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Extract of Provisions Contained in Faceless Assessment Scheme w.e.f. 1st April 2021

Latish Alwani 
Updated on 02 April 2021

LinkedIn


Faceless Assessment (Section-144B) w.e.f. 01/04/2021 And Faceless Assessment Scheme, 2019

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Section-144B(2) / Rule-3: Scope of Scheme / Applicability

  • Such Territorial Area
  • Persons / Class of of Persons
  • Incomes / Class of Incomes
  • Cases / Class of Cases

As may be specified by Board

Extract of Provisions Contained in Faceless Assessment Scheme w.e.f. 1st April 2021

Section-144B(3) / Rule-4: Faceless Assessment / E-assessment Centres

National E-Assessment Centre (NEC)

  • Conduct e-assessment proceedings in a centralised manner.

Regional E-Assessment Centres (REC) 

  • Facilitate conduct of e-assessment proceedings

Assessment Units (AU)

  • Facilitate conduct of e-assessment proceedings
  • To perform the function of making assessment:
    • Identification of Points or Issues Material for determination of any liability or refund.
    • Seeking Information or clarification on points or issues so identified.
    • Analysis of material furnished by the Assessee or any other person
    • Such other function as may be required.

Verification Units (VU)

  • Facilitate conduct of e-assessment proceedings
  • To perform the function of verification:
    • Enquiry
    • Cross Verification
    • Examination of Books
    • Examination of Witnesses and Recording of Statements
    • Such other function as may be required.

Technical Units (TU)

  • Facilitate conduct of e-assessment proceedings
  • To perform the function of providing technical assistance which includes any assistance or advice on:
    • Legal
    • Accounting
    • Forensic
    • Information Technology
    • Valuation
    • Audit
    • Transfer Pricing
    • Data Analytics
    • Management
    • Any other Technical Matter

Review Units (RU)

  • Facilitate conduct of e-assessment proceedings
  • To perform the function of review of the draft assessment order:
    • Facts of the case has been on record
    • Relevant facts & law have been incorporated in Draft Order
    • Addition or Disallowance should have been discussed in Draft Order
    • In confirmation with relevant judicial precedence.
    • Arithmetical Correctness of modification proposed.
    • Such other function as may be required.
  • All the communication among aforementioned centres, units, assessee or any other person shall be through the NEC.
  • NEC has been renamed as National Faceless Assessment Centre (NFAC)
  • REC has been renamed as Regional Faceless Assessment Centre (RFAC)

Communication Between

NEC & Assessee

NEC & AU

NEC & VU

NEC & TU

NEC & RU

NEC & N-AU

NEC & DRP

NEC & Jurisdictional A.O.

Section-144B(1) / Rule-5: Procedure for Assessment:

Clause (i, ii…..)

Summarised Provisions

Detailed Provisions

1

Serve Notice u/s-143(2)

  • NEC shall serve a notice on Assessee u/s-143(2) specifying the issues for selection of his case for assessment.

2

Response by Assessee within 15 Days

  • Assessee may file response within 15 days from the date of receipt of notice to the National E-Assessment Centre.

3

Intimation of initiation of Faceless Assessment by NEC in case of ITR not furnished by Assessee & Pending Scrutiny Assessment.

  • Where Assessee
    • has furnished his ITR u/s-139 / 142(1) / 148 and notice u/s-143(2) has been issued.
    • has not furnished his ITR in response to notice u/s-142(1).
    • has not furnished his ITR u/s-148 & notice u/s-142(1) has been issued.
  • NEC shall intimate the assesse that assessment in his case shall be complete under this scheme.

4

Assignment of case by NEC to one AU of any REC.

  • NEC shall assign the case selected for the purposes of e-assessment under this Scheme to a Specific AU in any one REC through an Automated Allocation System.

5

AU may request to NEC for Assistance of VU & TU

  • AU may request NEC for
    • Obtaining information, documents etc from Assessee or any other person
    • Conducting certain enquiry or verification by Verification Unit
    • Seeking technical assistance from the technical unit

6

For Obtaining Information etc.:

Issue of notice by NEC to Assessee or any other person

  • As per requirement of AU, NEC shall issue notice to Assessee or any other Person for obtaining information, documents etc.

7

Filing of response by Assessee  / other Person to NEC

  • Assessee or any other Person shall file response to notice issued by NEC within time limit specified therein or such time as may extended on application in this regard.

