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Faceless Assessment Scheme- Issues and Challenges

Every person who is earning today has one fear that whatever happens I should not get any notice from Income tax department. Not only crooks but even honest people do get IT notices nowadays. To avoid harassing honest tax payers, government has introduced Faceless Assessment Scheme for taxpayers

What is Faceless Assessment Scheme for taxpayers?

Faceless Assessment Scheme was started in Oct 2019 by the Finance Minister of India. Around 50,000 plus cases were assigned out of which more than 7000 plus cases have been closed.

In this scheme, the taxpayer need not to visit any offices of Income tax department or assessment center. There is also no need for taxpayer’s representative to visit any tax offices or assessment center for tax assessment, appeal or any other tax related matters

Objective of Faceless Assessment Scheme for taxpayers

The main objective to bring this scheme by the Government of India was to introduce a friendly ecosystem for taxpayers and to eliminate discrepancies and unnecessary harassment. This will also pave the way for simplification, automation, transparency and ease of compliance of Income tax.

Due to mismanagement by few people who try to evade taxes, honest taxpayers are sometime facing harassment due to issuance of notices, incorrect Pan numbers and Aadhar match, wrong jurisdiction. To avoid such an issue, Government of India has introduced this scheme.

How will Faceless Assessment Scheme for taxpayers work?

In this scheme, no taxpayer is attached to any jurisdiction or Tax center. The assessment is carried out in a randomized and faceless manner without any human intervention.

A gateway has been implemented in headquarters in New Delhi called as National e-Assessment Centre (NeAC). Regional E-Assessment Centres have been developed over 20 cities including Mumbai, Delhi, Chennai and Kolkatta.

Procedure of Faceless Assessment Scheme for Taxpayers

NeAC will issue the notices to the taxpayers under section 143(2) of Income Tax Act. The assessee has to respond to NeAC within 15 days of receipt of notice. All the communications between assessee and NeAS will be electronically and no physical intervention exists. Not only external but internal communication between NeAC and ReAC and other departments would be exclusively by electronic mode.

The system of NeAC would be working effectively as all the documents issued would be assigned a unique identificatio number. NeAC process is defined in such a manner that the details related to identity, jurisdiction, tax matter etc would be confidential.

Will This scheme Eliminate physical intervention completely?

To a large extent, this scheme should eliminate physical visit to the Tax department. However if the Commissioner of Tax or Director General of ReAS is of the opinion of cases requiring personal hearing then he may approve such cases. In these cases also, hearing needs to be conducted through teleconference or any other application which supports telecon.

Benefits of This Scheme

No Harassment -It is been seen that large number of honest taxpayers get harassed by regular tax officers. Also sometimes bribes are been asked by officers to close the cases hence this scheme eliminates such culture.

Proof of Documents – As the communication between assessee and NeAS is done electronically, there is a proof and availability of documents submitted.

Audit Trail – Such a system provides an audit trail of each case so it is easy to understand and solve the case in case there is a promotion/transfer of some officer.

Red flags – NeAS will automatically trigger flags for unwanted or deferment of cases in case of unnecessary delay in solving the assessment.

Power transfer – The power from regular tax officers is been eliminated in this system. Any assessment requiring physical hearing needs to be approved by Chief Commissioner of DG.

Faceless Assessment Scheme for Taxpayer – Issues/Challenges

Online savvy Assessee – Though this initiative of government is really remarkable, many of Indian users especially non salaried ones still rely on professionals and tax representatives for their IT returns. This might increase their costs for filing returns

Confidentiality – Though the notices will be issues by NeAC, there will be a dedicated team that will check and verify the draft notice/tax demand before sending it out to the Assessees. At the time of such verification, details about the client may be revealed to such a team.

Faceless Assessment Scheme for Taxpayer

So will Faceless Assessment Scheme for Taxpayers work ?

We need to wait and watch for this scheme and then decide. However the initiative by the Govt. to reduce tax litigations, harassments to honest tax payers and tax compliance. Government has deployed state of art mechanism which includes complex algorithms, Artifical Intelligence and Machine learning to ensure better adherance to tax filing.

To conclude the article, I think this is a very progressive reform taken by Government for Income tax issues. The intent is good but we need to wait for its successful implementation.

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