Structure and Procedure for Faceless Assessment as per Income Tax Act

The finance minister in Budget 2019, has introduced a scheme of faceless e assessment which aims at eliminating the human interface between the taxpayer and the Income Tax Department. The main aim of the scheme is to lay down the procedure of assessment in electronic manner. In this article we will be discussing the various aspects of e assessment.

In the Recent time of Covid-19 and Lockdown, the faceless assessment has been a rewarding and visionary step by government which will help virtual completion of scrutiny. Further in the Finance Act 2020 the Government has proposed Faceless Appeals which will further ensure that proceedings are not stop during Covid19 problems faced by India

Faceless e assessment leads to:

1. Bring transparency in the application of laws, remove multiple views by assessing authorities.
2. To provide economies of scale with better utilization of resources
3. Bring efficiency in specialized units to bring more efficiency in tax governance
4. Use of technology such as use of data analytics, artificial intelligence, machine learning and other latest tools to ascertain misreporting or tax evasion
5. Faceless e assessment leads to elimination of human interface.

Structure of E assessment:

The following are the structure of faceless E assessment:

1. National E assessment Centre: A National e assessment centre facilitate the conduct of e-assessment proceeding in a centralized manner, which shall be vested with the Jurisdiction to make assessment in accordance with the provisions of this scheme
2. Regional E assessment Centre: A regional e assessment centre as it may deem necessary to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a principal chief commissioner, which shall be vested with the jurisdiction to make assessment in accordance with the provisions of the scheme.
3. Assessment units: Assessment unit is set up for identifying the issues, material for the determination of any liability, analyzing information and such other function
4. Verification unit: It is set up for enquiry, cross verification, examination of books of accounts, witness and recording of statements, and such other functions.
5. Technical unit: Technical unit is setup for technical assistance including any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter.
6. Review unit: Review unit is set up 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.

Procedure for E assessment:

The assessment under this scheme shall be made as per the following, namely:

1. The National E- assessment centre shall serve a notice on the assessee under section 143(2), specifying the issues for selection of his case for assessment.
2. The assessee may, within 15 days from the date of receipt of notice file his response to the National E assessment Centre.
3. The National E assessment centre shall assign the case selected for the purposes of e-assessment under this scheme to a specific assessment unit in any one Regional E-assessment centre through an automated allocation system.
4. Where a case is assigned to the assessment unit, it may make a request to the national e assessment Centre for:
   • Obtaining such further information, documents or evidence from the assessee 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;
5. Where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the national e assessment centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining documents or evidence requisition by the assessment unit;
6. Where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the national e assessment centre to a verification unit through an automated allocation system.
7. Where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the national e assessment centre to a technical unit in any one regional e-assessment centre through an automated allocation system.
8. The assessment unit shall after taking into account all the relevant material available on the record, make in writing, a draft assessment order either accepting the returned income of the assessee or modifying the returned income of the assessee, as the case may be and send a copy of such order to the National E assessment Centre.
9. The National E assessment unit shall while making draft assessment order provide details of the penalty proceedings to be initiated therein, if any
10. The National E assessment unit shall examine the draft assessment order in accordance with the risk management strategy specified by the board, including by way of 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 to the assessee along with the demand notice specifying the sum payable by or refund of any amount due to the assessee on the basis of such assessment; or
    • 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; or
    • 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.
11. 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:
    • 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;
12. The National E assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure laid down in sub-paragraph (b) of point 10, as the case may be;
13. The National E assessment Centre shall, upon receiving suggestions for modifications from the review unit, communicate the same to the assessment unit;
14. 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;
15. The National E assessment Centre shall, upon receiving final draft assessment order, follow the procedure laid down in sub para (a) of point 10, as the case may be;
16. The assessee may, in a case where show-cause notice under sub-paragraph (b) of point 10 has been served upon him, furnish his response to the National E assessment Centre on or before the date and time specified in the notice;
17. 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 as per the procedure laid down in sub-paragraph (a) of point 10; or
    • In any other case, send the response received from the assessee to the assessment unit;
18. The assessment unit shall, after taking into account the response furnished by the assessee, make a revised draft assessment order and send it to the National E assessment Centre;
19. The National E assessment Centre shall, upon receiving revised draft assessment order:
    • In case no modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, finalise the assessment as per the procedure laid down in sub paragraph (a) of point 10; or
    • In case no modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, provide an opportunity to the assessee as per the procedure laid down in sub paragraph (b) of point 10; or
    • The response furnished by the assessee shall be dealt with as per the procedure laid down in point 14, 17 and 18
20. 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 case, for-
    • Imposition of penalty;
    • Collection and recovery of demand;
    • Rectification of mistake;
    • Giving effect to appellate orders;
    • Submission of remand report, or any other report to be furnished, or any representation to be made, or any record to be produced before the representation to be made, or any record to be produced before the commissioner (appeals), Appellate Tribunal or Courts, as the case may be;
    • Proposal seeking sanction for launch of prosecution and filing of complaint before the court;
21. Notwithstanding anything contained in point 20, the National E assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the assessing officer having jurisdiction over such case.

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