On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. In this backdrop, author CA Sachin Kumar BP (Partner, Manohar Chowdhry & Associates, Chartered Accountants) discusses the niceties and nuances of the new scheme and states that faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. The author opines that the scheme “intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.”. Encouraging the tax professionals to embrace this change, the author signs off suggesting that “Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge”

Faceless assessments and appeals - A shift from People-dependent to Process-dependent Governance

It is said Change is the only constant in this existence. That which does not change does not grow that which does not grow dies. To grow Change we must.

The change affects all of us. We respond to the change differently. Some embrace the change and some resist it. Those who resist it do so for the fear of the unknown. Those who embrace the change do so not because they do not have fear of the unknown, but they go ahead despite the fear of unknown. It is important to note that it is not the change that affects us but how we respond to the change and the disruptions that affect us. It is often not the calamity but the fear of calamity that affects us.

The Central Government is making tireless efforts to bring in the change in the Government functioning be it, Direct benefit transfer, Transparent Auctioning and bidding of large projects,  GST, the recent faceless assessment and faceless appeals. One aspect stands out in the above-mentioned schemes of the Government is anonymized rules are a better way of Governance than the relational network. Rule-based decision making in Governance is consistent as biases are not built in the decision-making. It is interesting to understand the Bureaucratic theory of Max Weber who was a political economist.

According to the Bureaucratic theory of Max Weber,  characteristics of Bureaucracy are as under

The income tax department has a clear hierarchical structure, clear selection process, career orientation of employees and well-documented Rules and regulations to implement income law in India. However, it lacked Functional Specialisation, Impersonality was obscure. The assessing officer was expected to issue notice, make an enquiry, cross verification, examination of books of accounts, the examination of witnesses, recording of statements, besides he was expected to know technical matters like transfer pricing, international taxation to make an assessment. Assessments were finalised on discussion with the taxpayer or his Counsel. Relationship trust between the Assesssing officer and the taxpayer / Counsel played a crucial role in finalising the assessments or appeals.

On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. It is interesting to note that the scheme of the faceless assessments and faceless appeals has put the transaction trust above Relationship trust while conforming to the Bureaucratic theory of Max Weber in its entriety.

Faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. It intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.

As per the scheme, the National  Faceless Assessment Centre shall be the nodal agency for any communication between the taxpayer and the Assessing Officer. All communication between the National  Faceless Assessment Centre & the taxpayer or his counsel will happen only through electronic mode. Now the assessments will no more be discussion-based but it will only be submission-based. Taxpayers used to explaining the nuances in person would take some time to adjust to only written filings. The taxpayer has to necessarily make written submissions over an email except when he gets an opportunity of personal hearing where he has sought one that too only after issue of the Show-cause notice. The personal hearing will also happen through video conference.

As regards the functional specialisation, the scheme provides that the National  Faceless Assessment Centre happens to be the central location of National Faceless Assessment Centre. It facilitates the conduct of proceedings in a centralised manner. Regional Faceless Assessment Centre facilitates the conduct of faceless assessment proceedings in the cadre controlling region of a Principal Chief Commissioner of IncomeTax.

Assessment units perform the function of making the assessment, seeking information or clarification, analysing the material furnished by the taxpayer or any other person; and such other functions as may be required for making an assessment.

Verification Units, Technical Units & Review Units assist with the enquiry, cross verification, an examination of books of accounts, an examination of witnesses, recording of statements, guidance on any technical matters and review of the draft assessment order.

Minimum Government, Maximum Governance, is oft repeated slogan of this Government. It intending to achieve it by changing the governance from People-dependent to Process-dependent. Faceless assessment is one such example – a significant change in governance sytle. It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.

While the government has made its intention clear to change the governance style it is imperative that the stake holders have to do so at the earliest. Hence, the tax officers, tapayers and tax Counsel have to adapt to this change in order to survive and flourish.

That which does not change does not grow; that which does not grow dies. Therefore,change is imperative. Let us embrace changegracefully. Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge, proficiency and skills and to convert and crystallize the same into definite and distinct advantage to stakehodlers in particular and to the country in general.