Faceless Assessment Under Income Tax

Faceless Assessment under Section 144B is a system where income tax assessments are conducted electronically without any direct interaction between the taxpayer and the assessing officer.

Book My

Table of Content

Faceless Assessment Overview:

Faceless Assessment under Section 144B is a system where income tax assessments are conducted electronically without any direct interaction between the taxpayer and the assessing officer. The entire process, from scrutiny to order issuance, is handled by different teams of tax officials located at different places, ensuring transparency and minimizing the potential for corruption. This system aims to streamline the assessment process, reduce harassment of taxpayers, and enhance tax compliance

What is Section 144B of Income Tax Act?

Section 144B of the Income Tax Act outlines the procedure for conducting faceless assessment, which is part of the government’s initiative to enhance transparency and efficiency in tax administration. This section prescribes the process for assessments conducted electronically, without any direct interaction between the taxpayer and the tax authorities. It mandates that all communication between the taxpayer and the income tax department be conducted through the National Faceless Assessment Centre (NFAC). The section includes provisions for issuing notices, submitting responses, and conducting hearings, if required, all through digital means. The aim is to reduce personal biases, curb corruption, and streamline the assessment process to make it more taxpayer-friendly.

Importance of Section 144B of the Income Tax Act:

Section 144B of the Income Tax Act holds significant importance in the modernisation of India’s tax administration, particularly in the context of the Faceless Assessment Scheme.

Enhanced Transparency: The faceless system removes direct personal interaction between taxpayers and Assessing Officers, reducing the chances of arbitrary decision-making and ensuring the assessment process remains impartial. This encourages greater trust in the system.

Reduction of Corruption and Bias: The removal of direct face-to-face interaction between the taxpayer and the officer helps in minimizing the opportunities for corruption and undue influence. The entire process becomes more objective, as decisions are based on data and facts rather than personal interactions.

Increased Efficiency: By using technology to handle assessments, the system becomes more streamlined, allowing for faster processing and decision-making. This reduction in administrative overhead means quicker resolutions for taxpayers and better utilization of resources.

Cost-Effective: With the adoption of technology and automation, the Faceless Assessment Scheme reduces the costs associated with paper-based processes and physical infrastructure. The tax department can now handle a larger number of cases with fewer resources, thus optimizing operational costs.

Team-Based Approach for Determining Arm’s Length Price: Section 144B allows for a collaborative, team-based approach to determining the arm’s length price, ensuring that the assessment is more accurate and reflects the complex nature of business transactions, especially for multinational enterprises.

Global Best Practices: The move towards a faceless, tech-driven process brings India in line with global best practices in tax administration, fostering a more business-friendly environment and enhancing India’s image as an investment destination.

Flexibility in Jurisdiction: Under Section 144B, jurisdiction is dynamic, allowing cases to be assigned to the most competent team or officer, regardless of geographical location. This increases flexibility and expertise in handling cases, ensuring that taxpayers get the best possible evaluation.

Minimized Human Error: The integration of technology into the assessment process reduces human error, leading to more accurate assessments and fewer chances of mistakes during the filing or processing stages.

Improved Resource Allocation: By automating routine tasks and shifting to a faceless system, the tax department can reallocate resources to more complex cases, improving the overall quality and depth of tax assessments.

FAQs for Faceless Assessment

What is the Faceless Assessment Scheme?

The Faceless Assessment Scheme (under Section 144B) allows income tax assessments to be conducted electronically, without any physical interaction between the taxpayer and the tax authorities. The entire process, from filing returns to the final assessment order, is handled through an online platform.

Who is eligible for Faceless Assessment?

All taxpayers who file their income tax returns electronically through the e-filing portal are automatically enrolled in the Faceless Assessment Scheme, unless specifically excluded.

How does the Faceless Assessment work?

The taxpayer submits their return and required documents online. The case is then randomly allocated to a Faceless Assessment Unit (FAU), where it is reviewed electronically. Notices, queries, and assessment orders are all handled through the online system.

Do I need to meet the Assessing Officer in person?

No. The faceless system eliminates the need for physical meetings with tax officers. All interactions are carried out electronically.

Can I authorize someone else to represent me in the Faceless Assessment?

Yes, you can authorize a tax professional, such as a Chartered Accountant (CA) or tax consultant, to represent you in the Faceless Assessment. This can be done through the e-filing portal.

What happens if I don’t respond to a notice under the Faceless Assessment system?

If you fail to respond to a notice or submit requested documents within the prescribed time, the Assessing Officer may proceed with a Best Judgment Assessment under Section 144, which may result in a higher tax demand or penalties.

How do I receive notices or communications?

Notices, orders, and other communications are sent electronically via the Income Tax e-filing portal or to your registered email address.

What happens if I disagree with the Faceless Assessment order?

If you disagree with the assessment order, you can file an appeal through the e-filing portal. The appeal will be processed by a Faceless Appeal Unit.

What if I miss the due date for filing my tax return or responding to a notice?

Missing the due date can lead to penalties under Section 234F for late filing of returns or interest under Sections 234A and 234B for late payment of tax. Additionally, the case may be assessed under Best Judgment Assessment if you fail to respond to notices.

Is there any fee for Faceless Assessment?

No, there is no additional fee specifically for the faceless assessment process. However, penalties or interest may apply if there is any delay or non-compliance with deadlines.

What are the benefits of the Faceless Assessment system?

The Faceless Assessment system improves transparency, efficiency, and reduces corruption. It offers a paperless process, better resource utilization, access to specialized units for complex issues, and timely resolutions.

Can I track the status of my Faceless Assessment?

Yes, you can track the status of your case, respond to notices, and view the final order all through the Income Tax e-filing portal.

Related Business Registrations

In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.

Income Tax Return

Income Tax Advisory

Internation Taxation & NRI Return Filing

Audit & Assurance

Accounting & Virtual CFO

GST Return

GST ADVISORY

Other Compliances

Annual Compliance- Individual Business

Annual Compliance- Company

Annual Compliance- LLP

Compliance- NGO / Trust

Expert Services