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Faceless Assessment Scheme 2020

On 13 August 2020, Hon'ble Prime Minister, Mr. Narendra Modi, launched the campaign 'Transparent Taxation: Honouring the Honest.' Under the campaign, below mentioned three schemes were introduced in relation to 'Direct Taxes':

  • Faceless Assessment Scheme, 2020 (effective from 13 August 2020);
  • Faceless Appeal (effective from 25 September 2020); and
  • Taxpayer's Charter (effective from 13 August 2020) containing revenue authorities' commitments towards taxpayers and duties of/expectations from taxpayers.

Necessary guidelines for 'Faceless Appeals' are yet to be issued.


The Faceless Assessment scheme has been re-introduced by amending the existing notifications of the electronic assessment scheme launched in September 2019. All assessment orders to be passed after 13 August 2020 would need to be issued under Faceless Assessment Scheme 2020, and any order passed outside the scheme (except for the exclusions mentioned hereunder) will be considered as 'nonest,' i.e., never in existence.

The scheme is summarized in brief as under:

Key Features

  • Assessment will be a unit-based assessment headed by National E-Assessment Centre (NeAC) and conducted by Assessment Unit (AU) with appropriate assistance from Technical Unit (TU), Verification Unit (VU), and Review Unit (RU);
  • Each unit shall have its independent functioning, headed by the Chief Commissioner of Income Tax (CCIT). However, TU has been structured to report directly to Principal Chief Commissioner of Income Tax (Pr CCIT), NeAC;
  • There will be no interaction between the taxpayers and the four units. Every communication will be between the taxpayer and National E-Assessment Centre (NeAC) and that too electronically;
  • The NeAC may send notices via email, SMS, or the registered account of the taxpayers' e-filing portal ( The only mode of communication available to the taxpayers is filing of responses to the notices issued by NeAC via e-filing portal (;
  • Similarly, all four units cannot communicate amongst themselves. Any communication amongst them would be via the NeAC;
  • All communications by NeAC would carry a Document Identification Number (DIN);
  • Similarly, all responses filed by taxpayers must be electronically signed either by way of Digital Signatures or by way of Electronic Verification Code (EVC).


  • Assessment under the Scheme will commence subsequent to the selection of the cases for assessment electronically. It is yet to be seen as to whether such selection would continue to be by existing Computer-Aided Selection Scrutiny (CASS) criteria or there would be the use of artificial intelligence/ machine learning in the selection of cases as well;
  • Assessments to be covered by the scheme are assessments initiated:
    • Pursuant to issuance of a notice under section 143(2) of the Act, viz:-
      • Scrutiny assessments under section 143(3) of the Act;
      • Best Judgment Assessments under section 144 of the Act;
      • Scrutiny Assessments under section 143(3) of the Act subsequent to the filing of return of income in response to a notice issued under section 148 of the Act for income escaping assessment;
    • By way of an intimation by NeAC, where no tax return has been furnished by the taxpayer in response to the notices issued section 142(1) and 148 of the Act.


At present, the Faceless Assessment Scheme is not applicable to the following cases of assessment:

  • Assessments in cases assigned to Central Charges, mostly in search and seizure cases; and
  • Assessments in cases assigned to International Tax Charges.


