Faceless Assessment Under Section 144B of the Income Tax Act

Introduction

Section 144B of the Income Tax Act introduces a modern approach to income tax assessments, focusing on transparency, efficiency, and accountability. Through the Faceless Assessment Scheme, the Central Government eliminates the direct interface between the Assessing Officer and the taxpayer, leveraging technology to streamline the process. The scheme optimises resource use via functional specialisation and economies of scale, while enabling a team-based approach for determining arm’s length pricing with dynamic jurisdiction. This article provides a detailed overview of the faceless assessment mechanism under Section 144B.

What is Section 144B of the Income Tax Act?

Section 144B of the Income Tax Act introduces the faceless assessment mechanism, a key initiative by the government to enhance transparency, efficiency, and accountability in tax administration. Under this system, income tax assessments are conducted electronically, without any direct interaction between taxpayers and assessing officers. All communications, including notices, responses, and hearings (if required), are handled through the National Faceless Assessment Centre (NFAC).

The primary objectives of Section 144B are to:

Reduce personal biases and curb corruption
Streamline the assessment process
Make the system more taxpayer-friendly

Importance of Section 144B

Section 144B has significantly reformed the traditional tax assessment process. Its key benefits include:

Transparency and Objectivity
Eliminates direct interaction between taxpayers and officials, reducing the risk of bias or undue influence.
Efficiency and Timeliness
Digital processes and automation accelerate case resolution, reducing delays and administrative burden.
Taxpayer Convenience
Taxpayers can manage assessments online without visiting tax offices, benefiting those in remote areas or with tight schedules.
Uniformity and Consistency
Standardized procedures across India ensure consistent treatment of taxpayers.
Reduced Litigation
Clear processes and impartial assessments minimize disputes and legal challenges.
Enhanced Accountability
Digital records create transparency and an audit trail for all actions taken by tax authorities.

Key Provisions of Section 144B

Section 144B establishes a robust framework for faceless assessment. Key provisions include:

Faceless Assessment: Assessment is conducted electronically with no physical interaction.
National e-Assessment Centre (NeAC): Central hub coordinating the faceless assessment process.
Assessment Units: Prepare draft assessment orders and examine evidence independently.
Review Units: Review draft orders for accuracy and fairness.
System-Driven Allocation: Cases assigned automatically to units to ensure impartiality.
Electronic Communication: Notices, responses, and orders exchanged digitally.
Opportunity for Hearing: Taxpayers can request virtual hearings.
Rectification Mechanism: Allows correction of errors in assessment orders.

Faceless Assessment Under Section 144B

Faceless assessment is designed to reduce taxpayer harassment, enhance compliance, and maintain transparency. Assessments are handled by different teams of tax officials, often in separate locations, to minimize bias and corruption.

Key Features:

No Direct Human Interface: Entirely digital assessment process.
Team-Based Assessment: Experts handle each stage of assessment.
Dynamic Jurisdiction: Cases allocated based on expertise, not location.
Technology-Driven: Uses analytics and AI to scrutinize returns.
Transparency and Accountability: Digital audit trail ensures fairness.
Ease of Compliance: Taxpayers respond online.
Expedited Resolution: Streamlined processes ensure quicker closure of cases.

Procedure of Faceless Assessment

Case Selection and Notice
NFAC selects cases and issues notices electronically under Section 143(2).
Case Allocation and Assessment Unit
Cases assigned to assessment units; additional information can be requested digitally. Technical units assist in specialized areas.
Draft Assessment Order
Assessment units prepare a draft, which may be reviewed by NFAC or review units.
Show Cause Notice (if required)
Taxpayers can respond to notices if the draft order affects their interests.
Final Assessment Order
NFAC finalizes the order based on inputs from assessment and review units and communicates it electronically.
Dispute Resolution Panel (DRP)
Taxpayers can raise objections; DRP recommendations are incorporated before finalization.
Case Closure
Electronic records are transferred to the jurisdictional Assessing Officer.

Centres and Units for Faceless Assessment

National Faceless Assessment Centre (NFAC): Central hub coordinating the faceless process.
Regional Faceless Assessment Centres (RFAC): Facilitate assessments in their respective regions.
Assessment Units: Prepare draft orders based on gathered evidence.
Verification Units: Conduct inquiries and examine records.
Technical Units: Provide expertise on accounting, valuation, IT, transfer pricing, and legal matters.
Review Units: Ensure accuracy and fairness of draft orders.

Electronic Communication

Digital Records: Notices, orders, and responses are digitally signed for authenticity.
Electronic Submission: Taxpayers submit responses online.
Time & Place: Determined as per the Information Technology Act, 2000.
No Personal Appearance: Interactions are electronic; video conferencing is available if requested.

CBDT Notification on Section 144B

On August 1, 2024, the CBDT expanded the powers of Income Tax Verification Units, allowing physical verification in certain cases:

Absence of sufficient digital data
Non-compliance with notices
Need for on-ground inspection of assets or premises

This ensures thorough investigations while maintaining the faceless assessment framework.

About the Author

Ravi

Ravi is a seasoned legal writer who simplifies complex legal concepts into clear, actionable guidance. He helps entrepreneurs navigate their legal responsibilities, empowering them to build compliant, confident, and sustainable businesses.

January 9, 2026