[Section 151A]- Faceless Assessment of Income Escaping Assessment

Section 151A empowers the Central Government to implement a faceless, technology-driven scheme for reassessing income that has escaped taxation under Section 147. Introduced by the Finance Act, 2021, and operationalized through the e-Assessment of Income Escaping Assessment Scheme, 2022 (effective from 29 March 2022), this provision aims to eliminate human interface, enhance transparency, and standardize procedures for reopening cases. Below is a detailed analysis of its framework, procedure, and implications.

1. Key Provisions of Section 151A

(A) Scope of the Scheme

The Central Government may notify a scheme for:

• Assessment/reassessment/re-computationunder Section 147.
• Issuance of noticesunder Section 148 (income escaping assessment).
• Conducting inquiriesor issuing show-cause notices under Section 148A.
• Sanctioning noticesunder Section 151.

(B) Objectives

• Eliminate direct interactionbetween taxpayers and tax officers.
• Automate case allocationusing risk management strategies.
• Ensure uniformitythrough team-based assessments (similar to Section 144B).

2. Structure of the Faceless Scheme

The e-Assessment Scheme, 2022 establishes:

1. National Faceless Assessment Centre (NFAC): Central hub for case allocation and coordination.
2. Functional Units:
   • Assessment Units: Draft orders based on evidence.
   • Verification Units: Cross-check documents.
   • Technical Units: Provide specialized advice (e.g., transfer pricing).
   • Review Units: Ensure legal compliance of draft orders.

3. Procedure for Faceless Reassessment

1. Automated Case Selection: NFAC identifies cases using risk parameters(e.g., discrepancies in Form 26AS/AIS).
2. Notice Under Section 148A:
   • Taxpayer receives a show-cause noticeand gets 7–30 days to respond.
3. Final Notice (Section 148): Issued if income escapement is confirmed.
4. Assessment: Conducted via NFAC and functional units, following the Section 144Bfaceless process.

4. Judicial Interpretation & Key Rulings

• Hexaware Technologies Ltd. v. ACIT (2024):
  • Notices issued by Jurisdictional Assessing Officers (JAOs)after 29 March 2022 are invalid. Reassessment must be faceless.
• Kankanala Ravindra Reddy v. ITO (2023):
  • Mandates strict compliancewith faceless procedures for Section 148A

5. Implications for Taxpayers

✅ Transparency: Reduced discretion of individual officers.

⚠️ Strict Timelines: Quick responses required (e.g., 15 days for notices).

📌 Documentation: Maintain records for 6+ years to defend against reopening.