Starting Friday, all income tax appeals will be faceless. Unveiled by Prime Minister Narendra Modi in August, the faceless evaluation scheme “will honor honest taxpayers of income tax in the country.” Under a faceless scrutiny assessment, a central computer collects the tax returns for scrutiny based on risk parameters and mismatch and then randomly assigns them to a team of officers. This assignment is reviewed by officers at another randomly selected location and only if you agree, the centralized computer system sends a notice. All of these notices must be responded to electronically without the requirement to visit a tax office or meet with any official.
The income tax department has already implemented faceless assessment services across India for all taxpayers since Aug 13. More than 58,000 cases have already been assigned under the faceless tax scheme. The National Center for Electronic Assessment in Delhi will be the governing authority for all communications with taxpayers under the faceless assessment scheme. There will be regional centers in Mumbai, Kolkata, Hyderabad, Chennai, Pune, Ahmedabad and Bengaluru.
“The Faceless Assessment Scheme is a landmark initiative that has the potential to remove gray areas from the tax administration. Eliminating the discretionary power available to tax assessment officers was unimaginable until a few days ago,” said Ravi S. Raghavan – Tax Lawyer, Majmudar & Partners.
Faceless Tax Assessment: How It Works
1) First, a notice will be issued from the National Center for Electronic Assessment (NeAC).
2) The appraiser must respond within 15 days of receiving the notification.
3) The center will assign an official for the case in the evaluation unit, which is the Regional Center for Electronic Evaluation. (ReEC)
4) The NeAC will then contact the evaluator, the verification unit and the technical unit. ReEC will send all the information of the unit to the NeAC.
5) NeAC will collect all this information and send it to ReAC. After reviewing all the information, REAC will prepare a draft evaluation order. It will now be sent to the NeAC.
6) The appraiser will have the opportunity to defend his case and the fine will be charged.
How it will benefit taxpayers
“The intent behind faceless appeals is certainly noble, but implementation would be the key to ensuring that all steps are taken to achieve the desired goal of reducing harassment,” said Indruj Rai, partner at Khaitan & Co.
“Furthermore, the taxpayer must still have the peace of mind that he is being fully heard on his point and the authority is still accessible, especially in sophisticated cases, which otherwise involve various hearings and representations to convince the authorities,” he added.
The 2020 Tax and Other Laws (Relaxation and Amendment of Certain Provisions) Bill seeks to make anonymous assessment applicable to at least eight processes under the IT Act, including the collection and recovery of taxes and the collection of information. Faceless assessments will require a structural shift in mindset from tax authorities, as well as significant infrastructure support.
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