Faceless Scheme

​​​​​In the annual conclave of Tax Administration Authorities called 'Rajaswa Gyan Sangam' held in June 2016, our Hon'ble Prime Minister Sh. Narendra Modi Ji had expressed his desire to bring reforms in tax administration in the form of an approach of 'RAPID', which stands for Revenue, Accountability, Probity, Information and Digitisation.

With a view to transforming the age-old conventional methods of manual assessments, and to ensure greater transparency, efficiency and accountability and curbing undesirable practices in the tax administration system, the "E-Assessment Scheme 2019", was launched on 07-10-2019, with the setting up of National e-Assessment Centre, in New Delhi and on pilot basis 58,322 regular assessment cases for the AY 2018-19 were being shortlisted under the scheme.

On 13-8-2020, our Hon'ble PM Sh. Narendra Modi had launched a new platform for transparent taxation - 'honouring the honest', and the major thrust of this platform is on three path breaking and bold reforms: Faceless Assessments, Faceless Appeals and the Citizens Charter.

With the launch of the 'honouring the honest' taxation platform, w.e.f. 13-08-2020, the e-Assessment Scheme, 2019 was replaced with the new Faceless Assessment Scheme, 2019, and all the regular assessments under Section 143(3) for the AY 2018-19 and all pending income escaping assessments under Section 147 except the cases under the central and international taxation charges, have been covered under this Faceless Assessment Scheme, 2019.

The CBDT, in the exercise of its powers conferred by Section 143(3A) of the Income-tax Act, 1961, has issued a notification dated 13-8-2020, bearing F.No. S.O. 2745 (E), making certain crucial and significant amendments in the E-Assessment Scheme, 2019, notified vide notification dated 12-9-2020, bearing F.No. S.O. 3264 (E). It has been provided with that w.e.f. 13-08-2020, the "E-Assessment Scheme 2019", shall be changed to "Faceless Assessment Scheme 2019", and all E-Assessments shall be conducted in a faceless manner.

The Taxation and Other Laws (Relaxation and Amendment of Certai​n Provisions) Act, 2020 expanded the scope of the e-governance initiative to cover the entire process of assessments, rectifications, revisions etc., under the regime of faceless proceedings. The Amendment Act incorporated the faceless assessment scheme in Section 144B. Section 144B mandates the conducting of income tax assessments in a faceless manner, and prescribes a detailed procedure to be followed in the conduct of such faceless assessments. All the legislative provisions included in the Faceless Assessment Scheme, as notified in the CBDT Notifications Nos. S.O. 2745 and 741(E) viz. definitions, procedure for faceless assessments, exchange of communication between the assessee and the income-tax department in electronic mode, authentication of electronic records, no personal appearance of assessees in the income tax department offices or centres etc., have been inserted in this newly inserted Section 144B​, w.e.f. 01-04-2021.

The Central Government has undertaken a number of measures to make the processes under the Income Tax Act, electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. A series of futuristic reforms have been introduced in the domain of Direct Tax administration for the benefit of taxpayers and economy. This started with faceless assessment in electronic mode involving no human interface between taxpayers and tax officials. The faceless procedures are being introduced in a phased manner in the Income Tax Act, 1961.

As part of this process of making the tax administration transparent and efficient, enabling provisions for notifying faceless schemes under sections 92CA, 130, 135A, 144C, 151A, 245D, 245MA, 245R, 250, 253,255, 264A, 274 and 279, in line with the faceless assessment and faceless appeal schemes, have been introduced in the Income Tax Act, 1961.

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​​​3.1. Key characteristics of new faceless regime of assessments

The assessments under Section 144B of the Income-tax Act, 19​61 are more popularly referred to as the 'Faceless Assessments' or the 'Jurisdiction-less Assessments'. Let us understand why these assessments are being referred so.

(a) Faceless assessments: These assessments are being referred to as 'Faceless' simply because the assessee will not get to see the face of his/her assessing officer. In other words, the assessee will not be able to know who will conduct his/her assessments. The faceless assessments completely eliminate the physical interface between t​he assessee and the assessing authority and instead involves the electronic interface right from the selection of the cases for the scrutiny purpose with the help of an 'automated allocation system' involving an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimising the use of resources, and the conduct of assessments exclusively in electronic mode via the 'e-Proceedings' utility of the e-Filing portal of Income-tax department's website, and finally the review and examination of the assessment orders using 'automated examination tool' involving therein an algorithm for standardised examination of draft assessment orders, by using suitable technological tools, including artificial intelligence and machine learning, with a view to reducing the scope of discretion.

