INTRODUCTION:
Our Honourable Prime Minister have a Vision of Ease of Doing Business in India. To Accomplish the Vision, Govt of India has taken a tremendous Steps in Various Sector. The Finance Minister while presenting the Union Budget of 2019, has taken a tremendous Steps in the Income Tax Act. Under this budget, Finance Minister has introduced the scheme of faceless Assessment to eliminate the physical presence of taxpayer. This new scheme of assessment will represent a dramatic shift in the functioning of Income Tax Department. Further, to enlarge the scope of this, Govt has Introduced the Scheme of faceless Appeals in the Finance Budget, 2020. On 13th August, 2020, Respected Prime Minister has given direction for Implementation of faceless Assessments from Immediate effect and Faceless Appeals will be implemented from 25th September, 2020.
How this scheme is Faceless Scheme and how it will be beneficial for Tax Payer?
Under this Scheme, the Govt has Constituted the Body who will conduct the Full Assessment Process. The System will select the Case for Assessment and handover the same to this newly Constituted Body. The Assessment will be finalized using online mechanism, so there is no need of physical presence. Further, this scheme is designed in such a manner that both Taxpayer as well as Assessing officer doesn’t know the identity of each other.
Since, under this new mechanism of Assessment, there is no need of physical presence, it will save time as well as cost of the Tax Payer. Further, this scheme will help in curbing unethical practices from the system.
How this scheme works?
Govt has constituted the body called National E- Assessment Centre (“NEC”). The office of the NEC is at New Delhi. Apart from NEC, 8 Regional E- Assessment Centres (“REC”) have been opened and under each REC, One Assessment Unit, One Verification Unit, One Technical Unit and One Review Unit has been opened.
Under this Scheme, NEC is responsible for issuing the Notice to the Taxpayer for Assessment, specifying the reason for selection of his case for assessment. On receipt of the Notice, the taxpayer may file his response to NEC.
The NEC will assign the selected case to a specific Assessment unit of any one REC through Automated Allocation Method and on the Receipt of the case by Assessment Unit, it may request NEC for any additional information from the taxpayer, or Conduct an enquiry and/or Verification by verification unit, or request for Technical Assistant from the Technical Unit.
The Assessment Unit after considering all the relevant materials shall, make in writing a draft assessment order either accepting the returned Income of the taxpayer or modifying the return income of the taxpayer and send a copy of such order to the NEC. This draft order includes details of Penalty proceedings, if any.
Upon Receipt of Draft Assessment Order, NEC shall review the same. Upon his satisfaction, NEC shall issue the demand/Refund order to the Taxpayer or issue a Show Cause Notice to Taxpayer calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order. Further, if NEC is not satisfied with the Draft order of Assessment Unit, then they may Assign the Draft Assessment order to the Review unit for conducting review of Such Order.
Upon Receipt of Draft Order from NEC, the Review Unit may either agree with the draft assessment order or suggest any modification to the NEC and the same shall be communicated by the NEC to the Assessment Unit.
The Assessment Unit after Considering the suggestions of Review unit, will send a Final Draft Assessment order to NEC.
In case, where Show Cause Notice has been served to the Taxpayer, the taxpayer will furnish his response to NEC. After considering the response, the NEC will finalise the assessment as per the Draft Assessment order or the send the response received from the Taxpayer to the Assessment unit. The Assessment unit will consider the response received from Taxpayer and make the revised Draft Assessment order and send it to NEC.
In case, Revised Draft Assessment order is prejudicial to the interest of Taxpayer, then NEC will provide an opportunity of being heard to the Taxpayer.
The NEC shall, after completion of Assessment, transfer all the records to the Assessing officer having jurisdiction over such case and direct for further course of action like Imposition of penalty, Recovery and collection of Demand, etc
In case, the Taxpayer does not agree with the order of NEC, he may file an appeal before Commissioner Appeals having jurisdiction over the Jurisdictional Assessing Officer.
However, Govt vide its Finance Act, 2020 made amendment in Section 250 of Income Tax Act, 1961, wherein Section 6B, 6C and 6D has been introduced which are relating to Faceless Appeals. Now Govt vide its Notification Dated 13th August, 2020 announced implementation of faceless Assessment w.e.f. 25th September, 2020. Now under Faceless Assessment, the appeal will be randomly allotted to any officer in the country. Since, this is a faceless appeal, the identity of the Officer will remain unknown and there is no need for physical presence. However, the Decision will be Team Based.
Cases related to Serious frauds, Major Tax Evasion, Sensitive and Search Matters, Cases Relating to International Taxation and cases related to Black Money Act and Benami Property are not covered under this Faceless Appeal Scheme.
Conclusion:
To overhaul the Tax Assessment and Investigation Process and to accomplish the vision of Respected Prime Minister of Ease of Doing Business and curb the unethical Practices in the system, the Finance Minister has introduced Faceless Assessment Scheme in Finance Act, 2019 and which will be effective from 13th August, 2020. Further, Govt Vide its Notification dated 13th August ,2020 announced implementation of Faceless Appeals from 25th September, 2020. This will save time and cost of the Taxpayer as well as remove unethical practices from the system. This new system is a location agnostic as the Assessing officer/ Officer in Appeals will be selected electronically making their location irrelevant.