What is Income Tax E-Assessment Scheme?
The Central Government introduced the Faceless Assessment Scheme to
provide greater transparency, efficiency and accountability in Income
Tax assessments.
All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are introduced to
Eliminate the interface between the Assessing Officer and the
assessee during the course of proceedings, to the extent that is
technologically feasible;
Optimise the utilisation of resources through the economies of scale and functional specialisation; and
Introduce a team-based determination of arm’s length price with dynamic jurisdiction.
In the Union Budget 2019, the Finance Minister proposed the
introduction of a scheme of faceless e-assessment. The scheme seeks 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. From 13 August 2020, the
e-assessment scheme of 2019 stands amended and hence known as the
Faceless Assessment scheme.
The faceless assessment scheme applied only to scrutiny assessment
and best judgment assessment. However, as per the Taxation and Other
Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020,
Faceless Assessment will now bring other provisions of the Income Tax
Act, 1961 under its purview.
Structure for faceless assessment
A faceless assessment will be as per the Income Tax Act and Income
Tax Rules. The Central Board of Direct Taxes (CBDT) decides the scope of
the faceless assessment such as territorial area, persons, class of
persons, incomes, class of incomes, cases or class of cases to whom this
faceless assessment is applicable. For the purpose of faceless
assessment, the CBDT would set up the below ‘centres’ and ‘units’ and
specify their respective jurisdiction:
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 an 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, the 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.
Procedure in faceless assessment
The procedure for e-assessment is as below:
A notice under section 143(2) would be served by the National
e-Assessment Centre specifying the issues for selection of taxpayer’s
case for assessment.
The taxpayer has a period of fifteen days for filing a response with the National e-Assessment Centre.
- The taxpayer’s case gets assessed under e-assessment if a taxpayer:
furnishes income tax return voluntarily under section 139
furnishes income tax return in response to notice under section 142(1) or 148(1) or 143(2)
fails to furnish an income tax return in response to a notice under section 142(1)
fails to furnish an income tax return in response to a notice under section 148(1)
An
assessment will include assessment under section 143(3) and under
section 144. Scrutiny assessment and summary assessment will be through
faceless assessment.
The National e-Assessment Centre will
assign the case selected for the purposes of e-assessment to a specific
‘assessment unit’ in anyone ‘Regional e-Assessment Centre’ through an
automated allocation system.
Once a case is assigned to an assessment unit, it may make a request to the National e-Assessment Centre for:
Obtaining such further information, documents or evidence from the taxpayer or any other person, as it may specify
Conducting of certain enquiry or verification by verification unit; and
Seeking technical assistance from the technical unit
Upon a request being made by the assessment unit for any
documents or evidence, the National e-Assessment Centre shall issue
appropriate notice or requisition to the taxpayer or any other person
for obtaining the information, documents or evidence requisitioned by
the assessment unit
The taxpayer can submit a response to the notice within the time specified in the notice.
Upon
a request being made for certain enquiry or verification as above, the
request shall be assigned by the National e-Assessment Centre to a
verification unit through an automated allocation system
Upon a
request being made seeking technical assistance as above, the request
shall be assigned by the National e-Assessment Centre to a technical
unit in any one Regional e-Assessment Centres through an automated
allocation system
The National e-assessment Centre will send the
report it receives from the verification unit or technical unit to the
concerned assessment unit
In case a taxpayer fails to file a response to the notice, the National e-assessment centre will issue a
notice under section 144 for making the best judgment assessment
The
taxpayer can file a response to the notice issued under section 144.
However, if the taxpayer does not file a response, the National
e-assessment centre will inform the assessment unit who in turn will
prepare a draft assessment order under best judgment assessment (section
144).
The ‘assessment unit’ shall, after taking into account
all the relevant material gathered as above, pass a draft assessment
order either accepting the returned income of the taxpayer or modifying
the returned income of the taxpayer, as the case may be, and send a copy
of such order to the National e-Assessment Centre
The
‘assessment unit’ shall, while making a draft assessment order, provide
details of the penalty proceedings to be initiated therein, if any
The
National e-Assessment Centre 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:
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,
specifying the sum payable by, or refund of any amount due to the
taxpayer on the basis of such assessment; or
Provide an
opportunity to the taxpayer, 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; or
Assign
the draft assessment order to a review unit in any one Regional
e-Assessment Centre, through an automated allocation system, for
conducting a review of such order
Concur with the draft assessment order and intimate the National e-Assessment Centre about such concurrence; or
Suggest
such modification, as it may deem fit, to the draft assessment order
and send its suggestions to the National e-Assessment Centre.
The National e-Assessment Centre shall, upon receiving the concurrence of the review unit finalise the draft assessment order or
provide an opportunity to the taxpayer in case a modification is
proposed
The National e-Assessment Centre shall, upon receiving
suggestions for modifications from the review unit, assign the case to an
assessment unit, other than the assessment unit which has made the
draft assessment order, through an automated allocation system.
