Procedure and Applicability for Faceless Assessment Scheme

The methodology for doing assessments changed completely after the government introduced the faceless assessment scheme under the income tax law. The faceless assessment scheme eliminated the physical interface between the assessees and the income tax officers, thus mitigating the shortcomings of the erstwhile assessment methods. What is the applicability of the faceless assessment scheme and how is it conducted? Find out here!

Applicability and Procedure of Faceless Assessment Scheme

The faceless assessment scheme is applicable for scrutiny assessments conducted under Section 143(3) and best judgement assessments conducted under Section 144. However, before discussing the procedure, it is important to understand the authorities involved in faceless assessment that includes:

1. National Faceless Assessment Centre (NFAC): Central authority for facilitating faceless assessment.
2. Regional Faceless Assessment Centre (RFAC): Facilitates faceless assessment proceedings in the regions under its Principal Chief Commissioner.
3. Assessment Units: Performs proceedings of faceless assessment.

Following is the procedure adopted for doing faceless assessment:

1. The NFAC shall serve notice under Section 143(2) to the assessee who shall furnish a reply within 15 days.
2. The NFAC shall assign the case to an AU under any one of the RFACs through an automated allocation system.
3. The AU can request NFAC for any document, evidence or information. The NFAC shall issue a requisition or notice to the assessee for the same.
4. If an inquiry or verification from the verification or technical unit is required, then the NFAC shall assign a request to the same using an automated allocation system. The reports issued by the technical or verification unit must be sent to concerned AU.
5. If the assessee does not reply to the above requisition or notice or the notice u/s 142(1) or direction issued under 142(2A), then the NFAC must issue a notice u/s 144 requiring the assessee to show cause as to why the assessment should not be completed on the best judgement basis.
6. In case the assessee fails to furnish a reply to the notice u/s 144, the AU shall be intimated by the NFAC. A draft assessment order shall be prepared by the AU with all the relevant information and documents available along with the details of the penalty proceedings.
7. The draft assessment order must be examined by the NFAC and assigned to the review unit. Further, the assessee must be provided with an opportunity of being heard if any variation prejudicial to the interest of the assessee is proposed.
8. If the review unit agrees to the draft assessment order, then a copy of the order shall be served to the assessee. However, if the review unit suggests any variation, then the same shall be communicated to an AU other than the one that originally prepared such order. The AU shall prepare the final assessment order that shall be furnished to the assessee.
9. The assessee shall furnish a reply to the order. In case no response is received from the assessee, the assessment shall be finalised as per the order. However, if the assessee furnishes a reply, then the response shall be sent to the AU.
10. Based on the reply, the AU shall prepare a revised draft assessment order. If the revisions are prejudicial to the assessee, then the order shall be forwarded to the assessee, providing him an opportunity of being heard (as discussed in the above steps).
11. In other cases, revised draft assessment order shall be finalised and a copy of the same shall be furnished to the assessee together with a notice for demand notice and penalty proceedings. Once the assessment gets completed, the NFAC shall serve the electronic records of the entire proceedings to the Assessing Officer having jurisdiction over the assessee to initiate the proceedings.

Following were the provisions regarding applicability and procedure for faceless assessment. In case of any queries, feel free to contact the ASC Group.