(b) Jurisdiction-less assessments: These assessments are referred to as 'Jurisdiction-less' because these are conducted by a Team/Group of Expert Income Tax Officers at multiple-level units, viz. National Faceless Assessment Centre (NaFAC), Assessment Unit, Verification Unit, Technical Unit and Review Unit, and are not conducted by an individual jurisdictional assessing officer. The cases shall be assigned by NaFAC to an assessment unit based on an 'automated allocation system' involving an algorithm for the randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning.

3.2. Restructuring and re-organisation of the income tax department

Section 144B(3) provides that the CBDT may, for the purposes of conduct of faceless assessment, set up the following Centre and units and specify their functions and jurisdiction, namely:

(1)  National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner;

(2)  Assessment units, to conduct the faceless assessment, to perform the function of making the assessment, which includes identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making a faceless assessment, and the term "assessment unit", wherever used in this section, shall mean an assessing officer having powers so assigned by the Board;

(3)  Verification units, to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification and the term "verification unit", wherever used in this section, shall mean an assessing officer having powers so assigned by the Board. Also, the function of VU for faceless assessment may also be performed by a VU located in any other faceless centre set up under the provisions of the Act or under any scheme notified under the provisions of the Act, and the request for verification may also be assigned through the NaFAC to such verification unit.

(4)  Technical units, to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance, which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, the management or any other technical matter under the Income-tax Act or an agreement entered into under section 90 or section 90A which may be required in a particular case or a class of cases, under this section and the term "technical unit", wherever used in this section, shall mean an assessing officer having powers so assigned by the Board.

(5)  Review units, to facilitate the conduct of faceless assessment, to perform the function of the review of the income determination proposal assigned to it, which includes checking whether the relevant and material evidence has been brought on record, relevant points of fact and law have been duly incorporated, the issues requiring addition or disallowance have been incorporated and such other functions as may be required for the purposes of review and the term "review unit", wherever used in this section, shall mean an assessing officer having powers so assigned by the Board.

3.3. Procedure of conduct of faceless assessments

All regular assessments in Section 143(3), income escaping assessments or re-assessments in Section 147, and best judgement assessments in Section 144 of the Income Tax Act, except those cases falling under the Central Charges, i.e., search and survey cases, and international taxation charges, are to be conducted in a faceless manner, as per the procedure and manner stipulated in Section 144B of the Income Tax Act, 1961.

Section 144B(1) stipulates the modified procedure of the conduct of faceless assessments as under:

(1)  Assignment of case on an automatic allocation basis and intimation to the assessee by NaFAC: The National Faceless Assessment Centre (NaFAC) shall assign the case selected for the purposes of faceless assessment to a specific assessment unit (AU) through an automatic allocation system and intimate the assessee that assessment in his case shall be completed as per the said section.

(2)  Serving of notice & furnishing of response by the assessee through NaFAC: The assessee shall be served a notice under Section 143(2) or under Section 142(1) o​f the Act through the NaFAC. The assessee may file his response to the aforementioned notice, within the date specified in such notice, to the NaFAC, which shall forward the same to the AU.

(3)  Requisition for further information from the assessee by AU through NaFAC: The AU may make a request, through the NaFAC, for obtaining such further information, documents or evidence from the assessee or any other person, as it may specify, and the NaFAC shall serve appropriate notice or requisition on the assessee or any other person for obtaining the same.

(4)  Request by AU through NaFAC for assistance in the enquiry by Verification Unit: The AU may also make a request, through the NaFAC, for conducting enquiry or verification by Verification Unit (VU), and the request shall be assigned by the NaFAC to a VU through an automated allocation system.

(5)  Request by AU through NaFAC for technical assistance by Technical Unit: The AU may also make a request for a reference to the Technical Unit (TU) for seeking technical assistance in respect of the determination of arm's length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter and the request shall be assigned by the NaFAC to a TU through an automated allocation system.

(6)  Sending reports received from VU & TU by NaFAC to AU: The NaFAC shall send any report received from the VU or TU to the AU.

(7)  Furnishing of response by Assessee: The assessee or any other person, as the case may be, shall file his response within the specified or extended time, in compliance with the said notice served by NaFAC, at the request of AU, to the NaFAC, which shall forward the reply to the AU.

(8)  Intimation of failure of the assessee to respond: If the assessee fails to comply with the said notice served by NaFAC, at the request of AU, or the earlier notice under Section 143(2) or under Section 142(1), the NaFAC shall intimate the same to the AU.

