Be Fearless with Faceless

The implementation of faceless assessments was announced by the Prime Minister with immediate effect and faceless appeals w.e.f. 25th September in line with the vision of ease of doing business in India.

This announcement was in furtherance to the steps announced by the Finance Minister, while presenting the Union Budget 2019 introducing the scheme of faceless assessment to eliminate the physical presence of assessee. Further, to enlarge the scope of this, the scheme of faceless appeals was introduced in the Finance Budget, 2020.

Under this scheme, the government has constituted a body called National E- Assessment Centre (NEC) which will conduct the full assessment process. The system will select the case for assessment and hand over the same to this newly constituted body. This scheme is designed in such a manner that both assessee as well as the assessing officer does not know the identity of each other.

Apart from NEC which will be based at New Delhi, 8 Regional E- Assessment Centres (REC) have been opened. Under each REC, one assessment unit, one verification unit, one technical unit and one review unit have been opened.

NEC is responsible for issuing notice to the assessee for assessment, specifying the reason for selection of his case for assessment. On receipt of the notice, the assessee may file his response to NEC.

The NEC will then assign the selected case to a specific assessment unit through automated allocation method and on the receipt of the case by assessment unit, it may request NEC for any additional information from the assessee, or conduct an enquiry and/or verification or request for technical assistant from the technical unit.

The assessment unit, after considering all the relevant materials, shall make a draft assessment order either accepting the returned income of the assessee or modifying the return income of the assessee and send a copy of such order to the NEC. This draft order includes details of penalty proceedings, if any.

Upon receipt of draft assessment order, NEC shall review the same. Upon its satisfaction, NEC shall issue the demand/refund order to the assessee or issue a show cause notice to assessee calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order.

However, if NEC is not satisfied with the draft order of assessment unit, they may assign the draft assessment order to the review unit for conducting review of such order.

Upon receipt of draft order from NEC, the review unit may either agree with the draft assessment order or suggest modification to the NEC and the same shall be communicated by the NEC to the assessment unit.

The assessment unit, after considering the suggestions of review unit, will send a final draft assessment order to NEC.

In case, where show cause notice has been served to the assessee, the assessee will furnish his response to NEC. NEC will then finalise the assessment as per the draft assessment order or send the response received from the assessee to the assessment unit. The assessment unit will consider the response received from assessee and make the revised draft assessment order and send it to NEC.

In case, revised draft assessment order is prejudicial to the interest of assessee, the NEC will provide an opportunity of being heard to the assessee.

The NEC shall, after completion of assessment, transfer all the records to the assessing officer having jurisdiction over such case and direct for further course of action like imposition of penalty, recovery and collection of demand, etc.

In case, the assessee does not agree with the order of NEC, he/she may file an appeal before commissioner appeals having jurisdiction over the Jurisdictional Assessing Officer.

However, under the faceless appeals procedure to be effective from 25th September the appeal will be randomly allotted to any officer in the country. Since, this is a faceless appeal, the identity of the officer will remain unknown and there is no need for physical presence. However, the decision will be team based.

Cases related to serious frauds, major tax evasion, sensitive and search matters, cases relating to international taxation and cases related to black money act and benami property are not covered under this faceless appeal scheme.

What does communication via electronic mode mean?

All communications between the National e-assessment Centre and the assesse as well as all internal communications between the National e-assessment Centre, Regional e-assessment Centres and various units, or his authorized representative, will be made exclusively by electronic mode.

How will the electronic records be delivered?

First, all the electronic records will be authenticated by affixing digital signature or electronic authentication technique. Subsequently, it will be delivered by way of:

  • Placing a copy to the assessee’s registered account; or
  • Sending a copy to the assessee’s registered email address; or
  • Uploading a copy on the assessee’s Mobile App

Note: A real-time alert will be sent to the assessee or his/her authorized representative at every point of communication. The assessee will have to respond to such a communication through his/her registered account only. Finally, an acknowledgment will be received upon successful submission of response which will deem the response to be authenticated.

Procedure for faceless e-assessment

  • A notice under section 143(2) of Income Tax Department will be sent by NEC. The notice will specify the issues for selection of the assessee’s case for scrutiny.
  • The assessee may respond to NEC within 15 days of the date of the receipt of the notice.
  • NEC will assign the case to one of the regional e-assessment centres through an automated allocation system.
  • The regional e-assessment centre may request NEC to:
  • Obtain necessary information or documents or evidence from the assessee: NEC will issue an appropriate notice to the assessee for obtaining the relevant information.
  • Conduct enquiry or verification by the verification unit:NEC will assign the request to a verification unit via an automated allocation system.
  • Seek technical assistance from the technical unit:NEC will assign the request to a technical unit in any of the Regional e-assessment centres via an automated allocation system.
  • The assessment unit after taking into account all the information will prepare a draft assessment order either accepting or modifying the ITR of the assessee. A copy of this order will be sent to NEC.

