Faceless tax assessment draws flak
The faceless assessments of income tax payers have got mired in procedural lapses leading to litigations throughout the country.
The e-assessment scheme for income tax assessees was initially notified in 2019 and was later renamed to faceless assessment scheme. The scheme was subsequently codified into the Income Tax Act in 2020 through the insertion of Section 144B.
The faceless mode of assessment was introduced to eliminate the interface between the assessing officer and the assessee with the use of technology and with an aim to impart transparency and accountability.
According to government data disclosed in Rajya Sabha, till March 10, 2021, a total of 82,072 assessment cases have been completed in faceless manner.
As part of the faceless assessment procedure, the assessment unit is required to write a draft assessment order based on all the relevant information available. The National Faceless Assessment Centre (NFAC) upon examining the draft assessment order may decide to either finalise the assessment or provide an opportunity to the taxpayer in case there is a variation which is prejudicial to the interest of the assessee. In case of the latter, a showcause notice will be issued to the assessee as to why the proposed variation in assessment should not be made.
If a taxpayer has received the show-cause notice, he may furnish his response to the NFAC within the stipulated timeline. The assessment unit is required to make a revised draft assessment order and send it to NFAC after taking into account the response furnished by the taxpayer.
Tax practitioners however point out that in many cases assessment has been done hurriedly without strictly following the procedures laid down in the Act which has led to filing of writs in various courts challenging the assessment orders. The Covid pandemic coupled with late issue of notices of extensions and technical glitches have further compounded the issues of faceless assessment.
At a session organised by PHDCCI, Rohit Jain, partner, Vaish Associates, highlighted some of the procedural concerns.
“In many cases, we are seeing that the draft assessment order and the show cause notice is not received by taxpayers. As a consequence, the important right available to the taxpayer to object to the draft assessment order and seek an opportunity of hearing is denied to taxpayers,” Jain said.
The provisions of faceless assessment under Section 144B also allows taxpayers to request for a personal hearing which can be conducted through a video conference. However, there have been instances where such opportunity has been denied.
Writ petitions have also been filed in instances where final assessment order has been passed before filing of reply and in cases where final assessment does not factor in the objections filed in response to show cause notice.
“It is high time that the matter needs to be seriously looked into so that officers who are handling faceless assessment should work as per law and as per the principles of natural justice. Otherwise people will be losing faith in faceless assessment,” tax advocate Narayan Jain told The Telegraph.