The e-assessment scheme of 2019 stands amended from 13 August 2020 and hence known as Faceless assessment scheme. The faceless assessment scheme applies to scrutiny assessment and best judgment assessment. In the Union Budget 2019, the Finance Minister proposed the introduction of a scheme of faceless e-assessment. The objective of the scheme was to eliminate the human interface between the taxpayer and the income tax department. The scheme lays down the procedure to carry out a faceless assessment through electronic mode. The e-assessment would be made in respect to such territorial area, or persons or class of persons, or income or class of income, or cases or class of cases, as may be specified by the Central Board of Direct Taxes (CBDT).
Structure for faceless Assessment
For the purpose of faceless assessment, the CBDT shall set up the below ‘centres’ and ‘units’ and specify their respective jurisdiction (refer Notifications 62/2020 to 66/2020 dated 13-08-2020 for jurisdictions):
- A ‘National e-Assessment Centre’ to facilitate and centrally control the e-assessment.
- ‘Regional e-Assessment Centres’ under the jurisdiction of the regional Principal Chief Commissioner for making assessment.
- ‘Assessment units’ for identifying points or issues, material for the determination of any liability (including refund), analysing information, and such other functions.
- ‘Verification units’ for enquiry, cross verification, examination of books of accounts, witness and recording of statements, and such other functions.
- ‘Technical units’ for technical assistance including any assistance or advice on legal, accounting, forensic, information technology, valuation, audit, transfer pricing, data analytics, management or any other technical matter.
- ‘Review units’ for reviewing the draft assessment order to check whether the facts, relevant evidence and law and judicial decisions have been considered in the draft order.
All the communications between all the units mentioned above, for the purpose of making an assessment under this scheme would be through the National e-Assessment Centre.
2. Procedure for Faceless Assessment
The procedures for Faceless Assessment are notified as follows:
- the NeAC shall serve a notice on the Assessee under S 143(2), specifying the issues for selection of his/her case for assessment.
- The Assessee shall file his/ her response within 15 days from the date of receipt to the NeAC.
- It is impertinent to note that the taxpayer’s case gets assessed under NeAC only when a taxpayer fails to furnish an income tax return voluntarily or in response to a notice, either under S 142(1) or 148(1) or 143(2) of the said Act, as the case may be, asking the taxpayer to furnish a return.
- the NeAC will assign the case selected for the purpose of e assessment to a specific Assessment Unit in any one ReAC (Regional e Assessment Unit) through an automated allocation system;
- An assessment will include assessment under Section 143(3) and under Section 144. Scrutiny Assessment and Summary Assessment will be through Faceless Assessment
- The Assessment Unit may request NeAC for:
- Obtaining further information, documents or evidence from the Assessee or any other person, as it may specify
- Conducting certain enquiry by the Verification Unit (VU)
- Seeking technical assistance from Technical Unit (TU);
- Based on the request of Assessment Unit (AU), the NeAC shall issue appropriate notice or requisition to the Assessee or any other person for obtaining the information, documents or evidence requisitioned by the Assessment Unit within the specified time;
- Where request for seeking assistance from the Verification Unit (VU) or the Technical Unit (TU), as the case may be, has been made by AU, the request shall be assigned by NeAC to any Verification Unit (VU) or the Technical Unit (TU) under any one ReAC, through automated allocation system;
- Thereafter, the NeAC shall send the report received from Verification Unit (VU) or the Technical Unit (TU) to the concerned Assessment Unit (AU);
- In case a taxpayer fails to file response to the notice, the NeAC will issue a notice under Section 144 of the said Act calling upon the Assessee to show cause as to why the assessment should not be completed to the best of his judgement;
- The Assessee or any other person, as the case may be, shall file his/ her response to the notice within the time specified therein;
- The taxpayer can file a response to the notice issued under Section 144. However, if the taxpayer fails to file a response, the NeAC shall inform the Assessment Unit (AU) and thereafter the Assessment Unit (AU) shall prepare a draft assessment order under best judgment assessment along with penalty proceedings, if any, send a copy of such order to NeAC;
- The NeAC shall examine the draft assessment order in accordance with the risk management strategy specified by the CBDT, including by way of an automated examination tool, whereupon it may decide to either,
- finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, on the taxpayer, along with the demand notice
- 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
- assign the draft assessment order to a Review Unit (RU) in any one ReAC, through an automated allocation system, for conducting review of such order;
- After being referred, the Review Unit (RU) will conduct review of the draft assessment order and may decide to either
- concur with the draft assessment order or,
- suggest such modifications, as it may deem fit;
- The NeAC shall, on receiving the concurrence of Review Unit (RU) finalises draft assessment order or provide an opportunity to the taxpayer
- Further, NeAC shall, upon receiving modifications suggested by the Review Unit (RU), assign the case to an Assessment Unit (AU), other than the Assessment Unit (AU) which has made the draft assessment order, through an automated allocation system;
- Assessment Unit(AU) shall, after considering the modifications suggested by the Review Unit (RU), send the draft assessment order to the NeAC.
- NeAC shall, upon receiving final draft assessment order, finalise the draft assessment order, or provide an opportunity to the taxpayer in case a modification is proposed, as the case may be;
- the taxpayer may, in a case where notice is issued for making submissions against the draft assessment order, furnish his/ her response to the NeAC on or before the date and time specified in the notice
- NeAC shall
- where no response to the show-cause notice is received, finalise the assessment as per the draft assessment order OR
- in any other case, send the response received from the Assessee to the Assessment Unit (AU)
- The Assessment Unit (AU) shall, after taking into account the response furnished by the taxpayer, make a revised draft assessment order and send it to the NeAC
- NeAC shall, shall, upon receiving the revised draft assessment order, in case
- where no modification prejudicial to the interest of the Assessee is proposed, finalise the order
- where modification against the interest of the Assessee is proposed, provide an opportunity to the taxpayer for hearing and making submissions;
- Finally, the response furnished by the taxpayer shall be dealt with by the NeAC and the draft assessment order finalised;
- The NeAC shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over such action as may be required under the law.
The National e-Assessment Centre may at any stage of the assessment, if it considers necessary, transfer the case to the Assessing Officer having jurisdiction over such case with the prior approval of the Board