  • Upon selection of the case for assessment, NeAC shall assign the case to an AU selected via an automated allocation system, which may employ artificial intelligence or machine learning;
  • Upon receipt of the case for assessment, AU shall intimate the details which it may require from the taxpayers, upon which NeAC shall issue the notice to the taxpayers;
  • The taxpayer needs to respond within the time specified in the notice or such extended time as it may request. Failure to respond to such notice may result in the initiation of penalty proceedings or issuance of a notice for the conclusion of assessment under the best judgment in terms of section 144 of the Act;
  • In case AU opines that an inquiry or verification needs to be conducted, it shall intimate NeAC, who shall intimate to a VU selected through an automated allocation system. The VU shall conduct the verification and submit its report to NeAC for onward forwarding to the AU from which request for verification was received;
  • Similarly, AU may seek technical assistance from TU via NeAC at any point of time of the proceeding;
  • Upon receipt of the information/ reports, AU shall prepare the Draft Assessment Order (DAO) based on the information available on records and forward the same to NeAC;
  • NeAC shall examine the DAO using risk management strategy (using AI) to either finalize the DAO or grant an opportunity to the taxpayer or to send it to RU for review;
  • NeAC shall finalize the assessment order based on DAO, in case no modification has been proposed from the returned income;
  • Where any modification has been proposed, NeAC shall grant an opportunity to the taxpayer by issuing a showcause notice (SCN). In response to the SCN, the taxpayer may file its written submissions as well as seek an opportunity for 'hearing' to present its case. Upon receipt of the request of hearing, NeAC shall forward such request for hearing to CCIT of the ReAC under which AU has framed the DAO. CCIT may grant the request for hearing in accordance with guidelines to be laid down by NeAC. Hearing granted, if any, shall be conducted virtually;
  • NeAC may also share DAO to RU for the purposes of review of the DAO, inter-alia for the inclusion of various points of facts and law/ judicial precedents, etc.;
  • Where RU has made some suggestions for the purposes of modifications to the DAO, NeAC shall reassign the case to any AU, other than the one which has framed DAO, through the automated allocation system;
  • NeAC shall follow the above procedure of issuance of SCN etc. again, in all probability, till no further modification is to be proposed, or the taxpayer has no further explanations, as the case may be;
  • Upon the finalization of the order, NeAC shall serve the final order along with a notice for initiation of penalty and notice of demand;
  • Upon completion of the assessment, all the electronic records shall be transferred to the jurisdictional officer.

NeAC may transfer the case to the jurisdictional officer for completion of the assessment, at any stage of the proceedings, with prior approval of CBDT.


The scheme would bring a paradigm shift in the manner in which the assessments have been framed so far. While it may require extensive training on the part of the revenue officials, taxpayers would also need to ensure:-

  • Updated contact details on the e-filing portal (www.;
  • Timely compliance with the notices as no physical hearings to explain the issues;
  • Appropriate finance staff to support the tax teams for timely compliance as no window for face to face discussion;
  • Maintain exhaustive documentation for each and every transaction, detailing the complete sequence of events/ trail, depicting the intention clearly;
  • Clear and detailed submissions on each and every point;
  • Appropriate articulation, wherever necessary so that it could be easily understood by the tax officers;
  • Maintain documentary evidence explaining the reasons as to why these could not be furnished at the time of assessment.

The Faceless Assessment is a positive initiative by the government. Particularly, the aspect that the assessment will go through verification, technical and review mechanism. We are likely to see the quality of assessment to improve significantly. However, we would need to see how the practical difficulties of e-assessments, e.g. – Abrupt closure of the submission portal near the last dates of assessments, etc. going to be tackled in a time-bound faceless assessment scenario.

Mr. Nilesh Bhagat
Vice President – Head of Tax,

Faceless Assessment as a concept is extremely good wherein ReAC will have four units, and the assessments would be selected by AI and Machine learning by NeAC. However, the following concerns need to be addressed:

  • Complete re-orientation of the tax team and the Consultants as written submissions will be the only way to explain the company's model and claims made in Return;
  • No clarity on conflicting decisions between 2 HC, assuming favorable decision at Jurisdiction AO level and adverse decision in the state of the Assessing Officer;
  • Whether the Jurisdiction AO has to transfer the past records every time to different AO's each year and will there be a mechanism to send back the file to the jurisdiction AO once the assessment is completed.

I think there seem to a number of issues that need to be addressed and clarified, and I think large companies' faceless assessments could have been taken up at a later point in time, given the complexity of issues. They should have done it in a phased manner.

Mr. Vishwanath Kini
Vice President – Global Tax Head,
Tech Mahindra Limited