7 Faceless Asst and DRC

Section 144B :
FACELESS ASSESSMENT
The Faceless Assessment shall be made in respect of such persons or
such cases as may be specified by the Board.
PROCEDURE FOR FACELESS ASSESSMENT

1) The NFAC shall assign the case to a specific assessment unit and
intimate the assessee that assessment in his case shall be
completed in Faceless manner;
2) The NFAC shall serve a notice u/s 143(2) or u/s 142(1) to the
assessee and the assessee shall file his response to the NFAC
which shall be forwarded to the assessment unit;
Where the assessee fails to comply with above notices, the
NFAC shall intimate such failure to the assessment unit. In such
case, the AU shall serve a show cause notice to the assessee
through NFAC requiring the assessee to give reason as to why
assessment should not be done as per best judgment.
3) The Assessment unit shall request the NFAC to –
➔ obtain further information, documents or evidence from
the assessee or any other person;
➔ conduct enquiry or verification by Verification unit;
➔ seek technical assistance from the Technical unit
[like determination of ALP, valuation of property etc.];
Accordingly, the NFAC shall serve a notice to the assessee or any
other person & assign request to Verification unit/Technical unit.
Copyright © CA SHIRISH VYAS, 2023 250

CA SHIRISH VYAS / CA FINAL / DIRECT TAX / RETURNS & ASSESSMENT
4) After taking into account all the relevant material available on the
record:
 If AU proposes to make variations in the income which are
prejudicial to the assessee then the AU shall serve a show
cause notice to the assessee through NFAC requiring him the
give reason as to why proposed variations should not be
made. After considering the reply of assessee, the AU shall
prepare an income determination proposal and send the
same to the NFAC.
 If AU does not propose to make any variations prejudicial to
the assessee then the AU shall directly prepare an income
determination proposal without issuing show cause notice
and send a copy of the same to the NFAC.
After receiving the income determination proposal, the NFAC
shall ask the AU to prepare a Draft order on the basis of such
proposal and send the same to the NFAC. However, if the NFAC
considers it necessary then it may send such proposal to a Review
unit for conducting review of such proposal. In such case, the AU
shall prepare a draft order (after considering the modifications
proposed by review unit) and send the same to NFAC.
5) After receiving the Draft order,
➔ If the assessee is not eligible for DRP then the NFAC shall ask
the AU to pass the final order which will be served to the
assessee through NFAC [along with notice of demand] and
➔ If the assessee is eligible for DRP then the NFAC shall serve
the draft order to the assessee. After receiving the draft order, the
assessee shall —
(a) file his acceptance to the NFAC or
(b) file his objections to the NFAC and DRP
within 30 days from the date of receipt of draft order.
If the assessee files his acceptance then the NFAC shall ask the
AU to pass the final order which will be served to the assessee
through NFAC [along with notice of demand]. However, if the
assessee files objections with the NFAC and DRP, the NFAC shall
send a copy of objections filed to the AU. The DRP shall issue its
directions to NFAC which shall be forwarded to AU. On the basis
of directions of DRP, the AU shall pass the final order which will
be served to the assessee through NFAC [along with notice of
demand].

Notes:
1) After completion of assessment, the NFAC shall transfer all the
electronic records of the assessee to the A.O. having jurisdiction
over such assessee.
2) If at any stage of the proceedings before it, the AU considers it
necessary then it can refer the case to NFAC for requiring the
assessee to get his accounts audited u/s 142(2A).
3) The assessment unit, verification unit, technical unit and the review
unit shall have the following authorities, namely:—
- Additional CIT
- JC
- AC/DC
- ITO and
- Such other I.T. Authority as considered necessary by CBDT.
4) All communications among the AU, VU, TU or RU or with the
assessee or any other person shall be through the NFAC by
electronic mode.
5) Personal hearing of assessee before any unit is not required.
However, if variations are proposed in the income determination
proposal or the draft order then the assessee may request for
personal hearing. Personal hearing shall be conducted
exclusively through video conferencing or video telephony,
including use of any telecommunication application software.