8

For Conducting Enquiry or Verfication:

Assignment by NEC to one VU of any REC.

  • Where AU demands enquiry or verification, NEC shall assign to one VU of any REC through an automated allocation system.

9

For Seeking Technical Assistance:

Assignment by NEC to one TU of any REC.

  • Where AU demands technical assistance, NEC shall assign to one TU of any REC through an automated allocation system.

10

NEC shall forward the reports received from VU & TU to AU

  • NEC shall send the reports received from VU & TU to Concerned AU.

11

Non-compliance of Notice issued u/s-142(1) & under clause (vi) ==> Notice u/s-144 by NEC to Assessee.

  • Non-compliance of notice issued under Rule-(5) (vi) or notice u/s-142(1) by Assessee.
  • NEC shall serve notice u/s-144 giving him opportunity to show-cause as to why the assessment in his case should not be completed to the best of its judgement (within time limit specified in notice).

12

Response by Assessee to NEC in relation to notice issued under Rule-(5)(xi)

  • Assessee shall file his response to NEC within time limit specified in notice or extended time limit as request by assessee in this regard.

13

NEC shall communicate, the non-compliance of notice under Rule-(5)(xi), to AU.

  • Where assessee fails to file response to notice issued under Rule-(5)(xi) within time limit or extended time, if any, NEC shall initimate such failure to AU.

14

Draft Assessment Order (DAO) from AU to NEC

  • AU shall make in writing a Draft Assessment Order based on:
    • Relevant material available on record
    • Its best judgement where non-compliance intimation received from NEC under Rule-(5)(xiii).
    • Either accepting the income or sum payable by or sum refundable to Assessee as per ITR or modifying the mentioned particulars.
  • AU shall send copy of such order to NEC.

15

AU to NEC:

Penalty proceedings to be initiated

  • AU shall provide the details of penalty proceedings to be initiated along with Draft Assessment Order.

16

NEC shall examine the DAO & It may decide to :

No Variation is Prejudi cial to Interest of Assessee

Finalise the Assessment

Any Variation is Prejudicial to Interest of Assessee

Opportunity of being Heard

Assign the DAO to RU for conducting review.

  • NEC shall examine the DAO (including automated examination tool) in accordance with the risk management strategy specified by the Board, whereupon it may decide to :

In case no variation prejudicial to the interest of Assessee is proposed

  • Finalise the Assessment as per DAO.
  • Serve a Copy of such Order, Penalty Proceedings Notice (if any) & Demand Notice.

In case any variation prejudicial to interest of Assessee is proposed

  • Provide Opportunity of being heard through show-cause notice as why proposed variation should not be made.
  • Assign DAO to RU of any REC for conducting review of such order, through an automated allocation system

17

RU to NEC :

  • Concur with DAO
  • Suggest variation in DAO
  • RU shall conduct the review of DAO and whereupon it may decide to:
    • Concur with DAO and intimate the same to NEC.
    • Suggest variation in DAO to NEC.

18

RU concur with DAO:

==> NEC shall follow the procedure laid down in clause (xvi) except review.

  • Upon receiving concurrence of RU, NEC shall follow the procedure laid down in Clause (xvi)(a) or (xvi)(b), as the case may be.

19

RU suggest variation in DAO

==> NEC shall assign the case to N-AU (other than AU which has prepared the DAO)

  • Upon receiving suggestions for variation from the RU, NEC shall assign the case to N-AU (other than AU which has prepared the DAO) through automated allocation system.

20

Final DAO (considering variation suggested by RU) from N-AU to NEC

  • N-AU shall, after considering the variations suggested by RU, send the final DAO to NEC.

21

Receipt Final DAO from N-AU:

==> NEC shall follow the procedure laid down in clause (xvi) except review.

  • Upon receiving final DAO from N-AU, NEC shall follow the procedure laid down in Clause (xvi)(a) or (xvi)(b), as the case may be.

22

Assessee may avail the option of opportunity of being heard under Clause (xvi)(b).

  • Assessee may furnish his response to NEC in case where show-cause notice has been served upon him under clause (xvi)(b), within time limit specified in notice or extended time on the basis of an application in this behalf.

23

NEC shall

  1. Opportunity of being heard not availed :

Any Variation is Prejudicial to Interest of Eligible Assessee

Forward the DAO or Final DAO to such Assessee.

In Any Other Case

Finalise the Assessment as per DAO or Final DAO.

