“The faceless assessment system of Income Tax Department has been a game changer in the arena of direct taxation. It has empowered the taxpayers and has, as a foremost mechanism, altered the facets and perception of overall tax administration in India,” a highly placed source in the finance ministry told CNBC-TV18.

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Since its launch on October 7, 2019 and the subsequent implementation of its first phase, the system has provided for assessment of income-tax in electronic mode, where “now taxpayers need not see face-to-face any tax officer or visit an I-T office and need not run pillar-to-post on receiving income tax scrutiny assessment notice or rush to a tax professional or accountant; and yet, s/he can e-file assessment's reply on the income tax portal from the comforts of her/his home without hassle or visiting any tax officer.

“Yes, time is changing for direct tax administration in India with automated and random allocation of income tax assessment cases without human interface at any stage”, added the same source.

According to sources other than the one quoted above, in the first phase of the faceless assessment, a total of 58,319 cases were assigned for in an automated way randomly and these were kept away from the geographical jurisdiction of the case, based on computer algorithms. Out of these, 7,116 cases have been disposed of until now with assessment orders issued without any additions and 291 cases wherein additions are proposed to be made, have been submitted to risk management unit.

Sources said that in all the above cases, the grievances of over-pitched assessment or harassment by the taxpayers/tax professional have been almost eliminated. The taxpayers have been advised to check their registered e-filing accounts/email ids for notices or updates. Now, all the communications with taxpayers is made electronically by a central cell in Delhi and identity of all the assessing officers remains unknown to the taxpayers at all times.

Notably, under faceless assessment, the Income Tax Department has created state-of-the-art digital technology for risk management by way of automated examination tool, artificial intelligence and machine learning, with a reduced discretion or no human interface from the Income Tax Department.

The new assessment regime has further brought in the concept of team based assessment with dynamic jurisdiction and has thus induced enhanced transparency, improved efficiency and superior standardisation of procedures.

The faceless assessment system was put to work under National Assessment Centre (NeAC), with headquarters at Delhi, and eight Regional Assessment Centres (ReAC) at Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Pune, Bengaluru and Hyderabad which comprise assessment units, review units, technical units and verification units.

Explaining the major reform in the income tax processes, finance ministry sources said that now almost 99 percent returns are now e-filed. Out of more than 6 crore returns filed annually, only about 3 lakh returns come under scrutiny on the basis of select risk parameters. Cases are centrally selected for scrutiny using computer-aided selection for scrutiny. Some scrutiny cases are also selected manually on the basis of specified criteria. Old assessments can also be re-opened if the assessing officer has sufficient reason to believe that some income has escaped assessment.

Sources said that earlier during assessment proceedings in scrutiny cases taxpayer or her tax professional/s were required to make multiple visits to the income tax office. There were allegations and some incidences of discretion and subjective approach which often resulted into high-pitched assessments. In tax recovery proceedings, almost similar types of allegations were being made.

This was one of the concerns that the faceless assessment system meant to rectify. Nevertheless, the primary objective is to provide convenience to the taxpayers.

Prime Minister Narendra Modi in 2017 had desired that tax assessments should be anonymous, thereby eliminating discretion and physical interface. Towards this goal, finance minister Nirmala Sitharaman announced the system of faceless assessment in her budget speech on July 5, 2019, which was subsequently inaugurated on October 7, 2019.

Sources said that the new Form 26AS which has been notified from June 1, 2020 is in the nature of Annual Information Statement. The 26AS old form contained limited information pertaining to tax payments and TDS/TCS only.

In the new 26AS form much more information is uploaded such as specified financial transactions (property, bank, shares, mutual funds, etc.), payment of taxes, tax deducted or collected at source, income tax demand and refund, pending and completed income tax proceedings.

“This would be faceless hand-holding of the taxpayers to ease them e-file their income tax returns quickly and correctly; besides nudging some taxpayers to disclose income relating to transactions displayed in the new 26AS form—and to pay taxes rightly.

“This will also help in verifying all available information in faceless manner and help in seamless implementation of first phase of faceless assessment”, said the highly placed source.

First Published:Jul 19, 2020 2:43 PM IST