Note: The assessment unit will provide the details of the penalty proceedings in the assessment order sent to NEC.

  • NEC will examine the draft assessment order via an automated examination tool in accordance with the approved risk management strategy and may:
  • Finalize the draft assessment order and issue a notice to the assessee to initiate penalty proceedings along with a demand or refund notice, if applicable.
  • Give the assessee a chance by sending a notice to call him/her to show cause as to why the assessment should not be completed as per the draft assessment order (when a modification is proposed).
  • Assign the draft assessment order to one of the review units in any Regional e-assessment centres via an automated allocation system.

What to do when a show-cause notice is issued after the e-assessment?

When a show-cause notice is issued to an assessee, he/she should furnish the response within the specified time limit.

The assessment unit after receiving the response from the assessee will prepare a revised draft assessment order and send it to NEC which may:

  • Finalize the assessment as per the revised draft assessment order and serve a copy of the order and the notice to the assessee for initiating penalty proceedings; or
  • Send another show-cause notice to the assessee, if a modification is proposed.

However, when an assessee fails to submit the response within the specified time limit, NEC will finalize the assessment as per the initial draft assessment order submitted by the Assessment Unit.

What happens after Review Unit receives the draft assessment order?

When NEC sends the draft assessment order to one of the Review Units in any Regional e-assessment Centre via an automated allocation system, the Review Unit will review the order and may:

  1. Agree with the draft assessment order: NEC will finalize the draft assessment order. Alternatively, if a modification is proposed, the center will send a show-cause notice to the assessee.
  2. Suggest modification to the draft assessment order: After considering the modifications, the assessment unit will send the final assessment order to the NEC. The center may finalize the order or send a show-cause notice to the assessee, if a modification is proposed. 

What happens after completion of e-assessment?

After finalizing the draft assessment order, NEC will transfer all the electronic records to the Assessing Officer (AO) having jurisdiction over the case. Then the AO may take the following actions: 

  • Imposition of penalty;
  • Collection and recovery of tax demand;
  • Rectification of mistake;
  • Giving effect to appellate orders;
  • Submission of remand report or any representation to be made or any record to be produced before the Commissioner, Appellate Tribunal or Courts; 
  • Proposal seeking sanction for launch of prosecution;
  • Any other reason considered to be appropriate by NEC. 

Note: The penalties, if applicable will be imposed as per the respective sections of the Income Tax Act, 1961.

How is the new e-assessment scheme different from the offline scrutiny assessment?


E-assessment Scheme, 2019

Offline scrutiny Assessment

Mode of communication

Both internal and external communications will be done only via electronic mode including emails and video conferencing.

By means of sending notices and responses in paper format.

Personal interaction

No personal interaction between the assessee and the Income Tax Department representative such as assessing officer.

In some cases, the assessee had to personally visit the department and present answers to the Assessing officer.   

Units involved

This scheme involves the National and Regional e-assessment centres along with Verification and Review units. 

This scheme only involved the Assessing Officer and the assessee.


A draft assessment order prepared by the assessing unit is examined by the National e-assessment Center. The order is then finalized/modified/reviewed to prepare a final draft. The final draft is sent to the assessing officer who implements the final decision as per the order.

The Assessing Officer evaluated the ITR and completed the assessment accordingly. 

Pros and Cons

Communication via electronic mode will make the process more fair and just.

In certain cases, the personal interaction led to undesirable practices on the part of tax officials.

Frequently Asked Questions (FAQs)

What will be the advantage of the e-assessment scheme?

Under the e-assessment scheme, there will be no personal interaction between the assessee and the assessing officer. Also, the Assessing Unit will be selected by an automated system without any bias. Thus, chances of any undesirable practices on the part of tax officials will decrease making the process of scrutiny assessment more fair and just. 

What effect will e-assessment have on assessees?

As the mode of communication under the e-assessment scheme will be solely electronic, the assessee will no longer be required to post documents or personally meet the assessing officer to answer any queries. 

What to do when a show-cause notice is issued?

A show-cause notice is sent when a modification is proposed in the previously filed ITR. Upon receiving this notice, you should reply within the specified time limit from your registered account. Remember to authenticate the response by affixing the digital signature. Also, make sure that you receive an acknowledgement upon successful submission of the response.

How will the penalties be imposed after the e-assessment?

After successful e-assessment, a copy of the final draft assessment order is sent to the Assessing Officer having jurisdiction over such case. Subsequently, penalties will be imposed as per the chapter XXI of the Income Tax Act. Relevant notices will be sent to the assessee in such a case.


The scheme is an attempt to honour the honest taxpayers with an objective to strengthen the government’s direct tax reforms. The income tax department’s way of dealing with taxpayers has always been considered an unpleasant one.

Faceless e-assessment procedure point to a shift in the focus of the government from considering the department from a revenue needs to thinking of it as one supposed to serve the assessee by easing evaluation system.

It will do away with physical interface to remove unethical practices eventually benefiting honest taxpayers.

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