  1. NEC shall send the response furnished by the Assessee to AU
  1. Where no response to show-cause notices as per clause (xxii) is received:

NEC shall

In case Any Variation Prejudicial to Interest of Eligible Assessee is Proposed in DAO or Final DAO

  • Forward DAO or Final DAO to Eligible Assessee.

In Any Other Case

  • Finalise the Assessment as per DAO or Final DAO.

Serve a Copy of such Order, penalty proceedings notice, if any & Demand Notice.

  1. NEC shall send the response furnished by the Assessee to AU

Eligible Assessee means:

  1. Any person in whose case the variation arises as a consequence of the order of the Transfer Pricing Officer passed u/s-92CA(3) and
  2. Any Non-Resident not being a company or any foreign company.

24

AU to NEC

Revised DAO (considering response furnished by Assessee)

AU shall make revised DAO (after taking into account the response furnished by the Assessee) and send it to NEC

25

NEC shall :

In case variations proposed in Revised DAO as compared to DAO or Final DAO, are Not Prejudicial to Interest of the Assessee

Any Variation (in DAO or Final DAO) is Prejudicial to Interest of Eligible Assessee

Forward the Revised DAO to such Assessee.

In Any Other Case

Finalise the Assessment as per Revised DAO.

In case variations proposed in Revised DAO as compared to DAO or Final DAO, are Prejudicial to Interest of the Assessee

Opportunity of Being Heard.

NEC shall, upon receiving the Revised DAO,

In case variations proposed in Revised DAO as compared to DAO or Final DAO, are Not Prejudicial to Interest of the Assessee and

Any Variation (in DAO or Final DAO) is Prejudicial to Interest of Eligible Assessee

  • Forward the Revised DAO to such Assessee.

In Any Other Case

  • Finalise the Assessment as per Revised DAO.
  • Serve a copy of such order.
  • Notice for initiating penalty proceedings.
  • Demand Notice specifying sum payable or refund due to Assessee on the basis of such Assessment

In case variations proposed in Revised DAO as compared to DAO or Final DAO, are Prejudicial to Interest of the Assessee

  • Provide an opportunity to the Assessee, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made.

26

Once Opportunity of Being Heard given to Assessee  Assessee, Procedure laid down in Clause-5(xxiii), 5(xxiv) & 5(xxv) shall apply on similar lines.

  • The procedure laid down in Clauses (xxiii), (xxiv) and (xxv) shall apply mutatis mutandis to the notice referred to in sub-clause (b) of Clause (xxv).

27

Where DAO, Final DAO or Revised DAO is forwarded to Eligible Asseessee under Clause-(xxiii) or (xxv)

  • Assessee shall file his acceptance of the variations to NEC
  • Within period specified u/s-144C(2) i.e. 30 days of Draft Order.
  • Where DAO, Final DAO or Revised DAO is forwarded to Eligible Asseessee under Clause-(xxiii) or (xxv)
    • Assessee shall file his acceptance of the variations to NEC
    • Within period specified u/s-144C(2) i.e. Within 30 days receipt of Draft Order.

28

NEC shall (A)

  • Upon Receipt of Acceptance or
  • No objections received within specified period.
  • Finalise the Assessment
  • Within time allowed u/s-144C(4) i.e. Within 1 month from the end of the month in which (A).

NEC shall

  • Upon the receipt of acceptance or
  • No objections received within the period specified u/s-144C(2).
  • Finalise the Assessment
  • Within time allowed u/s-144C(4) i.e. Within 1 month from the end of the month in which
    • Acceptance is received
    • Period of filing objections u/s-144C(2) expires.
  • Serve copy of such order
  • Serve notice for initiating penalty proceedings to the Assessee along with Demand Notice
  • Specifying sum payable by or refund of any amount due to Assessee.

29

Eligible Assessee files his objections with Dispute Resolution Panel (DRP):

  • DRP shall forward Directions u/s-144C(5) to NEC.
  • NEC shall forward such directions to AU.

Where Eligible Assessee files his objections with Dispute Resolution Panel (DRP):

  • DRP shall forward Directions u/s-144C(5) to NEC.
  • NEC shall forward such directions to AU.

30

AU shall

  • Prepare DAO
  • In conformity of directions issued u/s-144C(5) by DRP
  • In accordance with Section-144C(13)

And send DAO to NEC.