The
assessment unit shall, after considering the modifications suggested by
the review unit, send the final draft assessment order to the National
e-Assessment Centre.
The National e-assessment Centre shall,
upon receiving the 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 response to the National
e-Assessment Centre on or before the date and time specified in the
notice.
The National e-Assessment Centre shall:
In a case 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 taxpayer to the assessment unit.
The assessment unit shall, after taking into account the
response furnished by the taxpayer, make a revised draft assessment
order and send it to the National e-Assessment Centre.
The National e-Assessment Centre shall, upon receiving the revised draft assessment order:
In case no modification against the interest of the taxpayer is
proposed with reference to the draft assessment order, finalise the
draft assessment; or
In case a modification against the interest
of the assessee is proposed with reference to the draft assessment
order, provide an opportunity to the taxpayer for hearing and making
submissions
The response furnished by the taxpayer shall be dealt with by
the National e-Assessment centre and the draft assessment order
finalised
If the eligible assessee files his objections with the
Dispute Resolution Panel, the National Faceless Assessment Centre shall
forward such directions received from the Dispute Resolution Panel to the
concerned assessment unit.
The assessment unit shall prepare a
draft assessment order in conformity with the directions issued by the
Dispute Resolution panel and send a copy of the order to the National
Faceless Assessment Centre.
The National Faceless Assessment
Centre shall finalise the draft assessment order received from the assessment
unit and serve a copy of the order and notice for initiating penalty
proceedings, if any, to the assessee. It shall issue a demand notice,
specifying the sum payable by, or refund of any amount due to the
assessee on the basis of such assessment.
The National
e-Assessment Centre shall, after completion of the 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.
Procedure for penalty
Any unit may, in the course of assessment proceedings, for
non-compliance of any notice, direction or order issued under this
scheme on the part of the taxpayer or any other person, send a recommendation for initiation of any penalty proceedings under the
income tax law, against such taxpayer or any other person, as the case
may be, to the National e-Assessment Centre, if it considers necessary
or expedient to do so
The National e-Assessment Centre shall, on
receipt of such recommendation, serve a notice on the taxpayer or any
other person, as the case may be, calling upon him to show cause as to
why penalty should not be imposed on him under the income tax law
The
response to show – cause notice furnished by the taxpayer or any other
person, if any, shall be sent by the National e-Assessment Centre to the
concerned unit which has made the recommendation for penalty
The
said unit shall, after taking into consideration the response furnished
by the taxpayer or any other person, as the case may be:
Make a draft order of penalty and send a copy of such draft to National e-Assessment Centre; or
Drop the penalty after recording reasons, under intimation to the National e-Assessment Centre
The National e-Assessment Centre shall levy the penalty as per
the said draft order of penalty and serve a copy of the same along with a
notice for demand on the taxpayer or any other person, as the case may
be, and also transfer the records of penalty proceedings to the
jurisdictional assessing officer for further action.
Procedure for appeal
An appeal against an assessment order or penalty order made by the
National e-Assessment Centre under this scheme can be filed before the
Commissioner (Appeals) having jurisdiction over the jurisdictional
Assessing Officer.
Communication and electronic record
All communications between the National e-Assessment Centre and
the taxpayer, or his authorised representative, shall be exchanged
exclusively by electronic mode; and
All internal communications
between the National e-Assessment Centre, Regional e-Assessment Centres
and various units shall be exchanged exclusively by electronic mode.
However, the electronic exchange of communication is not applicable
where the verification unit approves a personal hearing.
All the electronic records issued under the scheme shall be
authenticated by the National e-assessment centre by affixing a digital
signature, or by the taxpayer or any other person by affixing their
digital signature or through an EVC. Every notice or order or any other
electronic communication under this scheme shall be delivered to the
taxpayer, by way of:
Placing an authenticated copy of the communication in the taxpayer’s registered account ;
Sending an authenticated copy thereof to the registered email address of the taxpayer or his authorised representative; and
Uploading an authenticated copy on the assessee’s Mobile App, and followed by a real-time alert to the taxpayer.
The taxpayer shall file his response to any notice or order or any
other electronic communication, under this scheme, through his registered account,
and once an acknowledgement is sent by the National e-Assessment Centre
containing the hash result generated upon successful submission of a response, the response shall be deemed to be authenticated.
The appearance of taxpayers before the centre and units
A person is not required to appear either personally or through an authorised representative in connection with any proceedings under this
scheme before the income-tax authority at the National e-Assessment Centre or Regional e-Assessment Centre or any unit set up under this scheme.
In
a case where a modification is proposed in the draft assessment order,
the taxpayer will be given an opportunity to make submissions against
such modifications.
The taxpayer or his authorised
representative can also request for a personal hearing or make oral
submissions before income tax authority in any unit under this scheme.
Such hearing would be conducted exclusively through video conferencing,
including through video telephony, in accordance with the procedure laid
down by the CBDT.
