Contributed by Huzefa Mala
Under the leadership of our Prime Minister Narender Modi, the Central Board of Direct Taxes (CBDT) has notified the faceless assessment scheme.
For implementing the said scheme, National e-Assessment Centre (NeAC) has been constituted which shall be headed by Principal Chief Commissioner of Income Tax (Pr. CCIT) which shall consist a team of:
32 – Commissioners (CITs),
96 – Principal Commissioners (Pr. CITs),
261 – Assistant and Deputy commissioners (ACs & DCs) and
1,274 – Income Tax Officers (ITOs).
In addition to NeAC officials, 34 members from the Regional e-Assessment Centre (ReAC) shall be available in Ahmedabad, Mumbai (5 Centres) and Pune, Bengaluru, Chennai, Hyderabad, Kolkata (4 Centres), New Delhi (3 Centres), Bareilly, Bengaluru, Dehradun, Indore, Jodhpur, Nashik, Panaji, Panchkula, Ranchi, Shimla, Thane, Trichi, Vadodara, Vijayawada and Vishakhapatnam. All put together, nearly 2/3rd of the IT workforce is under deployment towards ensuring success and smooth functioning of the faceless assessment scheme.
The faceless assessment scheme is looked upon to make the Indian taxation system transparent significantly.
The scheme shall also contain rules to allow physical hearing through video conferencing, where required. Further, guidelines for physical verification are also being framed where the taxpayer’s premises could be anticipated not being traceable or where the taxpayer is not replying to communication from the department, in the online process.
However, assessments pertaining to tax evasion matters, search & seizure matters, Benami properties and/or black money related cases and International Taxation matters will be outside the faceless assessment purview.
Faceless Assessment – Points to Consider:
- Impact of historical adjustments made by AO’s under the new scheme?
- Fresh reassessment proceedings –Who will issue a 148 notice and record reasons for reopening?
- Set aside proceedings –Whether to be handled by NeAC or Jurisdictional AO?
- Penalty Proceedings –Whether covered under the scheme?
- Revenue targets for NeAC?
- Provision for personal hearing?
- Timelines for completion of assessment under the scheme?
- Jurisdictional HC orders?
- With the dynamic jurisdiction, the judicial precedents of which region would be applied under the faceless regime –jurisdiction of the assessee or Regional e-Assessment Centers (‘ReAC’)?
- Who will lay down the circumstances for personal hearing through video conferencing, and how will it be practically implemented by ReACs?
- What is the procedure for seeking adjournment under the faceless regime?
- Whether there is a mechanism available under the faceless regime to change limited scrutiny proceedings to complete scrutiny?
Difficulties envisaged in implementing the Faceless Assessments:
Strong Drafting Skills
There will be a need for expert tax professional with strong drafting skills since there would be no opportunity to explain things in-person henceforth. Any lacuna in drafting may lead to negative assessment order and further litigations.
Digital Records
A large volume of documents and data is still not maintained in digital form by all assessee’s. Converting them into digital form, maintain records of all submissions until the conclusion of assessments could be a tedious task for many.
Data Security & Privacy Issues
The security and privacy issues of data shared and stored with the department will be of more significant concern.
Timely Completion of Assessments
Whether the revenue and the assessee will be able to complete their assessment within the specified time will be a real challenge.
Pandemic Effect
Though much work on infrastructure development, IT systems and human resource have been planned, however, whether the income tax department will be able to operate at planned levels of operations with various limitations caused due to pandemic and Corona cases cropping up all over the country.
What can we offer:
Expertized Tax Professionals and Chartered Accountants
We have a dedicated team of expert tax professionals and chartered accountants who have been handling assessments over a few decades now. Further, they are highly efficient in IT related skills and hence can handle assessment matters with ease and get you through.