AU shall

  • Prepare DAO
  • In conformity of directions issued u/s-144C(5) by DRP.
  • In accordance with Section-144C(13)

And send DAO to NEC.

In accordance with Section-144C(13)

  • In Conformity of Directions issued u/s-144C(5) by DRP.
  • Send DAO to NEC
    • Without providing any further opportunity of being heard to Assessee.
    • Within 1 Month from the end of the month in which such directions is received.

31

NEC shall

Upon receipt of DAO under Clause-(xxx)

  • Finalise the Assessment
  • Within time allowed u/s-144C (13).

NEC Shall

Upon receipt of DAO under Clause-(xxx)

  • Finalise the Assessment
  • Within time allowed u/s-144C(13) i.e. Within 1 Month from the end of the month in which directions is received u/s-144C(5)
  • Serve copy of such order
  • Serve notice for initiating penalty proceedings upon Assessee
  • Serve Demand Notice specifying the sum payable by or refund of any amount due to Assessee.

32

NEC shall transfer all electronic records to Jurisdictional A.O.

NEC shall

  • After Completion of Assessment
  • Transfer all the electronic records of the case to A.O. having jurisdiction over the said case.
  • For such action as may be required under the Act.

Section-144B(7) / Rule-8 to Rule-12

Modes of Communication & its Authentication under Faceless Assessment:

Sr. No.

Summarised Provisions

Detailed Provisions

1

An Electronic Record shall be authenticated by

Persons / Centres

Authentication

NFAC

DSC

Assessee's required to File ITR with DSC

DSC

Other Assessee's

EVC

  • An Electronic record shall be authenticated by

Persons / Centres

Mode of Authentication

NFAC

Affixing its DSC

Assessee's required to furnish ITR with DSC

Affixing his / her DSC

Other Assessee's

EVC

2

Every Communication with Assessee by:

  • Placing in Regd. Account.
  • Sending to Regd. E-mail Address of Assessee / Representative
  • Uploading on the Assessee's Mobile App.

And followed by a real time alert.

Every Notice or Order or Any other electronic communication shall be delivered to the addressee, being Assessee, by way of:

  • Placing an authenticated copy thereof in Assessee's Registered Account or
  • Sending an authenticated copy thereof to Registered E-mail Address of Assessee or his Authorised Representative.
  • Uploading an authenticated copy on Assessee's Mobile App.

And Followed by Real Time Alert.

3

Every Communication with Any Other Person by:

  • Sending to Regd. Email Address of such Person

Followed by a real time alert.

Every notice or order or any other electronic communication shall be delivered to the addressee, being any other person, by way of:

  • Sending an authenticated copy thereof to Registered E-mail Address of such person

And Followed by a Real Time Alert.

4

Assessee's Response Procedure :

  • File his response through his Regd. Account
  • Ack. is sent by NFAC containing # result.

Assessee shall file his response to any notice or order or any other electronic communication,

  • Through his registered account
  • Once an Acknowledgement is sent by the NFAC containing hash (#) result generated upon successful submission of response
  • The Response shall be deemed to be authenticated.

5

For Time and Place of Dispatch and Receipt of Electronic Record

  • Refer Section-13 of I.T. Act, 2000

For Time and Place of Dispatch and Receipt of Electronic Record - Refer Section-13 of I.T. Act, 2000.

Generally unless otherwise specified:

Dispatch of an Electronic Record

When it enters a computer resources outside the control of originator

Time of Receipt of an Electronic Record

Particulars

Receipt Occurs When Electronic Record

Addressee has designated Computer Resources

Enters designated computer resources

Record is sent to Computer Resources (which is not designated)

Retrieved by the Addressee

Addressee has not designated computed resources

Enters Computer Resources of Addressee

Place of Receipt

  • At the place where addressee has his Place of Business (POB).
  • More than One POB – Principal Place of Business.
  • Does not have POB –

Place of Residence shall be deemed to be POB.

6

A person shall not be required to appear b4 any I.T. Authority at any Assessment Centres

A person shall not be required to appear:

  • Either personally or through authorised representative
  • In connection with any proceedings before
  • Income Tax Authority at NFAC or RFAC or any unit set up under this sub-section.

7

Assessee may request for Personal Hearing in case of Opportunity of Being Heard provided.

Situation:

  • Where a variation is proposed in DAO or Final DAO or Revised DAO
  • Opportunity is provided to Assessee
  • By Serving a notice calling upon him to show cause as to why the assessment should not be completed as per DAO or Final DAO or Revised DAO.

