Faceless proceedings scheme under Income tax Act:
E-proceedings is an electronic platform for conducting proceedings in an end to end manner created by the Income Tax department. Subject to continuous amendments; In addition, technology is being adopted for execution of various income tax procedures, like e-filing of income tax returns and faceless assessment/ appellate hearings.
In faceless assessment, the entire assessment process is done remotely by a team of officers without any physical interface with the assessee. To illustrate, a notice could be issued to a Delhi resident from the Bengaluru office and the reply could be seen by another officer in Mumbai. All notices have to be responded to electronically without visiting the Income tax office.
Faceless Assessment Proceedings:
To eliminating the physical interface between the Assessing Officer and the assessee. The government had introduced the faceless assessment regime from 2018; based on Key Principles of Efficiency, Transparency and Accountability.
Features and benefits of Faceless Assessment ?
a. No human interface and no need to visit Income Tax Office.
b. All response of notices to be submitted electronically.
c. Centralised issue of notices using unique DIN (Document Identification Number).
d. Using Artificial Intelligence i.e. Random automated allocation made for allocation of cases of scrutiny or assessment.
e. Ease of compliance, improvement in quality of assessment for Taxpayers.
How Faceless Assessment scheme works ?
a. At first assessee receive notice under section 143(2) of the Act digitally signed by NeAC officer in the registered account with efiling (www.incometax.gov.in) followed by real time alert in the form of sms/e-mail.
b. Notice’s reply should be given through online portal only by the assessee or assessee may also request personal hearing through video conferencing.
c. After considering reply of the said notices, A.O. may send further notices in continuation or may send show cause notice or draft assessment order for further clarification of time being.
d. After all proceeding a final assessment order along with annexures shall be received by assessee, it means that the assessment is complete.
Faceless Appeal Proceedings:
After assessment completion, if assessee wants to file appeal against the assessment order or penalty order assessed, than assessee may file the same through e-appeal under National Faceless Appeal Center (NFAC).
All the digital records in respect of faceless assessment will be transferred to the jurisdictional assessing officer, who would responsible for post assessment work.
The Central Board of Direct Taxes “CBDT”, vide its notification dated September 25, 2020, notified the “Faceless Appeal Scheme”; without any physical interaction between the CIT(A) and the appellant.
Features of Faceless Appeal Scheme ?
a. The Scheme entails setting up of a National Faceless Appeal Centre (“NFAC”), serving as a central point of communication and responsible for assigning the appeals to specific Appeal Units (“AUs”), consisting of CIT(A)s, in Regional Faceless Appeal Centres (“RFAC”) through an automated allocation system.
b. In case appeals before the CIT(A) were already being filed online through the official income tax portal, now even the adjudication of such appeals, right from the issuance of notice for the hearings to subsequent adjudication, will be carried on through a centralised communication centre, without any physical interaction between the CIT(A) and the appellant.
Faceless ITAT Proceedings:
An appeal against an order passed by the NFAC under this Scheme needs to be filed before the Income Tax Appellate Tribunal (“ITAT”), having jurisdiction over the jurisdictional AO.
After faceless assessment, appeals and penalty, now provisions for faceless ITAT have also been enacted vide the Finance Act 2021.
The Hon’ble Finance Minister in her 2021 Budget Speech had clarified that a National Faceless Income Tax Appellate Tribunal Centre shall be established and all communication between the ITAT and the appellant shall be made electronically and wherever personal hearing is needed, it shall be done through videoconferencing.
Implementation of Faceless ITAT would have its own challenges considering litigation and arguments would be completely different in a faceless manner. These technological developments have their own pros and cons. A detailed scheme is yet to be notified in this regard.
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