Faceless E-Assessment Tax Scheme - Structure & Procedure

The Central Government announced the launch of the Faceless e-Assessment scheme during the presentation of the Union Budget 2019. The scheme aims to provide greater efficiency, transparency, and accountability of the Income Tax (IT) assessment.Earlier the Faceless e-Assessment scheme was limited to best judgement assessment and scrutiny assessment. Now, the scheme will be applicable for other provisions of the Income Tax Act, 1961 as perthe Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020.

For the Faceless e-Assessment scheme, the Central Board of Direct Taxes (CBDT) decides the scope. This comprises the incomes, class of persons, territorial area, or classes of cases to whom this scheme is applicable. Following is the structure:

• The National e-Assessment Centre controls the e-assessment
• Each Regional e-Assessment Centres consists of different units and reports to NeAC
• The Assessment Unit (AU) is responsible for the functioning of making the assessment,i.e. determining liability or refund
• Verification Unit (VU) is responsible for examining witnesses, books of accounts, recording statements, cross verifying, etc
• Technical Unit (TU) provides technical assistance or advice on legal, forensic, accounting, information technology, valuation, etc.
• The Review Unit (RU) is responsible for reviewing draft assessments.

1. Finalize the order
2. Provide an opportunity to the Assessee if the modification is proposed
3. Assign the draft order to the RU

1. Concur the Draft Assessment Order and intimate to NeAC
2. Suggest modifications and send its suggestions to NeAC

• The NeACserve the notice to the Assessee
• Assessee is required to reply within 15 days of the date of notice
• Post this, NeACassigns the case to a specific Assessment Unit in any one ReAC through the automated allocation system
• AU will raise a request with NeAC if the Unit wants to document data or evidence from the Assesseewho wants to conduct an enquiry or verification by the VU and need technical assistance from the TU.
• The NeAC will assign the request to VU and TU. After documents from the assessment and required reports from VU and TU, the NeAC will forward the same to AU
• The Assessee shall reply within the time frame to the NeAC. If the individual fails to respond to the notice, then the NeAC will issue a notice u/s 144 for best judgement assessment
• If the taxpayer can respond to the notice issued u/s 144; however, if he/she doesn’t, then the NeAC will inform the AU to prepare a draft assessment order for best judgment assessment.
• Once the AU has all the relevant information, it will pass the draft assessment order, either modifying the income of the taxpayer or accepting the returned income and sending the copy of the order to the NeAC.
• The NeAC will examine the draft assessment order with the assistance of the Risk Management Strategy specified by the CBDT, wherein it may decide to
• Once RU reviews the order, it may decide to
• The NeACwill finalize the draft assessment order once receiving the concurrence of the review unit. In case it receives suggestions for modifications from RU, then NeACwill assign another AU. This AU will look into the modifications request and send the Final Assessment Order to NeAC.

1. Make a draft of the penalty and share a copy of it withNeAC, or
2. Impose the penalty after recording the reasons

• A recommendation for the initiation of penalty shall be sent to the taxpayer or any other person in case of non-compliance of notice, order or direction
• On receipt of such recommendation, the NeAC will serve a notice to the taxpayer or any other person where the taxpayer needs to state why the penalty should not be imposed.
• Once the taxpayer sends the response, the NeAC will forward this to the concerned Unit
• On the basis of the response, the Unit shall:
• The National e-Assessment Centre will levy the penalty on the taxpayer and also transfer the records of penalty proceedings to the Jurisdictional Assessing Officer.

An appeal against an assessment order or penalty order made by the NeACunder this scheme can be filed before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer.

All the communication between the NeAC and the taxpayer as well as the internal communication between the NeAC, Regional e-Assessment and various other units will be exchanged exclusively by electronic mode.

A person is not required to appear before the NeAC or the Regional e-Assessment Centre or any other unit in connection with any proceedings. In case there is a modification in the draft assessment order, a taxpayer would be informed to provide submissions against the changes.A taxpayer can also request oral submissions or a personal hearingbefore the income tax authority. This will be done through video conferencing or video telephony or in accordance with the procedure by the CBDT. In addition, an income-tax authority has the right to assess the statement or record of the taxpayer under this scheme.

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.

Under Section 130, the Central Government has the authority to develop a scheme by notifying the same in the Official Gazettein order to:

• To exercise power to transfer cases under section 127; or
• To vest the jurisdiction with the Assessing Officer under Section 124, or
• To 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 exercise jurisdiction in case of change of incumbency, as referred to in section 129

The introduction of Section 135A gives the Central Government the following powers:

• To create a scheme for the purpose of calling for information under Section 133
• Gathering information under Section 133B
• Calling for information by the prescribed income tax authority under Section 133C
• Right to inspect the registerof companies under Section 134 or power of the Assessing Officer under Section 135.

Introduction of Section 142B gives the Central Government the following powers:

• To create a scheme when issuing a notice under sub-section (1), or
• To conduct an inquiry prior to assessment under Sub-section (2), or
• To direct the Assessee to get his accounts audited under sub-section (2A) of 142 or
• To evaluate the cost ofthe property or asset or investment by a Valuation Officer under Section 142A

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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.