FACELESS ASSESSMENT UNDER SECTION 144B

Faceless assessment means the assessment proceedings conducted electronically in “e- proceeding” facility through assessee’s registered account in the designated portal. Designated portal means the web portal designated as such by the Principal Chief Commissioner or Principal Director General, in charge of the National Faceless Assessment Centre.

The CBDT had issued the instructions, guidelines and notice formats for conducting scrutiny assessments electronically.

Scope of faceless assessment

The provision provides that the assessment, re-assessment or recomputation under Section 143(3), Section 144, or Section 147 shall be made in a faceless manner in respect of the specified territorial areas, persons, income or class of cases.

Authorities to conduct the faceless assessment

For the purpose of faceless assessment, the CBDT is empowered to set up the following centres and units by specifying their respective jurisdiction:

(a) National Faceless Assessment Centre (NFAC);

(b) Assessment Units (AU);

(c) Verification Units (VU);

(d) Technical Units (TU); and

(e) Review Units (RU).

National Faceless Assessment Centre

The purpose of this centre is to facilitate the conduct of faceless assessment proceedings in a centralized manner.

Assessment Units

It shall perform the function of making the assessment, which includes identification of points or issuing material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for making the faceless assessment.

The term “assessment unit”, wherever used in this provision, shall refer to an Assessing Officer having powers so assigned by the Board

Verification Units

It shall perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification.

The function of the verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of this Act. The request for verification may also be assigned by the NFAC to such a verification unit.

Technical Units

It shall perform the function of providing technical assistance, which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management, any other technical matter or an agreement entered into under Section 90 or Section 90A which may be required in a particular case or a class of cases, under this section.

Review units

It shall perform the function of the review of the Income Determination Proposal, which includes checking the following:

(a) Whether the relevant and material evidence has been brought on record;

(b) Whether the relevant points of fact and law have been duly incorporated in the proposal;

(c) Whether the issues requiring addition or disallowance have been incorporated in the proposal;

(d) Arithmetical correctness of modifications proposed, if any; and

(e) Any other functions required for the purposes of review.

The term ‘review unit’, wherever used in this provision, shall refer to an Assessing Officer having powers so assigned by the Board

Time-limit

As per Section 153, the time limit for making assessment under section 143(3) is:-

1) Within 21 months from the end of the assessment year in which the income was first assessable. [For assessment year 2017-18 or before]

2) 18 months from the end of the assessment year in which the income was first assessable. [for assessment year 2018-19]

3) 12 months from the end of the assessment year in which the income was first assessable [Applicable for assessment year 2019-20]

4) 18 months from the end of the assessment year in which the income was first assessable [Applicable for assessment year 2020-21]

5) Within 9 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2021-22 and onwards]

Note:

• If reference is made to TPO, the period available for assessment shall be extended by 12 months.

• If return has been furnished under section 139(8A), the order of assessment shall be passed within 9 months from the end of financial year in which such return was furnished.

Assessment under section 144

This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered. This assessment is carried out in cases where the taxpayer fails to comply with the requirements specified in section 144.

Scope of assessment under section 144

As per section 144, the Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:-

• If the taxpayer fails to file the return required within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5), or an updated return under section 139(8A).

• If the taxpayer fails to comply with all the terms of a notice issued under section 142(1).

Note: The Assessing Officer can issue notice under section 142(1) asking the taxpayer to file the return of income if he has not filed the return of income or to produce or cause to be produced such accounts or documents as he may require and to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the taxpayer, whether included in the accounts or not) as he may require.

• If the taxpayer fails to comply with the directions issued under section 142(2A).

Note : Section 142(2A) deals with special audit. As per section 142(2A), if the conditions justifying special audit as given in section 142(2A) are satisfied, then the Assessing Officer will direct the taxpayer to get his accounts audited from a chartered accountant nominated by the principal chief commissioner or Chief Commissioner or Principal Commissioner or Commissioner and to furnish a report of such audit in the prescribed form.

• If after filing the return of income the taxpayer fails to comply with all the terms of a notice issued under section 143(2), i.e., notice of scrutiny assessment.

• If the assessing officer is not satisfied about the correctness or the completeness of the accounts of the taxpayer or if no method of accounting has been regularly employed by the taxpayer.

From the above criteria, it can be observed that best judgment assessment is resorted to in cases where the return of income is not filed by the taxpayer or if there is no cooperation by the taxpayer in terms of furnishing information / explanation related to his tax assessment or if books of accounts of taxpayer are not reliable or are incomplete.

Procedure of assessment under section 144

• If the conditions given above calling for best judgment are satisfied, then the Assessing Officer will serve a notice on the taxpayer to show cause why the assessment should not be completed to the best of his judgment.

• No notice as given above is required in a case where a notice under section 142(1) has been issued prior to the making of an assessment under section 144.

• If the Assessing Officer is not satisfied by the arguments of the taxpayer and he has reason to believe that the case demands a best judgment, then he will proceed to carry out the assessment to the best of his knowledge.

• If the criteria of the best judgment assessment are satisfied, then after taking into account all relevant materials which the Assessing Officer has gathered, and after giving the taxpayer an opportunity of being heard, the Assessing Officer shall make the assessment of the total income or loss to the best of his knowledge/judgment and determine the sum payable by the taxpayer on the basis of such assessment.

Time-Limit

As per Section 153, the time limit for making assessment under section 144 is:-

1) Within 21 months from the end of the assessment year in which the income was first assessable. [For assessment year 2017-18 or before]

2) 18 months from the end of the assessment year in which the income was first assessable. [for assessment year 2018-19]

3) Within 12 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2019-20]

4) Within 18 months from end of the assessment year in which income was first assessable [Applicable for assessment year 2020-21]

5) Within 9 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2021-22 and onwards]

Notes:

• If reference is made to TPO, the period available for assessment shall be extended by 12 months.

• If return has been furnished under section 139(8A), the order of assessment shall be passed within 9 months from the end of financial year in which such return was furnished.