TaxTMI 
TaxTMI 
Future of Faceless Assessment :Clause 273 of the Income Tax Bill, 2025 Vs. Section 144B of the Income-tax Act, 1961
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....r tax administration and improved taxpayer experience. This commentary provides a detailed analysis of Clause 273, compares it with the existing Section 144B of the Income-tax Act, 1961, and considers the relevant aspects of Rule 14C. The analysis will cover the objectives, detailed provisions, practical implications, and potential challenges, as well as highlight the similarities, differences, and possible future directions. Objective and Purpose The principal objective of Clause 273 is to codify and expand the framework for faceless assessment in the new Income Tax Bill, 2025. The legislative intent is to: * Ensure assessments are conducted in a manner that is impartial, transparent, and free from undue influence or bias; * Leverage digital technology to streamline the assessment process, reduce human interface, and optimize resource allocation; * Enhance taxpayer confidence in the fairness and efficiency of the tax administration system; * Align the assessment process with global best practices in tax administration. Historically, the assessment process under the Income-tax Act, 1961, was largely manual and involved significant interaction between the taxpayer and th....
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....proper incorporation of issues. This multi-unit structure is designed to segregate functions, minimize discretion, and introduce checks and balances at various stages. 4. Functions and Powers of Units (Sub-sections 4 and 5) Sub-section (4) clarifies the respective roles: * Verification, technical, and review units facilitate the assessment process. * The assessment unit is responsible for making the actual assessment order, after considering all material and hearing the assessee, and determining the tax/refund due. Sub-section (5) provides that these units are to be manned by Assessing Officers with powers assigned by the Board, ensuring that only authorized officers perform these functions. 5. Composition of Units (Sub-section 6) This sub-section lists the authorities eligible to be part of these units, including Additional/Joint Commissioners/Directors, Deputy/Assistant Commissioners/Directors, Income-tax Officers, and other staff or consultants as considered necessary. This ensures adequate seniority, expertise, and administrative support within the units. 6. Communication Protocol (Sub-sections 7 and 8) All communications between units, the NFAC, the assessee, and t....
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....difications. 3. Definitions and Technological Provisions Section 144B contains detailed definitions relating to digital processes (automated allocation, electronic record, digital signature, hash function, real-time alert, etc.), reflecting its focus on technological precision. Clause 273 includes only the most essential definitions, again implying reliance on rules or notifications for operational details. 4. Jurisdiction and Transfer Both provisions allow for the transfer of cases to the jurisdictional AO where faceless assessment is not feasible or appropriate, subject to Board approval. The circumstances and mechanisms for such transfer are similar. 5. Scope of Application Section 144B applies to assessments u/ss 143(3), 144, and 147, whereas Clause 273 refers to assessments, reassessments, or recomputations u/s 270(10), 271, or 279 of the Bill. The specific cross-references may reflect a reorganization or renumbering of provisions in the 2025 Bill, but the overall scope-covering regular and special assessments-remains comparable. 6. Role of Review and Technical Units Both provisions envisage a review mechanism to ensure quality control and consistency in assessment ord....
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....ment process; * Need for digital literacy and timely response to electronic communications; * Opportunity for video-conference hearings, but possible challenges for those lacking internet access or digital infrastructure. 2. For the Tax Administration * Enhanced efficiency through centralized allocation, specialization, and use of technology; * Improved resource utilization and workload balancing via automated allocation systems; * Requirement for robust IT systems and data security protocols; * Need for continuous training and capacity building for officers in digital processes. 3. For the Legal System * Potential reduction in litigation arising from subjective or arbitrary assessments; * Greater auditability and traceability of assessment decisions; * Possible new grounds of challenge relating to procedural fairness, data privacy, or technical glitches. 4. Compliance and Procedural Aspects * Strict timelines for responses and submissions, with electronic tracking of deadlines; * Authentication of all records via EVC or digital signature, as per Rule 14C; * Requirement for taxpayers to maintain updated contact details and monitor electronic communication....