:
Sec. 245MA DISPUTE RESOLUTION COMMITTEE
Dispute Resolution committee (DRC) is a committee to resolve
disputes of small and medium taxpayers. The Scheme of DRC is
optional. It is an alternative to appeal i.e. the assessee can either
chose to appeal or resolve the disputes through DRC.
The main advantage of DRC is speedy resolution of disputes plus
DRC has powers to waive penalty or grant immunity from
prosecution under this Act.
➔ CONDITIONS:
An assessee is eligible to resolve disputes through DRC if
following conditions are satisfied:
(i) Returned income of such assessee is upto Rs. 50 lakhs.
(ii) The aggregate amount of Variation made in the order is
upto Rs. 10 lakhs and if the assessee is eligible u/s 144C, then
the aggregate amount of variation proposed in the draft
order is up to Rs. 10 lakhs.
(iii) The disputed order should not be based on Search/ Survey
or information received under DTAA.
(iv) Such person should not be Convicted under laws like the
Indian Penal Code, Prevention of Corruption Act, Prevention
of Money Laundering Act, Unlawful Activities Act etc.
➔ PROCEDURE:
1) Once an assessment order is passed or a draft order is
forwarded u/s 144C, the assessee can make an application
in Form 34BC to DRC within 1 month from the date of
receipt of such order (alongwith fees of Rs.1,000 and proof
of payment of tax on returned income).
2) After receiving the application, the DRC shall check the
conditions and decide whether to allow or reject the
application. If DRC decides to reject the application, then it
shall issue a show cause notice to the assessee and after
considering the reply of assessee, the application shall be

allowed or rejected. The decision allowing/rejecting the
application shall be communicated to the assessee.
3) If the application is allowed then within 30 days from the
date of such communication, the assessee shall submit a
proof of withdrawal of appeal or convey that no such
appeal proceedings is pending in his case.
4) After receiving the response of assessee within above 30
days, the DRC shall:
- call for records from the income-tax authority
- examine issues covered in the application
- seek a report from the A.O. on such issues
- call for further information from assessee
5) After considering above materials and information, the DRC
may decide whether to make modifications in the order or
not and decide whether to waive penalty/prosecution or
not. This is done by passing an order of resolution within
six months from the end of the month in which application
for dispute resolution is admitted by DRC. The DRC shall serve
a copy of such order to the assessee and A.O.
6) After receiving such order, the A.O. shall:
 In case of assessee eligible u/s 144C, pass an order of
assessment or
 In other cases, modify the order of assessment,
within one month from the end of the month in which
order of DRC is received.
7) The A.O. shall serve a copy of the modified order along with
notice of demand to the assessee specifying a date for
making the payment.
The assessee shall, furnish proof of making payment to the
DRC and the A.O.
The DRC shall [on receipt of confirmation of payment of
demand] pass an order granting immunity from
prosecution and waiver of penalty.

Notes:
1) The DRC may decide to terminate the proceedings if,—
(i) the assessee fails to cooperate with DRC
(ii) the assessee fails to submit any information to DRC
(iii) the assessee has concealed materials
(iv) the assessee has given false evidence.
(v) the assessee fails to pay the demand
In such cases, the DRC shall intimate the I.Tax Authority for
taking necessary action as per the provisions of the Act.
2) If DRC rejects the application, the assessee may file an
appeal to the CIT(A) or file objections with DRP and the
period taken by DRC in deciding on the admission or
rejection of application shall be excluded from the period
available to file such appeal.
3) Each DRC shall consist of 3 members [out of which, 2
members shall be retired officers who have held the post
of CIT level or higher post for atleast 5 years; and 1 member
shall be a serving officer not below the rank of CIT].
~~~~~~~~~~~~~~~~~

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Section 144B :

PROCEDURE FOR FACELESS ASSESSMENT

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