Opportunity of Personal Hearing:

  • Assessee or his Authorised Representative
  • May request for Personal Hearings
  • So as to make his oral submissions or present his case before the Income Tax Authority in any Unit.

8

Approval Personal Hearing:

Authority

CCIT or DGIT, of RFAC of concerned Unit.

Circumstances

Covered under Clause (xii)(h)

Approval of Personal Hearing:

Authority

Chief Commissioner or Director General, in charge of RFAC, under which the concerned Unit is set up may approve the request for personal hearing

Circumstances

If he is of the opinion that request is covered by the circumstances referred to in Clause-(xii)(h).

9

Personal Hearing through Video Conferencing etc.

  • Where request for Personal Hearing has been approved by
    • Chief Commissioner
    • Director General

In charge of RFAC

  • Such hearing shall be conducted exclusively through
    • Video Conferencing
    • Video Telephony
    • Including use of any telecommunication application software which supports video conferencing or video telephony
  • In accordance with the procedure laid down by the Board.

10

Any Examination or Recording of Statement through Video Conferencing etc.

Subject to Rule-8(2) or Section-144B(6)

  • Any Examination or Recording of the Statement of the Assessee or Any Other Person
  • Other than statement recorded in the course of survey u/s-133A of the Act
  • Shall be conducted by Income Tax Authority in any unit exclusively through:
    • Video Conferencing
    • Video Telephony
    • Including use of any telecommunication application software which supports video conferencing or video telephony
  • In accordance with the procedure laid down by the Board.

11

Board shall establish suitable facilities of Video Conferencing etc for those who are deprived of such facilities.

  • Board shall establish suitable facilities for
    • Video Conferencing
    • Video Telephony
    • Including use of any telecommunication application software which supports video conferencing or video telephony
  • At such locations a may be necessary, so as to ensure that Assessee, or his Authorised Representative, or any other person is not denied the benefit of Faceless Assessment
  • Merely on the Consideration that they does not have access to Video Conferencing or Video Telephony at his end.

12

Prescribe Standards, Procedures and Processes for Effective functioning of NFAC, RFAC and Unit Set up

  • Principal Chief Commissioner (PCCIT) or the Principal Director General (PDGIT), in charge of the NFAC shall with prior approval of the Board
  • Lay down standards, procedures and processes for effective functioning of NFAC, RFAC and the Unit set up
  • In an automated and mechanised environment (Including format, mode, procedure and processes in respect of the following namely:
    • Service  of the Notice, Order or Any other Communication
    • Receipt of any information or documents from the person in response to the notice, order or any other communication
    • Issue of Acknowledgement of the response furnished by the person
    • Provision of E-Proceeding Facility including login account facility, tracking status of assessment, display of relevant details, and facility of download.
    • Accessing, Verification and Authentication of information and response including documents submitted during the assessment proceedings
    • Receipt, Storage and Retrieval of Information or Documents in a Centralised Manner
    • Circumstances in which proviso to Section-144B(6) / Rule-8(2) shall apply.
    • Circumstances in which personal hearing under Section-144B(7)(viii) / Rule-11(3) shall be approved
    • General Administration and Grievance Redressal Mechanism in the respective Centres and Units.
  • All communication between NFAC and Assessee, or his Authorised Representative, or Any Other Person shall be exchanged exclusively by Electronic Mode.
  • All Internal communication between NFAC, RFAC and various units shall be exchanged exclusively by Electronic Mode.
  • Except Enquiry or Verification conducted by the Verification Unit in the circumstances referred in Rule-12(via) / Section-144B(7)(xii)(g)
 

Other Important Provisions

Section-144B(8)

PCCIT or PDGIT of NFAC may at any stage of the Assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with prior approval of Board. {Notwithstanding anything contained in Section-144B(1) & Section-144B(2)}

Section-144B(9)

  • Assessment made u/s-143(3) & 144 shall be non-est / Invalid,
  • If such assessment not made in accordance with the procedure laid down under this Section-144B
  • Notwithstanding anything contained in any other provision of the act
  • Other than cases transferred u/s-144B(8)
  • On or after 1st April 2021
 

Disclaimer:

The aforesaid article presents the view of an independent writer who is an expert on Income Tax  / GST  Related Matters. The article is informative in nature and writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your tax consultant / tax advisor before making any decision.


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