An income-tax authority has the power to
examine a taxpayer or record the statement of any taxpayer under this
scheme. The income tax authority would do the same through video
conferencing or video telephony. For the purpose of facilitating the
scheme, the CBDT shall establish suitable facilities for video
conferencing and video telephony at such locations as may be necessary.
Power to specify process and procedure
The Principal Chief Commissioner or the Principal Director General,
in charge of the National e-Assessment Centre, shall with the approval of
CBDT lay down the standards, procedures and processes for effective
functioning of the National e-Assessment Centre, Regional e-Assessment
Centres and the units set-up under this scheme. The systems shall
function in an automated and mechanised environment, including format,
mode, procedure and processes in respect of the following, namely:
Service of the notice, order or any other communication;
Receipt of any information or documents from the person in response to the notice, order or any other communication;
Issue of acknowledgement of the response furnished by the person;
Provision
of ‘proceeding facility including login account facility, tracking
status of assessment, display of relevant details, and facility of
download;
Accessing, verification and authentication of
information and response including documents submitted during the
assessment proceedings;
Receipt, storage and retrieval of information or documents in a centralised manner;
General administration and grievance redressal mechanism in the respective Centres and units.
Circumstances for approving a personal hearing.
Faceless jurisdiction of income-tax authorities.
Section 130 gives power to the Central Government to make a scheme by
notifying the same in the Official Gazette, for the purposes of-
The exercise of any or all powers and performance of any or all
the functions conferred on or assigned to the income-tax authorities
under the Income Tax Act, as referred to in section 120; or
To vest the jurisdiction with the Assessing Officer, as referred to in section 124; or
To exercise the power to transfer cases under section 127; or
To exercise jurisdiction in case of change of incumbency, as referred to in section 129
Section 135A has been introduced to give powers to the Central
Government to make a scheme for the purpose of calling for information
under section 133, collecting information under section 133B, or calling
for information by the prescribed income-tax authority under section
133C, or the exercise of power to inspect the register of companies
under section 134 or power of the Assessing Officer under section 135.
Faceless inquiry or valuation
Section 142B has been introduced to give powers to the Central
Government to make a scheme for the purposes of issuing a notice under
sub-section (1) or making an inquiry before an assessment under
sub-section (2), or to direct the assessee to get his accounts audited
under sub-section (2A) of section 142 or to estimate the value of any
asset, property or investment by a Valuation Officer under section 142A.
Faceless assessment of income escaping assessment
Section 151A has been introduced to give powers to the Central
Government to make a scheme for the purposes of assessment, reassessment
or re-computation under section 147 or issuance of notice under section
148 or sanction for the issue of such notice under section 151.
Faceless rectification, amendments and issuance of notice or intimation
Section 157A has been introduced to give powers to the Central
Government to make a scheme for the purpose of rectification of mistakes
apparent from the record under section 154, or other amendments under
section 155, or issue of a notice of demand under section 156, or
intimation of loss under section 157.
Faceless collection and recovery of tax
Section 231 has been introduced to give powers to the Central Government to make a scheme for the purposes of-
Issuing certificates for the deduction of income-tax at a lower rate or no deduction of income-tax under section 197, or
Deeming a person an assessee in default under sub-section (1) of section 201, or sub-section (6A) of section 206C, or
Issuing certificates for a lower collection of tax under sub-section (9) of section 206C, or
Passing an order or an amended order under sub-section (3) or sub-section (4) of section 210, or
Reducing or waiving the amount of interest paid or payable by assessees under sub-section (2A), or
Extending the time for payment or allowing payment by instalment under sub-section (3), or
Treating an assessee as not being in default under sub-section (6) or sub-section (7) of section 220, or
Levy of a penalty under section 221, or
Drawing of a certificate by the Tax Recovery Officer under section 222, or
Jurisdiction of the Tax Recovery Officer under section 223, or
Staying
of proceedings in pursuance of certificate and amendment or
cancellation thereof by the Tax Recovery Officer under section 225, or
Other modes of recovery under section 226, or
Issuance of tax clearance certificates under section 230.
Faceless revision of orders
Section 264B gives the Central Government powers to make a scheme for
the purpose of giving effect to orders under sections 250, 254, 260, 262,
263 or 264.
Faceless effect of orders
Section 264B gives the Central Government powers to make a scheme for the
purposes of giving effect to an order under sections 250, 254, 260, 262,
263 or 264.
Faceless approval or registration
Section 293D has been introduced to give the Central Government powers
to make a scheme for the purposes of granting approval or registration
by the income-tax authority under any provision of the Act. The provisions
of Faceless Assessment will also apply to Section 253 (Appeals to the
Appellate Tribunal), and Section 279 (Prosecution to be at the instance
of Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner) for the purpose of granting sanction under
sub-section (1) or compounding under sub-section (2).
The
Central Government may direct that any provision of this Act shall not
apply, or apply with exceptions, modifications and adaptations, which
shall be specified in the notification, which needs to be issued in the
Official Gazette. No direction will be issued after the 31st day of
March 2022. Every notification issued as stated above shall be laid
before each House of Parliament.
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