'Faceless' authority proposes restructuring in Income-Tax department

Calls for merger of supervisory officers at CIT level and above

The department tasked with administering the ambitious Faceless Assessment Scheme (FAS) has admitted that the scheme has not gotten off to a smooth start and has proposed a restructuring in the income tax (I-T) department to iron out the anomalies.

The National Faceless Assessment Centre (NaFAC) on Thursday shot off a letter to senior officials of the I-T department seeking a restructuring of the faceless system by merging the role of supervisory officers from the level of Commissioner of Income Tax (CIT) and above.

“Experience and feedback received so far indicate that the faceless assessment and erstwhile territorial jurisdictional structure has resulted in ‘uneven distribution’ of workload and inadequate coordination amongst the faceless and jurisdictional hierarchy,” NaFAC said in the letter, dated August 12.

Further, the letter, which Business Standard has reviewed, said the current reporting structure of the faceless division has in some instances given rise to a situation where an officer posted in one (region) has to report to another posted outside the said region.

The faceless centre, constituted by the Central Board of Direct Taxes (CBDT), is the nodal authority and works as an interface for FAS, rolled out last year. 

If the proposal is accepted, then the separate divisions of faceless and jurisdictional officers will be unified from the CIT post upwards. This means every CIT, principal CIT, chief CIT, and principal chief CIT will supervise both sections.

“Workload on jurisdictional principal commissioner level has increased manifold on account of merger of erstwhile territorial jurisdictions in respect of work areas assigned to JPCIT on budget collection, recovery, certain statutory functions, decision on filing of appeals/SLP, handling of writs petitions, taxpayers services, etc,” the letter states.

MAKING IT WORK

• National Faceless Assessment Centre has flagged inadequate coordination and uneven distribution of work under the scheme
• Has sought changes in reporting structure of officials
• Finance ministry has, meanwhile, initiated a time-bound internal survey of the faceless assessment regime to examine its effectiveness
• Faceless scheme was introduced in 2019 in a phased manner
• PM Modi launched it across the board in August 2020

Sources in the I-T department said that before the faceless system’s launch all officers were jurisdictional. After FAS, jurisdictional officers only deal with tax recovery after assessment orders are passed by the faceless set-up.

The letter comes at a time when several taxpayers have filed writ petitions against the scheme in different courts challenging it.

Recently, the tax department also released a standard operating procedure (SOP) to deal with writ petitions filed against faceless assessment cases and faceless appeal cases. The SOP emphasised that NaFAC has no primary role in defending the writ petition, except in cases where the scheme itself is challenged or a wider policy issue is involved. In such writ petitions, the faceless centre shall authorise jurisdictional officer (commissioner level) to defend the case.

Meanwhile, the finance ministry has initiated a time-bound internal survey of the faceless regime to examine its effectiveness. It will examine various features of the scheme, including video conferencing, which is a bone of contention for taxpayers. The final report is expected to be submitted later this month.

Sources said the findings will be crucial as it will reveal the impact. It may also suggest some changes that could fix certain ambiguities of the scheme.