Faceless Assessment Under Section 144B of Income Tax Act, 1961

Faceless Assessment under Section 144B of the Income Tax Act, 1961, marks a monumental shift in India's tax administration, bringing in efficiency, transparency, and reduced human intervention. Introduced as part of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, faceless assessment aims to minimize the interface between taxpayers and tax authorities. This digital transformation was launched with effect from 1st April 2021, promoting a seamless online system for handling assessments.

What is Faceless Assessment?

Faceless assessment refers to the process of conducting income tax assessments electronically. It eliminates the need for physical interaction between taxpayers and income tax officers. All communications, from notices to submission of responses, are conducted through the assessee’s registered account on the designated portal (www.incometax.gov.in). This process ensures greater transparency and reduces the scope for discretion or bias in tax assessments.

Structure and Key Authorities in Faceless Assessment

The faceless assessment process involves various specialized units, all coordinated through the National Faceless Assessment Centre (NFAC). These units are:

• Assessment Unit (AU): Performs core assessment functions such as analyzing information and drafting orders.
• Verification Unit (VU): Handles cross-verification and examines financial records.
• Technical Unit (TU): Provides expert advice on complex issues like valuation and transfer pricing.
• Review Unit (RU): Reviews draft assessment orders to ensure legal accuracy.

Procedure for Faceless Assessment

1. Automated Case Allocation: NFAC assigns cases randomly.
2. Issuance of Notice: Notices are sent electronically to the assessee.
3. Submission of Response: Assessees submit responses via the portal.
4. Request for Additional Information: AU may seek further details.
5. Draft Assessment Order: Prepared and reviewed for finalization.
6. Final Assessment Order: Issued by NFAC electronically.

Key Features of Faceless Assessment

• Elimination of Human Interface: Fully digital communication.
• Automated Allocation: Randomized case assignments.
• Team-Based Approach: Collaborative review by different units.
• AI and Machine Learning: Advanced tools for efficiency.

Benefits of Faceless Assessment

• Transparency: Maintains a digital trail of all proceedings.
• Efficient Use of Resources: Optimizes resources with specialized units.
• Time-Bound Assessments: Faster than traditional methods.
• Reduced Litigation: Minimizes discretionary errors.
• Taxpayer-Friendly: Enables remote compliance.

Challenges and Concerns

• Technical Glitches: Dependence on digital infrastructure.
• Lack of Human Interaction: Limited face-to-face explanations.
• Learning Curve: Requires familiarity with online systems.

Conclusion

Faceless assessment under Section 144B has revolutionized tax administration in India. By eliminating human interaction, curbing corruption, and introducing an efficient, team-based approach, it significantly enhances transparency and fairness in tax assessments. As technology evolves, faceless assessments promise to strengthen the country’s tax collection system.