Faceless Assessment in Income Tax

Faceless assessment in income tax ensures transparency, reducing human intervention through an online process.
OPEN FD
Faceless Assessment in Income Tax
OPEN FD
4 min
29-September-2025

India’s tax system has taken a digital leap with the Faceless Assessment Scheme, making income tax compliance more transparent, efficient, and fair. Introduced under the E-Assessment Scheme, 2019, this initiative eliminates physical interaction between taxpayers and tax officers, reducing the scope for bias or corruption.

The system leverages artificial intelligence (AI) and machine learning (ML) to randomly allocate cases to officers across the country. Assessments are conducted electronically through the National E-Assessment Centre (NeAC) and Regional Assessment Units (ReACs), streamlining processes and improving accountability.

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Faceless assessment under Income Tax Act

The Faceless Assessment Scheme ensures impartiality and smooth processing under the Income Tax Act. Key features include:

  • Elimination of human interaction: Entirely online, minimising in-person meetings with officers.
  • Randomised case allocation: Cases assigned to officers across India to maintain neutrality.
  • Automated decision-making: AI-driven analysis for efficient processing.
  • Digital communication: Notices and orders sent electronically, saving time and paperwork.

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Assessment under Section 143(3)

Section 143(3) covers detailed scrutiny of income tax returns. The Assessing Officer (AO) verifies income, deductions, and claims to ensure accuracy. The process starts with a notice under Section 143(2), requiring supporting documents. Based on the review, the AO assesses total income and determines tax payable or refundable.

This structured scrutiny promotes accuracy and transparency, reducing errors and disputes.

Assessment under Section 143(1)

Section 143(1) deals with preliminary assessments, checking for math errors, inconsistencies, and incorrect claims electronically. The Centralised Processing Centre (CPC) processes these returns automatically without human intervention.

If discrepancies are found, an intimation is sent to the taxpayer, ensuring quick corrections and timely refunds.

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Faceless Assessment [Section 144]

Section 144 addresses best judgment assessments when taxpayers fail to comply with the law, such as non-filing or missing information. Under the faceless scheme, these assessments are conducted digitally by the National Faceless Assessment Centre (NFAC), ensuring impartiality and transparency.

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Assessment under Section 147

Section 147 empowers reassessment of income that escaped earlier evaluation. If the AO has reason to believe certain income was not reported, proceedings are initiated under Section 148. Taxpayers can present evidence, ensuring fairness and preventing misuse.

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Section 144B of the Income Tax Act

Section 144B introduces faceless assessment to strengthen transparency and efficiency. Assessments are carried out electronically through NFAC and Regional FACs (RFACs). Taxpayers receive notices and respond digitally, ensuring smooth communication and minimal human bias.

Structure for faceless assessment

Key components of the faceless assessment framework:

  • National e-Assessment Centre (NeAC): Central hub overseeing all processes.
  • Regional e-Assessment Centres (ReACs): Support local coordination.
  • Assessment Units (AUs): Conduct detailed reviews of returns.
  • Verification Units (VUs): Authenticate submitted documents and information.
  • Technical Units (TUs): Provide expertise on complex taxation matters.
  • Review Units (RUs): Ensure legal compliance and accuracy of assessment orders.

Procedure in faceless assessment

The digital procedure involves:

  1. Issuance of notice – NeAC informs the taxpayer under Section 143(2).
  2. Submission of response – Taxpayer uploads documents online.
  3. Allocation to AU – Automated system assigns the case to an Assessment Unit.
  4. Assessment and information request – AU may ask for additional details.
  5. Verification and technical assistance – VUs and TUs assist if needed.
  6. Draft assessment order – AU prepares preliminary order with any modifications.
  7. Review of draft order – RU ensures accuracy and compliance.
  8. Finalisation – NeAC communicates the final assessment, including tax payable or refund.

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Conclusion

The Faceless Assessment Scheme is a landmark step in India’s tax administration. By reducing human interaction and introducing AI-driven processes, it ensures fairness, transparency, and efficiency. Taxpayers benefit from digital communication, automated reviews, and structured assessments.

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Frequently asked questions

What is the faceless assessment scheme?
The Faceless Assessment Scheme is an initiative by the Indian government to conduct income tax assessments digitally. It eliminates direct interactions between taxpayers and tax officers, ensuring transparency and reducing bias. The process is managed through a centralised system with automated case allocation and electronic communication.

How to respond to faceless assessment in income tax?
To respond to a faceless assessment notice, taxpayers must log in to the income tax e-filing portal. They should review the notice carefully and submit required documents or explanations online within the specified deadline. All communications, responses, and submissions must be made electronically through the designated portal.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or referhttps://www.bajajfinserv.in/fixed-deposit-archivesThe company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

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