Home >Opinion >Views >Opinion | Faceless Assessment - towards realizing vision of ease of business

On 13 August, Prime Minister Narendra Modi announced the implementation of faceless assessments with immediate effect and faceless appeals from 25 September. These announcements and initiatives were made towards accomplishing the vision of ease of doing business in India.

To realize the vision, the government has taken tremendous steps in various sectors. The finance minister, while presenting the Union Budget of 2019, had announced steps in the Income Tax Act. She introduced the scheme of faceless assessment to eliminate the physical presence of taxpayer. This new scheme of assessment will represent a dramatic shift in the functioning of Income Tax Department. Further, to enlarge the scope of this, the government introduced the scheme of faceless appeals in the Finance Budget, 2020.

How is it a faceless scheme and how will it benefit tax payers?

Under this scheme, the government has constituted a body which will conduct the full assessment process. The system will select the case for assessment and hand over the same to this newly constituted body. The assessment will be finalized using online mechanism, so there is no need for physical presence. Further, this scheme is designed in such a manner that both taxpayer as well as the assessing officer does not know the identity of each other.

Since there is no need for physical presence, it will save time as well as cost of the tax payer. It will also help curb unethical practices from the system.

How the scheme works?

Govt has constituted a body called National E- Assessment Centre (NEC). Apart from NEC at New Delhi, 8 Regional E- Assessment Centres (REC) have been opened. Under each REC, one assessment unit, one verification unit, one technical unit and one review unit have been opened.

NEC is responsible for issuing notice to the taxpayer for assessment, specifying the reason for selection of his case for assessment. On receipt of the notice, the taxpayer may file his response to NEC.

The NEC will assign the selected case to a specific assessment unit through automated allocation method and on the receipt of the case by assessment unit, it may request NEC for any additional information from the taxpayer, or conduct an enquiry and/or verification or request for technical assistant from the technical unit.

The assessment unit, after considering all the relevant materials, shall make a draft assessment order either accepting the returned income of the taxpayer or modifying the return income of the taxpayer and send a copy of such order to the NEC. This draft order includes details of penalty proceedings, if any.

Upon receipt of draft assessment order, NEC shall review the same. Upon his satisfaction, NEC shall issue the demand/refund order to the taxpayer or issue a show cause notice to taxpayer calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order. Further, if NEC is not satisfied with the draft order of assessment unit, they may assign the draft assessment order to the review unit for conducting review of such order.

Upon receipt of draft order from NEC, the review unit may either agree with the draft assessment order or suggest modification to the NEC and the same shall be communicated by the NEC to the assessment unit.

The assessment unit after considering the suggestions of review unit, will send a final draft assessment order to NEC.

In case, where show cause notice has been served to the taxpayer, the taxpayer will furnish his response to NEC. he NEC will then finalise the assessment as per the draft assessment order or send the response received from the taxpayer to the assessment unit. The assessment unit will consider the response received from taxpayer and make the revised draft assessment order and send it to NEC.

In case, revised draft assessment order is prejudicial to the interest of taxpayer, the NEC will provide an opportunity of being heard to the taxpayer.

The NEC shall, after completion of assessment, transfer all the records to the assessing officer having jurisdiction over such case and direct for further course of action like Imposition of penalty, recovery and collection of demand, etc

In case, the taxpayer does not agree with the order of NEC, he/she may file an appeal before commissioner appeals having jurisdiction over the Jurisdictional Assessing Officer.

However, govt vide its Finance Act, 2020 made amendment in Section 250 of Income Tax Act, 1961, wherein Section 6B, 6C and 6D had been introduced, relating to faceless appeals. Now govt vide its notification on 13 August, announced implementation of faceless assessment. Under this, appeal will be randomly allotted to any officer in the country. Since, this is a faceless appeal, the identity of the officer will remain unknown and there is no need for physical presence. However, the decision will be team based.

Cases related to serious frauds, major tax evasion, sensitive and search matters, cases relating to international taxation and cases related to black money act and benami property are not covered under this faceless appeal scheme.


The shift is an attempt to honour the honest with an objective to strengthen the government’s direct tax reforms. The tax department's way of dealing with tax payers is considered an unpleasant one. These changes in the tax filing process point to a shift in the focus of the government from considering the department from a revenue needs to thinking of it as one supposed to serve the taxpayer. Faceless e-assessments have been introduced to ease evaluation system. The move will do away with physical interface to remove unethical practices. Faceless e-assessments will eventually benefit honest tax filers.

(Dr. Neelam Rani is associate professor (Finance), Indian Institute of Management Shillong. Ankit Sharma is a Chartered Accountant. The views expressed in this column are his own and do not reflect Mint's.)

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