Faceless assessment (Assessment procedure) – Section 144B(2) - Income Tax - Ready Reckoner - Income Tax

Faceless assessment (Assessment procedure) Section 144B (1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under section 143(3) / 144 / 147 , as the case may be, with respect to the cases referred to in section 144B(2) , shall be made in a faceless manner as per the following procedure, namely:- Selection of cases - the National Faceless Assessment Centre (NFAC) shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system; Intimate to the assessee - the NFAC shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section; Serve the notice - a notice shall be served on the assessee, through the NFAC, u/s 143(2) or u/s 142(1) and Submit the response - the assessee may file his response to such notice within the date specified therein, to the NFAC which shall forward the same to the assessment unit; Cases assigned to the assessment unit - where a case is assigned to the assessment unit (AU), under clause (i), it may make a request through the NFAC for- (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of enquiry or verification by verification unit (VU); (c) seeking technical assistance in respect of determination of arm s length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter by referring to the technical unit (TU); where a request u/s 144B(1)(iv)(a) has been initiated by the AU, the NFAC shall serve appropriate notice or requisition on the assessee or any other person for obtaining the information, documents or evidence requisitioned by the AU and the assessee or any other person, as the case may be, shall file his response to such notice within the time specified therein or such time as may be extended on the basis of an application in this regard, to the NFAC which shall forward the reply to the AU; Request by the NFAC to verification unit where a request, - (a) for conducting of enquiry or verification by the VU unit has been made by the AU u/s 144B(1)(iv)(b), the request shall be assigned by the NFAC to a VU through an automated allocation system; or (b) for reference to the technical unit has been made by the AU u/s 144B(1)(iv)(c) of clause (iv), the request shall be assigned by the NFAC to a TU through an automated allocation system; Report received by the NFAC send to Assessment Unit the NFAC shall send the report received from the VU or the TU, as the case may be, based on the request referred to in clause (vi) to the concerned AU; Fails to comply notice served intimate to the Assessment unit where the assessee fails to comply with the notice served u/s 144B(1)(v) or notice issued u/s 142(1) or the terms of notice issued u/s 143(2) , the NFAC shall intimate such failure to the AU; the assessment unit shall serve upon such assessee, as referred to u/s 144B(1)(viii), a notice, through the National Faceless Assessment Centre, u/s 144 , giving him an opportunity to show-cause on a date and time as specified in such notice as to why the assessment in his case should not be completed to the best of its judgment; the assessee shall, within the time specified in the notice referred to u/s 144B(1)(ix) or such time as may be extended on the basis of an application in this regard, file his response to the NFAC which shall forward the same to the AU; where the assessee fails to file response to the notice served u/s 144B(1)(ix) within the time specified therein or within the extended time, if any, the NFAC shall intimate such failure to the AU; the AU shall, after taking into account all the relevant material available on the record, prepare, in writing,- (a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the NFAC; or (b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the NFAC; the assessee shall file his reply to the show cause notice served u/s 144B(1)(xii)(b) on a date and time as specified therein or such time as may be extended on the basis of an application made in this regard, to the NFAC, which shall forward the reply to the AU; where the assessee fails to file response to the notice served u/s 144B(1)(xii)(b) within the time specified therein or within the extended time, if any, the NFAC shall intimate such failure to the AU; the AU shall, after considering the response received u/s 144B(1)(xiii) or after receipt of intimation u/s 144B(1)(xiv), as the case may be, and taking into account all relevant material available on record, prepare an income or loss determination proposal and send the same to the NFAC; upon receipt of the income or loss determination proposal, as referred to u/s 144B(1)(xii)(a) or u/s 144B(1)(xv), as the case may be, the NFAC may, on the basis of guidelines issued by the Board, - (a) convey to the AU to prepare draft order in accordance with the income or loss determination proposal, which shall thereafter prepare a draft order; or (b) assign the income or loss determination proposal to a RU through an automated allocation system, for conducting review of such proposal; the RU shall conduct review of the income or loss determination proposal assigned to it by the NFAC, u/s 144B(1)(xvi), whereupon it shall prepare a review report and send the same to the NFAC; the NFAC shall, upon receiving the review report u/s 144B(1)(xvii), forward the same to the assessment unit which had proposed the income or loss determination proposal; the AU shall, after considering such review report, accept or reject some or all of the modifications proposed therein and after recording reasons in case of rejection of such modifications, prepare a draft order; the AU shall send such draft order prepared u/s 144B(1)(xvi)(a) or u/s 144B(1)(xix) to the NFAC; in case of an eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee, as mentioned u/s 144C(1) , the NFAC shall serve the draft order u/s 144B(1)(xx) on the assessee; Issuance of draft assessment order before issuing assessment order is mandatory [ Interglobe Enterprises Pvt Ltd. Vs NFAC, Delhi 2021 (7) TMI 1044 - DELHI HIGH COURT , Arista Infrastructure Vs CIT 2023 (2) TMI 581 - GUJARAT HIGH COURT ] in any case other than that referred to in u/s 144B(1)(xxi), the NFAC shall convey to the AU to pass the final assessment order in accordance with such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings, if any, and send it to the NFAC; upon receiving the final assessment order as per section 144B(1)(xxii), the NFAC shall serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; where a draft order is served on the assessee as referred to in u/s 144B(1)(xxi), such assessee shall,- (a) file his acceptance of the variations proposed in such draft order to the NFAC; or (b) file his objections, if any, to such variations, with- the DRP, and the NFAC. within the period specified in the section 144C(2) ; the National Faceless Assessment Centre shall,- (a) upon receipt of acceptance from the eligible assessee; or (b) if no objections are received from the eligible assessee, within the period specified in section 144C(2) , intimate the assessment unit to complete the assessment on the basis of the draft order; the AU shall, upon receipt of intimation under clause (xxv), pass the assessment order, in accordance with the relevant draft order, within the time allowed u/s 144C(4) and initiate penalty proceedings, if any, and send the order to the NFAC; where the eligible assessee files objections with the DRP, u/s 144B(1)(xxiv)(b), the NFAC shall send such intimation along with a copy of objections filed to the AU; the NFAC shall, in a case referred to in clause (xxvii), upon receipt of the directions issued by the DRP u/s 144C(5), forward such directions to the AU; the AU shall, in conformity with the directions issued by the DRP u/s 144C(5), complete the assessment within the time allowed in u/s 144C(13) and initiate penalty proceedings, if any, and send a copy of the assessment order to the NFAC; xxx. the NFAC shall, upon receipt of the assessment order referred to u/s 144B(1)(xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment; xxxi. the NFAC shall, after completion of assessment, transfer all the electronic records of the case to the AO having jurisdiction over the said case for such action as may be required under the provisions of this Act; xxxii. if at any stage of the proceedings before it, the AU having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon recording its reasons in writing, refer the case to the NFAC stating that the provisions of section 142(2A) may be invoked and such case shall be dealt with in accordance with the provisions of section 144B(7).