Income Tax Taxation

Highlights of the Faceless Assessment (1st Amendment) Scheme, 2021

The Central Board of Direct Taxes recently notified about the Faceless Assessment (1^st Amendment) Scheme, 2021. It aims to amend the faceless assessment scheme of 2019 through certain amendments in definitions in respect of no personal appearance in the centres or units and substituted procedure for assessment. In this article, we shall look at the details of this 1^st amendment.   

What is Faceless Assessment Scheme 2019?

The central government introduced this scheme to provide greater efficiency, transparency, and accountability in the Income Tax Assessments. The provisions under this scheme were introduced to eliminate the interface between the assessing officer and the assessee during proceedings to an extent that it’s technologically feasible.

It aims to optimize the utilization of resources through economies of scale and functional specialization and introduce a team based determination of arms’ length price with dynamic jurisdiction.

What is the purpose of bringing the Faceless Assessment (1^st Amendment) Scheme, 2021?

This has been brought in to bring the provisions of faceless assessment scheme 2019 at par with the provisions of section 144B of the Income Tax Act.

Faceless Assessment (1^st Amendment) Scheme, 2021- Highlights

The key highlights are as follows:

• Service of Notice by the National e-Assessment Centre

The National e-Assessment Centre would send a notice to the assessee under sub-section (2) of section 143 of the Income Tax Act 1961^[1], and the assessee shall file his or her response to the National e-Assessment Centre within 15 days from the date of receipt of notice.

• Regional e-Assessment Centre

The national e-Assessment Centre will assign the case chosen for the e-assessment purposes under this scheme to specific assessment unit in any one Regional e-Assessment Centre via an automated allocation system. If a case is assigned to the assessment unit, then it can make a request to the National e-Assessment Centre for getting such further information, documents, or evidence from the assessee or any other person; conducting of a particular enquiry or verification done by the verification unit and seeking technical help from the technical unit.

• Issuance of notice to assessee to get information, document, or evidence

If a request has been made from the assessment unit for obtaining further such further information or documents, or evidence from the assessee or any other person, the national e-Assessment Centre will issue an appropriate notice or requisition to such an assessee or person mentioning a time therein for submission of such information or documents or evidence.

The assessee or any other person as per case to case, file his response to the notice within the prescribed time period or such extended time as allowed on basis of an application in this regard to the National e-Assessment Centre.

• Automated allocation system

If a request has been made by the assessment unit to get technical assistance from the technical unit, the request will be assigned by the national e-Assessment Centre to a technical unit in any one of the regional e-Assessment Centre via an automated allocation system.

• Failure from the assessee to comply with the notice to produce documents, evidence, etc.

In case assessee fails to comply with notice or with a direction issued under sub-section (2A) of section 142 of the Act, then the national e-Assessment Centre shall serve a notice upon such assessee under section 144 of the Act providing him a reasonable opportunity to show cause on date and time to be specified in the notice as to why the assessment in his case shouldn’t be completed to the best of its judgement.

Where the assessee fails again to file a response to the notice within the prescribed time period or within the extended time, the national e-assessment centre shall intimate the failure to the assessment unit.

The assessment shall, after taking into account all the available material on the record, make in writing draft assessment order to the best of its judgement, either accepting income/sum payable by, or sum refundable to, the assessee according to his return or making variation to such income or sum and send the copy of the order to the national e-Assessment Centre. The assessment unit shall provide details of the penalty proceedings to be initiated while making a draft assessment order. 

• Examination of the draft assessment order by the national e-Assessment Centre

The national e-Assessment Centre shall examine the draft assessment order as per the risk management strategy prescribed by the board, including through an automated examination tool.

Firstly the assessment is finalized if no variation prejudicial to the assessee’s interest is proposed, as per draft assessment order, and serve a copy of the order and notice for penalty proceedings, if any, to the assessee with the demand notice, specifying the payable sum by, or refund of any amount due to, the assessee on basis of assessment.

Secondly, give an opportunity to the assessee, if any variation prejudicial to the interest of assessee is proposed by sending a notice calling upon him to show cause why the proposed variation should not be made.

Thirdly, assign the draft assessment order to a review unit in any of the Regional assessment centre via an automated allocation system for conducting a review of the order. The review unit will perform a review of the draft assessment order referred to it by the National e-assessment centre where it can decide to concur with the draft assessment order and intimate the national e-assessment centre regarding the concurrence or suggest such variation in the draft assessment order and send suggestions to the national e-assessment centre.  

• Filing of objections with Dispute Resolution Panel

In case the eligible assessee files objections with the Dispute Resolution Panel, then the national e-assessment centre, upon receipt of the directions issued by such panel under sub section (5) of section 144C of the Act, shall forward such directions to the concerned assessment unit.

The assessment unit, in conformity with the directions issued by such panel under sub section (5) of section 144C of the Act, shall prepare a draft assessment order as per subsection (13) of the Act and send a copy to the national e-assessment centre.

• Duty of the National e-assessment centre

This centre shall finalize the assessment within the time permitted under sub-section (13) of section 144C of the Act serve a copy of order for initiating penalty proceedings upon the assessee, if any.

The national e-assessment centre shall transfer all electronic records of the case to the assessing officer after the completion of the assessment.

Conclusion

Faceless Assessment (1^st Amendment) Scheme, 2021 is expected to bring the provisions of faceless assessment scheme 2019 at par with the provisions of section 144B of the Income Tax Act.

Read our article: Faceless Penalty Scheme: Boosting Transparency and Compliance