- Central Government introduced E-assessment Programme in 2019
- IT Department introduces the Faceless Penalty Scheme
- Penalties issued will undergo multiple layers or review
The Income Tax Department has introduced a “Faceless Penalty Scheme” which will handle the recommendations for penalties which are issued under its faceless assessment programme.
On Tuesday, the scheme notified that it seeks to make sure that any order which comes from the faceless assessment of taxable income is foolproof and has undergone several layers of review before a penalty is confirmed or imposed.
Under this scheme, a National Faceless Penalty Centre (NFPC) and several regional units will be established. This Central Government will then allocate a recommendation for a penalty which will be made under the faceless assessment initiative to its regional units who will be able to confirm or reject the penalty.
The NFPC will also be able to refer the recommendation from its penalty unit for review and modification by another unit(s) before it finally decides to pass an order in the case which will result in confirming or dropping the penalty, as per an official order.
The notice said, “The tax department scaled up its faceless or e-assessment programme in 2019 to eliminate personal bias and subjectivity in tax assessment proceedings by randomly allocating cases to field officers and eliminating physical interface between tax payers and officials. Personal hearings can be sought under the scheme which a senior tax official is empowered to grant. Faceless assessment was later complemented with a faceless appeals scheme as well. Now the faceless penalty scheme has been added,” as per Mint.
It was said that more than 58,000 cases were identified for the faceless assessment in the first phase, of which final orders have already been passed in more than 24,700 cases through the faceless system.
In 95 per cent among these cases where the final orders have been passed, the explanations which was given by the tax payers to email notices were accepted and no addition of income or imposition penalty were made, as per the finance secretary Ajay Bhushan Pandey who told this to Mint in an interview on 1st January.
Only in 6 per cent of the cases, which comes out to be around 1,500 cases, understatement of income was observed and all the required and necessary addition of income and penalty have been imposed, Pandey had said.
Any appeal against the final verdict from the National Faceless Penalty Centre (NFPC) under this scheme could be made before a commissioner who will be handling the appeals or before the National Faceless Appeal Centre.
The Direct and Indirect Tax authorities are not relying more on the automation and technology for the assessments. This can be seen by the “extensive data collection about transactions in the economy by way of reporting requirements placed on various agencies and by collection or deduction of taxes at source. This enables the authorities to detect mismatches and quickly identify tax irregularities,” as per the report.
The determined approach from the Income Tax and the GST authorities aims to improve the formalisation of the Indian economic activities which will in turn help in broadening the tax base.