In just nine months, the faceless assessment system of the Income Tax Department has turned into a game-changer in the area of direct taxation, empowered taxpayers and altered the facets and perception of tax administration.
Since the launch on October 7, 2019 and implementation of the first phase, the new system has provided for income-tax assessment in electronic mode, where “taxpayers need not have face-to-face meeting with the tax officer or visit an I-T office and run from pillar to post on receiving the I-T scrutiny assessment notice,” according to a high official source.
They don’t need to rush to tax professional or accountant and could e-file the reply on the income tax portal from their home. “Yes, the time is changing for the direct tax administration with automated and random allocation of assessment cases, without human interface at any stage,” said the source.
In the first phase of the faceless assessment, 58,319 cases were randomly assigned in an automated way and were kept away from the geographical jurisdiction of the case.
Of this, 7,116 cases have been settled and assessment orders issued without any additions. In 291 cases, wherein additions are proposed, have been submitted to the risk management unit.
With this, grievances of over-pitched assessment or harassment have been eliminated, almost. Taxpayers have been advised to check their registered e-filing accounts or email IDs for notices or updates.
Now, all communications with taxpayers are made electronically by a central cell in Delhi and the identity of assessing officers remains unknown to taxpayers.
Under the faceless assessment system, the department is using the latest digital technology for risk management by way of automated examination tool, artificial intelligence and machine learning.
It has also brought in the concept of team-based assessment with dynamic jurisdiction, and enhanced transparency, improved efficiency and led to superior standardisation of procedures.
The assessment is done at National Assessment Centre (NeAC) in Delhi, and the Regional Assessment Centres (ReAC) in Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Pune, Bengaluru and Hyderabad. They comprise assessment units, review units, technical units and verification units.
Explaining this major reform in the I-T processes, Finance Ministry sources said now almost 99 per cent returns were being filed electronically. Of more than 6 crore returns filed annually, only around 300,000 come under scrutiny on the basis of select risk parameters.
Cases are centrally selected for scrutiny using computer-aided selection process. Some 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.
During the earlier assessment proceedings in scrutiny cases, taxpayers or tax professionals were required to make multiple visits to the I-T office. There were allegations as well as incidences of discretion and subjective approach that often resulted into high-pitched assessments. In tax recovery proceedings, almost similar allegations were being made.
It was one of the reasons to rectify the processes by making it faceless. But the main reason was the taxpayer’s convenience.
In 2017, the Prime Minister had desired that tax assessments should be anonymous, thereby eliminating discretion and physical interface. Towards this goal, the Finance Minister announced the faceless assessment scheme in the budget speech on July 5, 2019. The scheme was inaugurated on October 7, 2019.
According to sources, the new Form 26AS that became effective from June 1, 2020 is in the nature of Annual Information Statement. The old Form 26AS contained limited information pertaining to tax payments and TDS/TCS only.
In the new Form 26AS more information, like specified financial transactions, payment of taxes, tax deducted or collected at source, income tax demand and refund, pending and completed income tax proceedings, are uploaded.