What is Faceless Income Tax Assessment & How it Works for Taxpayers?

Sometimes, the assessees have to face harassment from the tax officials so for the benefit of such assessees, the government has started a faceless Income tax assessment. Previously, the assessee had to visit the office of the I-T department if there was an error in the return and the same was the case if there is a dispute with a rule. The system will be helpful for such faceless tax assessments.

Latest Update in Faceless Tax Assessment

• Numbers of taxpayers have filed writs against the Income-tax department citing everything from inadequate time limits to arbitrary orders. The constitutional validity of the scheme eliminates contact between taxpayers and assessing officers. A team-based approach was intended to replace the discretion of tax officers.
• The Rajasthan high court has passed out the order in the case of the Rati Ram Bambelwal Vs National Faceless Assessment Centre. The order was said to pass without considering the assessee’s reply for violation of natural justice. Read Order
• The Income-tax department Faceless Penalty (Amendment) Scheme, 2022 via notification number 54/2022. Read Notification
• Under section 274 (2A) of the Income-Tax Act, the CBDT department has shared notification No. 55/2022 about the Regional Faceless Penalty Centre. Read Notification
• The Gujarat high court has cancelled an order related to faceless assessment. The reason is a violation of natural justice principles. Read Order
• “CBDT has issued the notification for a scheme called the Faceless Assessment (1st Amendment) Scheme, 2021.” Check PDF
• “In exercise of the powers conferred by sub-section (2B) of section 274 of the Income-tax Act, 1961 (43 of 1961), for the purposes of giving effect to the Faceless Penalty Scheme, 2021”. Read more
• “Save draft option is now available in Form 35 in accordance with faceless scheme”
• “Form 35 is re-enabled to file an appeal in accordance with the Faceless Appeal Scheme,’ Save draft’ will be enabled shortly”.
• The income tax department has now launched the Faceless facility for income tax appeals. Under the facility, all the cases will be completed in a faceless way in a faceless environment except for appeals that are related to evasion of tax, serious frauds, black money, international tax, and special research. A mandatory Gazette notification is also given today.
• On 13th August 2020, the Hon’ble Prime Minister during the initiation of the Faceless Assessment and Taxpayers’ Charter as a portion of the “Transparent Taxation Honoring the Honest” stage declared the launch of Faceless appeals on 25th September 2020 on the occasion of the Birth Anniversary of Pt. Deen Dayal Upadhayay. Moreover, in some previous years, the Income Tax Department has taken out various reforms in Direct Tax to get easier tax processes and for simplicity of acceptance concerning for the assessee.
• The Lok Sabha declares the taxation bill for the faceless assessment scheme and to give relief in the context of compliance to the assessee. The law conserves the elongation of the deadlines for filing the return and linked it to the PAN and Aadhar. The Bill passed through the voice vote post stiff opposition on problems concerning tax operation and clear the PM Cares Fund and the GST compensation problems.
• The administration provides the tax consideration for those who have contributed to the PM cares fund set up in March. Under the faceless assessment, this could be applied to processes such as collection and recovery of tax, transfer pricing assessments, IT acts, appeals, and revisions, including the assessment and conflict analysis panel, which has been produced.
• The finance minister Nirmala Sitaraman speaks that using the faceless assessment will lead to reducing tax evasion, “We’re bringing in tax transparency through law because it is extremely important for the country,”. This also made relaxation to the NRI investors as additional charge being applied on the dividend income for foreign portfolio investors (FPI) which utilizes the structure which stands at 15%.
• Recently the CBDT department has announced around 30 evaluation centres for the newly launched faceless assessment scheme notified by the government. There are 20 cities that have been selected for the establishment of these 30 evaluation centres
• Prime Minister Narendra Modi on Thursday, August 13, 2020, unveiled ‘Transparant Taxation-Honoring the Honest’ Platform aimed to reform and simplify the current taxation system. During the launch video conference, he stated that the platform has major reforms like faceless assessment, faceless appeal, and taxpayers charter. Faceless appeal service will come into action from September 25, whereas the other two will come into play from today. It is expected that the Faceless Assessment Scheme will eliminate the need for the human interface between the taxpayer and the Income Tax department. Read Press Release

What is Faceless Income Tax Assessment?

The system is started by the government as Prime Minister Modi had said that income tax filing and disputes should not require physical contact with any official. So, this scheme was started on 7th October 2019. The department assigned a total of 58,319 cases online, which are not limited to a single jurisdiction. Out of these, 7,116 cases have been disposed off.

How Does the Faceless IT Assessment Work?

National e-Assessment Center, Delhi will be the only governing authority for the faceless IT assessment system. The regional centres of the authority will be in Mumbai, Kolkata, Hyderabad, Chennai, Pune, Ahmedabad and Bengaluru.

Some Advantages of the Faceless Assessment Scheme

The faceless tax assessment has some other benefits on its list. The government officials who have researched on the faceless assessment said that the new assessment scheme will bring relief for the honest taxpayers. In the current assessment scheme, the tax department and officials may take bribery but in the faceless assessment, it would be easier for the honest taxpayers to directly submit their tax returns without even known to whom they are submitting, thus eradicating the chances of bribery.

Along with such advantages, multiple people take government machinery as a tool to harass innocent people and by this faceless mechanism, this issue will also be covered.

Process of the Faceless Tax Assessment:

• National e-Assessment Center will issue the notice
• Receiving assessee will reply within 15 days
• The centre will assign an official for the case in Assessment Unit i. e. Regional Electronic Assessment Center REAC
• NEAC will then communicate with assessee, verification unit and technical unit
• They will send all unit information to NEAC
• NEAC will collect all this information and send it to REAC
• After examining all the information, REAC will prepare a draft assessment order
• It will now be sent to NEAC
• The assessee will be given a chance to defend his case and the fine will be charged

Benefits of Faceless Income Tax Assessment for Taxpayers

Previously, the taxpayers had to visit the department’s office for scrutiny, which resulted in an increase in corruption cases, especially in higher number cases. The problem would not have arisen if the transaction could have been settled through a payment. This is where faceless assessment comes in. it is an electric mode through which the assessee does not have to face any official and report his grievance.

No need for an official or a tax professional for help, the system is here for you. You can contact the department at your home anytime you want. The assessee will get the response for his query on his registered email id. All the responses will be available online and the need to contact an official will be removed.

The government has employed state-of-the-art digital technology for a risk management system for the assessment. Automated Examination Tool, Artificial Intelligence, and Machine Learning will ensure that there is no human intervention or less interference from the Income Tax Department. No boundaries, no limit use it anywhere, anytime. The faceless tax assessment will provide more transparency and efficiency to the system. Now that more than 99% of the ITRs are filed online, the system will help in assessing the scrutinized ITRs easily.