File Your Income Tax Return Before 31st July 2024.
Income tax department has now launched Faceless tool for income tax appeals. Under the facility, all cases will be completed face-to-face in an anonymous environment, except for appeals involving tax evasion, serious fraud, black money, international tax and special investigation. Let us discuss the common issues, solutions, and suggestions for improvement of functioning of NFAC. This article briefly describes the Faceless Assessment Scheme, & Common issues and solution concerning functioning of NFAC.
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National Faceless Appeal Centre (NFAC)
NFAC is the nodal agency and acts as an interface between the National e-Assessment Centre (NeAC) or Assessing Officer (AO), the appellant or any other person, and the Appellate Units (AUs). The NFAC acts as a central authority and is vested with powers to enable e-appeal proceedings and to dispose of appeals. Accordingly, all communication by the appellant or the NeAC/Assessing Officer will be through the NFAC with the AU only. The NFAC will notify the appellant of the acceptance or rejection of the appeal. The appellant or authorised representative may communicate with the NFAC electronically through e-mail or other designated electronic means.
Appeal Unit (AU)
Under this scheme, NFAC will allocate appeals to appeal units. Accordingly, an automated allocation system using artificial intelligence and other appropriate technologies will facilitate the random allocation of cases. However, all communication between the AU and the appeal parties will be facilitated through the NFAC. Regional Commissioners of Income Tax (Appellate Unit) will act as AUs. In each region, the appeals units will conduct the electronic appeals process and perform the appeals handling function, which includes:
- Additional grounds exist for accepting an appeal.
- Conducting another inquiry or directing the NeAC or AO to another inquiry
- Request for information or clarification regarding recognised grounds for appeal.
- Providing an opportunity to be heard by the petitioner, analysis of the materials provided by the petitioner.
- Draft order review and other features that may be required
An automated investigation tool will facilitate the examination of contract proposals using technology. Thus, the use of artificial intelligence eliminates discretion in the investigation and selection of cases.
What shall be procedure of communication between the different units and the assesse?
- The NFAC will be the common portal for communication between all units and the NFAC. It will be the NFAC that issues notices to the assesse.
- Any information required by the AU from the assesse will be communicated to the NFAC, and it will be the NFAC that will communicate the requested information to the NFAC.
- AU will be provided after receiving them from the assesse. Likewise, any assistance the AU may request from other units will be communicated only through the NFAC, and there will be no direct communication between the various units.
Common issues and solution concerning functioning of NFAC
| ISSUES | SOLUTIONS |
| An SCN has been issued which only provides a 24/48 hour response. | Under Section 148A of the Income-tax Act, 1961, the assesse is supposed to have a minimum period of seven days to file a reply to the show-cause notice. |
| Assessment is done by NFAC without issuing SCN to the assesse. | It is mandatory for the NFAC to issue a Show Cause Notice (SCN) and draft assessment order inviting the assesses objection before the assessment order can be finally passed and the application made. |
| Request for face-to-face hearing not assessed | The NFAC will grant the request for a face-to-face hearing via video conference and notify the appellant of the date and time of the hearing through the National Faceless Assessment Centre. |
| The Assessing Officer failed to enter the password after providing the video conference link. | NFAC will also share the password when providing the video conference link. |
| Requests for deferment are not considered. | NFAC must consider deferrals wherever possible and in case of refusal, assesses must be informed with reasons. |
| The impugned order was passed before the time prescribed for filing a reply to the SCN, it is clear that the impugned order was passed with a pre-determined mind. | NFAC must strictly adhere to the time schedule given in the SCN under review for filing the response. |
| Assesse could not submit reply as portal was down. The department ignored such matters and issued a final assessment. | In such cases, NFAC has to verify from reliable sources of the Department that whether there are any problems in the portal as claimed by the assesse and even if there are no problems, it may consider giving one more chance to the assesse as all technical faults cannot be proved. |
| NFAC passes orders regardless of ROI filed in response to notice issued | Before sending any order, NFAC must ensure that ROI is filed or not. |
| Assessment orders are passed without considering or dismissing the objections raised by the assesse to the draft assessment order. Simply, the draft measurements are issued once again as the final measurement. | If there are objections of the assesse to the Draft Assessment Order, they should be discussed in the order and if rejected, they should be mentioned with the reasons for rejection. |
| Time-limit for passing orders not known | A fixed time limit should be prescribed from the date of first notification by NFAC to the submission of final assessment; say three months or so. |
Suggestions to improve functioning of NFAC
Although the scheme is called FACE LESS, it is not 100% face less as the assessing authority at the NFAC end can contact the assesse at any time as it knows the name, address and contact details of the assesse, whereas the assesse only does not. to know who conducts the assessment proceedings.
Data should be collected for the percentage of orders out of the total number of orders issued which have been challenged in the High Courts and of which the percentage of orders set aside by the High Courts and reassessed for the purpose of changing the course assessment proceedings should be- if required, based on the results to save a lot of time and money on both ends. NFACs which have been quashed at the CIT (Appeals)/ITAT/High Court level to alter the course evaluation proceedings if necessary based on the results so that much time and money can be recovered filed at both ends
Assesses are notified that their case is being selected for review and this is for information only, there may be no option to reply to the notice/information. Henceforth, as ‘response option’ is made available on the page, assessors have to acknowledge the notification and indicate that they are ready to provide details, if any, required in future. There should be no “response option” for such notifications.
Conclusion
Thus, the National Faceless Assessment Center (NFAC) has provided a Standard Operating Procedure (SoP) for the Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Control Unit (RU) under the faceless assessment provisions of Section 144B of the Act on Income Taxes of 1961.
