More time to release new faceless assessment schemes
The scheme for faceless assessment for determination of arm’s length price under section 92CA, dispute resolution panel under section 144C and appeal to the appellate tribunal under section 253, were required to be issued by March 31, 2023; and for the procedure of appellate tribunal under section 255 were required to notified by March 31, 2024. These dates have been extended to March 31, 2024.
Changes to faceless assessment scheme under section 144B
Under the faceless assessment scheme, the board shall establish the National Faceless Assessment Centre (NaFAC). The Assessing Officers would be known as Assessing Units (AU). In addition, Verification Units (VU) will provide verification facilities such as verifying evidence and documents, cross-verification with information available, etc. Review Units (RU) will review the communications such as Notices, Demand Orders, Computations etc. Technical Units (TU) will provide additional support for complex areas such as the determination of arms-length price.
Section 144B has been substituted to provide that –
(a) Section shall apply for faceless assessment, reassessment or recomputation under section 143(3) or 144 or 147
(b) the National Faceless Assessment Centre (NaFAC) shall assign the case selected to a specific Assessment Unit (AU) and intimate the assessee
(c) the assessee shall be served notice through the NaFAC. The assessee may file his response within the date specified in such notice in this regard, to the NaFAC, which shall forward the reply to the AU.
(d) Thereafter, the AU may make a request, through the NaFAC, for obtaining further information, documents or evidence. The AU may also make a request, through the NaFAC, for conducting enquiry or verification by Verification Unit (VU) or Technical United (TU) through an automated allocation system.
(e) The assessee or any other person, as the case may be, shall file his response to the notice served by NaFAC, If the assessee fails to comply with the said notice the NaFAC shall intimate the same to the AU. The AU will issue a show-cause giving him the opportunity.
(f) The assessee shall file his response to the show-cause notice within the time specified. If the assessee fails to respond, the NaFAC shall intimate the same to the AU.
(g) The AU shall, after taking into account all the relevant material available on the record, prepare in writing, an income or loss determination proposal and send the same to the NaFAC. If a variation is being proposed, then a show cause notice is served on the assessee stating the variations proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made.
(h) The assessee shall file his reply to the show-cause notice to the NaFAC. If he fails to respond within the specified time.
(i) Upon receipt of the income or loss determination proposal, with or without any variations proposed to the income of the assessee, NaFAC may, based on guidelines issued by the Board, convey to the AU to prepare a draft order following such income or loss determination proposal, which shall thereafter prepare a draft order, or assign the income or loss determination proposal to a Review Unit (RU) through an automated allocation system, which shall conduct a review of such order, prepare a review report and send it to NaFAC.
(j) The NaFAC shall forward the review report received from the RU to the AU. The AU may accept or reject some or all of the modifications proposed in such review report, prepare a draft order accordingly, and send it to NaFAC. The AU shall record reasons in writing if it is rejecting the modifications proposed by the RU.
(k) The NaFAC shall, upon receiving draft order where a proposal to make any variation which is prejudicial to the interest of such assessee under section 144C(1) for reference to Dispute Resolution Panel, serves such draft order on the assessee. In any case, other than that of the eligible assessee under section 144C, the NaFAC shall convey to the AU to complete the assessment following such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings
(l) An eligible assessee shall, upon receiving the draft order as served on him above, file his acceptance of the variations proposed in such draft order or file objections, if any, to such variations, with the Dispute Resolution Panel
(m) In case the variations proposed in the draft order are accepted by the assessee or not objected to within the time given, NaFAC shall intimate the AU of the same, which shall complete the assessment, based on the draft order.
(n) Where the eligible assessee files objections with the Dispute Resolution Panel, against the variations proposed in the draft order in his case, the NaFAC shall send such intimation along with a copy of such objections to the AU.
(o) The NaFAC shall, upon receipt of the final assessment order, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice. The NaFAC shall, after completion of the assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for recovery.
(p) Faceless assessment shall be made in respect of persons or class of persons as may be specified.
(q) All communication, among the AU, RU, VU or TU or with the assessee or any other person for the information or documents or evidence or any other details, shall be through the NaFAC.
(r) Electronic record shall be authenticated by affixing the digital signature, electronic verification code or by logging into his registered account in the designated portal. Every communication shall be delivered to the addressee, in the registered account of the assessee or by sending to the registered email address or by uploading an authenticated copy on the assessee’s mobile app, followed by a real-time alert.
(s) Assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the NaFAC containing the hash result generated upon successful submission of a response, the response shall be deemed to be authenticated.
(t) A person shall not appear personally or through an authorised representative in connection with any proceedings.
(u) Where a variation is proposed in the income or loss determination, the assessee may request for a personal hearing to make his oral submissions or present his case before the income-tax authority.
(v) The Central Board of Direct Taxes (CBDT) shall establish suitable facilities for video conferencing or video telephony including telecommunication application software at such locations so that assessee is not denied the option merely because of the absence of the requisite facilities.
(w) The AU can inform the Principal Commissioner to invoke a special audit under section 142(2A).
Faceless assessments do not void if the procedure is not followed (Retrospective amendment)
Section 144B(9) has been amended retrospectively from April 1, 2021, to provide that assessment proceedings shall not be void if the procedure mentioned in the section was not followed. A large number of disputes have been raised under this sub-section on account of mere technical issues arising due to the use of information technology, leading to unnecessary litigation, according to the finance minister and therefore, the amendments have been brought in.