional Faceless Assessment Centre) via AAS aka automated allocation system.
  • The assessment unit may make a request to NFAC for these purpose like obtaining information, documents, evidences as required from the taxpayer; and / or; conducting enquiry or verification by verification unit.
  • The National Faceless Assessment Centre shall issue communication to the respective person to take the documents as requested by the assessment unit.
  • NFAC shall send the documents received from the taxpayer or report received from the verification/technical unit to the concerned assessment unit.
  • After that the assessment unit will prepare draft assessment order & send it to NFAC along with the details of penalty proceedings to be initiated (if there is any penalty).
  • The National Faceless Assessment Centre will examine the draft assessment order according to the risk management strategy through an automated examination tool.
  • After finishing upper process the review unit will review the draft assessment order & intimate the NFAC of its concurrence with it or suggest suitable modifications
  • If any variation has suggested by the review unit then NFAC will send the modifications suggested by the review unit to a different assessment unit via an automated allocation system. The new assessment unit, after considering the variations suggested by the review unit, will prepare the final draft assessment order and send to the NFAC to issue it to the taxpayer.
  • Now that a taxpayer has to comply with assessment without need for physical attendance in the Income tax office, faceless assessment is expected bring positive changes to the assessment system, thereby saving travel time & cost for the taxpayer, being environment friendly as there will not be any submission made physically, review by more than one assessment unit for a single assessment making the entire assessment procedure more transparent & objective.