CBDT- New exception to Faceless assessment

Last Updated On: Sept. 7, 2021, 11:38 p.m.
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CBDT Notifies new Exception to Faceless Assessment Scheme

 

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.

 

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 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.

 

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 any one ‘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:

1. Obtaining such further information, documents or evidence from the taxpayer or any other person, as it may specify

2. Conducting of certain enquiry or verification by verification unit; and

3. 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 response to the notice, the National e-assessment centre will issue a notice under section 144 for making a 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 ceentre will inform the assessment unit who in turn will prepare a draft assessment order under best judgmnet 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 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:

1. 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, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to the taxpayer on the basis of such assessment; or

2. 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

3. Assign the draft assessment order to a review unit in any one Regional e-Assessment Centre, through an automated allocation system, for conducting review of such order

  • The review unit shall conduct review of the draft assessment order, referred to it by the National e-Assessment Centre, whereupon it may decide to:

1. Concur with the draft assessment order and intimate the National e-Assessment Centre about such concurrence; or

2. 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 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 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:

1. In case no modification against the interest of the taxpayer is proposed with reference to the draft assessment order, finalise the draft assessment; or

2. 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 Dispute Resolution Panel to the concerned assessment unit.
  • The assessment unit shall prepare a draft assessment order in conformity of the directions issued by the Dispute Resolution panel and send a copy of order to the National Faceless Assessment Centre.
  • The National Faceless Assessment Centre shall finalise draft assessment order received from assessment unit and serve a copy of 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 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.

 

CBDT NOTIFIES NEW EXECPTION:

The Central Board of Direct Taxes vide Order dated 13th August 2020 (the Order) read with the order under section 119 of the Act regarding. mutatis mutandis application of Orders, Circulars etc. issued in order to implement the Scheme to Faceless Assessment under section 144B of the Act, dated 31 March 2021 directed that all the Assessment Orders shall be passed by the National Faceless Assessment Centre (NaFAC) under section 144B of the Act except as under Assessment orders in cases assigned to Central Charges and assessment orders in cases assigned to International Tax Charges.

The Faceless Assessment Scheme, 2019 (the Scheme) has been incorporated in the Act vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 144B of the Act pertaining to Faceless Assessment has been inserted by the said amendment w.e.f. April 1, 2021.

The Central Board of Direct Taxes vide Order dated 13th August 2020 (the Order) read with the order under section 119 of the Act regarding. mutatis mutandis application of Orders, Circulars etc. issued in order to implement the Scheme to Faceless Assessment under section 144B of the Act, dated 31 March 2021 directed that all the Assessment Orders shall be passed by the National Faceless Assessment Centre (NaFAC) under section 144B of the Act except as under Assessment orders in cases assigned to Central Charges and assessment orders in cases assigned to International Tax Charges.
 

The CBDT in the exercise of powers under section 119 of the Act, directed that in addition to the above exceptions the exception namely “Assessment Orders in cases where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be,” shall be added The Central Board of Direct Taxes clarifies that assessment in cases transferred by the Principal Chief Commissioner or the Principal Director General in charge of National Faceless Assessment Centre (NaFAC) u/s 144B(8) of the Act shall be handled as per the procedure specified in the letter F.No. 225/97/2021/ITA-11 dated 06 September 2021.

 

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