I-T dept undergoes overhaul to implement faceless assessment scheme

3,500 posts of assessment officers diverted to other centres; officers flag transitional challenges in implementing scheme

The income tax (I-T) department is undergoing an overhaul to implement the faceless assessment scheme launched by Prime Minister Narendra Modi on Thursday.

It will eliminate the physical interface between an assessee and the tax officer. At least 3,500 posts of assessment officers across the country have been diverted to the national e-assessment centre and the regional centres, in two sets of orders issued barely hours after the announcement.

However, there is lack of clarity with respect to functions like reassessment, transfer of existing cases, domestic transfer pricing cases and dispute resolution process for transfer pricing cases, among others, leaving tax officers perplexed. 

Amid the largescale overnight transition, doubts have also emerged over the system’s load taking capacity to handle heavy assessment documents.

Investigation, international tax and tax deduction at source (TDS) have been kept out of the transition process and will continue in their old formats.

While faceless assessment came into effect on Thursday, faceless appeals will be rolled out on September 25. Faceless e-assessment eliminates territorial jurisdiction and substitutes individual discretion with team-based assessment. It aims to bring transparency and objectivity to the process.

“Roughly, half the assessment officers have been moved to the faceless asseessment function and the remaining will not be doing any assessment now. They may be entrusted with carrying out functions under the taxpayers’ services head. Clarity is still awaited on what will be their role and function,” said a tax officer.

The power to conduct regular surveys has been limited to only the investigation or the TDS unit.

This, the tax officers say, will negate their work of the last 2-3 years where they found incriminating evidence against certain assesses during preventive surveys carried out by them. Those will no longer be of use as the assessments will now only be done by the faceless assessment mechanism.

“Clarity is still awaited on what happens to the incriminating evidences that we have collected against certain taxpayers over the last couple of years. We were waiting for returns to be filed to check income mismatch,” said another tax officer.

With faceless assessment, a case may never get picked up by the system for income mismatch, causing loss of revenue to the department, he added.

The CBDT has said that all orders will be passed by the NAEC through the faceless assessment scheme only, barring those assigned to central charges and international charges.  There is also lack of clarity over who will carry out reassessment, since the NEAC or regional offices will only carry out regular assessment. “At present, about 30-40 per cent are reassessment cases only. Who will look at those? Moreover, who will perform that function, since no surveys will be allowed now for anyone other than the investigation or TDS units?” asked a Jaipur-based tax officer.

Reassessment means reopening the already completed assessment and reassessing the total income of the assessee by including the income which has escaped earlier assessment. It is done under Section 147 of the Income Tax Act.