Faceless Income – Tax Assessment: How Does It Work?

The government introduced the concept of faceless assessments, whereby scrutiny assessments are carried out in a faceless manner, that is, without any physical meeting or submission of physical documents.

Just because you filed your income-tax return (ITR) by July 31 doesn’t mean your case is closed. Once the return is filed, tax authorities may select certain tax returns for detailed scrutiny and request that the individual submit documents evidencing the claims made in the return of income, referred to as an assessment. Earlier, the assessments were carried out by personal representations/visits to tax offices and the physical filing of submissions.

Recently, the government introduced the concept of faceless assessments, whereby scrutiny assessments are carried out in a faceless manner, that is, without any physical meeting or submission of physical documents. The National Faceless Assessment Centre (NFAC), along with other centres and units, have been established by the Central Board of Direct Taxes (CBDT).
Faceless assessments seek to eliminate the human interface between the taxpayer and the income tax department. The faceless assessment scheme lays down the procedure to carry out such an assessment in electronic mode.

Procedure for making e-assessment
Once the case is selected for scrutiny, the NFAC will issue a digitally signed notice to the individual on his/her registered email ID as well as in the registered account with the e-filing portal (www.eportal.incometax.gov.in). NFAC may also inform the individual that the assessment will be completed in accordance with the provisions of faceless assessment.

The individual can view the notice on the e-filing portal (www. eportal.incometax.gov.in). After logging in, the notice can be seen at the e-proceedings option under 'pending action’, under the "for your action" tab. The reply to the notices is to be filed through the e-filing account only.

If the individual needs additional time to collate information, he may seek adjournment through the e-filing portal under the assessment tab. The maximum period for which an adjournment can be sought is 15 days.
While submitting the response, there is an option to select whether the response submitted is a "Partial response" or a "Full response". The response to the notice can be provided in the space provided therein (with a limitation of words). Further, a written response submission along with supporting documents can be attached as an annexure. However, while uploading the document, one has to ensure that the size of the document being submitted does not exceed 50 MB.

Also read: 5 income-tax return filing errors that could get you a notice

Tax authorities will go through the information submitted on the back end. If the tax authorities are not satisfied with the response or need further information based on the documents provided, they may issue another notice to seek additional details on the same portal and email ID of the individual. The individual may also request a personal hearing through video conferencing. If the individual’s request is approved under the applicable guidelines, the hearing will be conducted through video conferencing only.

What to do after your response is submitted
Once the final response is received by the NFAC:

If, after getting your response, the NFAC is satisfied with the submission and documents, the tax authorities will issue a final assessment order; or
If the authorities are not satisfied with the submission, i.e., if the NFAC proposes to increase the income/reduce the loss and raise demand, it will issue a draft assessment order.

In response to the draft assessment order, the individual may choose to either file his objection to the variation with the Dispute Resolution Panel (DRP) or may wait for 30 days for the assessing officer to pass the final order and subsequently file an appeal with the Commissioner of Income Tax (Appeals) within 30 days of receipt of the final assessment order.

The change in the process of conducting assessments in a faceless manner has made it easier for individuals to make representations without any personal appearance. Further, it is also a welcome move by the government to promote transparency and accountability.