(9)  Issuing of show cause notice (SCN) under Section 144 to assessee: The AU shall serve upon the assessee, through NaFAC, a show cause notice under Section 144 giving him the opportunity to explain why the assessment in his case should not be completed to the best of its judgement.

(10)  Furnishing of response by the assessee to SCN: The assessee shall file his response to the show-cause notice under Section 144 of the Act, within the time specified in such notice or approved extended time, to the NaFAC which shall forward the same to the AU.

(11)  Preparation of income or loss determination proposal by AU:

 a)  If the assessee fails to respond, the NaFAC shall intimate the same to the AU. After taking into account all the relevant material available on the record, the AU shall prepare in writing an income or loss determination proposal where no variation prejudicial to the assessee is proposed and send the same to the NaFAC.

 b)  In any other case, the AU shall serve a show cause notice on the assessee stating the variations proposed to be made to the income of the assessee and calling upon him to submit why the proposed variation should not be made through the NaFAC.

 c)  The assessee shall file his reply to such show cause notice, to the NaFAC, on the date and time as specified in the notice or within the approved extended time, and NaFAC shall forward the reply to the AU.

 d)  If the assessee fails to respond within the specified or extended time, the NaFAC shall intimate the same to the AU.

 e)  After considering the response of the assessee or the intimation of failure of the assessee to file a response received from NaFAC and all relevant material available on the record, the AU shall prepare an income or loss determination proposal and send the same to the NaFAC.

(12)  Personal Hearing through Video Conferencing

 a)  in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a show cause notice upon him, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit.

 b)  Where the request for a personal hearing has been received, the income-tax authority of the relevant unit shall allow such a hearing through NaFAC, which shall be conducted exclusively through video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

 c)  Any examination or recording of the statement of the assessee or any other person (other than the statement recorded in the course of survey under section 133A) shall be conducted by an income-tax authority in the relevant unit, exclusively through video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(13)  Action on income or loss determination proposal & preparation of draft order in case of assessee other than eligible assessee under Section 144C:

a) Upon receipt of such income or loss determination proposal, with or without any variations proposed to the income of the assessee, as the case may be, the NaFAC may, on the basis of guidelines issued by the Board, convey to the AU to prepare draft order in accordance with the income or loss determination proposal, and the AU shall thereafter prepare a draft order.

b) The NaFAC may also assign the income or loss determination proposal to a Review Unit (RU) through an automated allocation system, which shall conduct a review of such order, prepare a review report and send it to NaFAC.

c) The NaFAC shall forward the review report received from the RU to the AU, which had proposed the income or loss determination proposal. The AU may accept or reject some or all of the modifications proposed in such review report, prepare a draft order accordingly, and send it to NaFAC.

(14)  Passing of final assessment order in case of assessee other than eligible assessee under Section 144C:

 a)  In any case, other than that of the eligible assessee under Section 144C, the NaFAC shall convey to the AU to pass the final assessment order in accordance with such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings, if any, and send it to the NaFAC.

 b)  The NaFAC shall serve a copy of the final assessment order, notice for initiating penalty proceedings, if any and the demand notice to the assessee.

(15)  Preparation of draft order & passing of final assessment order, in case of eligible assessee under Section 144C:

 a)  The NaFAC shall, upon receiving a draft order in a case of an eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee under Section 144C(1), serve such draft order on the assessee.

 b)  An eligible assessee, as referred to in Section 144C, has to file his acceptance of the variations proposed in such draft order or file objections, if any, to such variations with the Dispute Resolution Panel, under Section 144C and the NaFAC, within the period specified in sub-section (2) of the said section.

 c)  In case the variations proposed in the draft order are accepted by the assessee or not objected to within the time given in Section 144C(2), the NaFAC shall inform the AU of the same, which shall pass the assessment order, on the basis of the draft order, within the time allowed under Section 144C(4) and initiate penalty proceedings, if any, and send the order to the NaFAC.

 d)  Where the eligible assessee files objections with the Dispute Resolution Panel against the variations proposed in the draft order in his case, the NaFAC shall send such intimation along with a copy of such objections to the AU.

 e)  Upon receipt of the directions issued by the Dispute Resolution Panel in the case of an eligible assessee, the NaFAC shall forward such directions to the AU.

 f)  The AU shall complete the assessment within the time allowed in Section 144C(13) and initiate penalty proceedings, if any, in conformity with the directions issued by the Dispute Resolution Panel under Section 144C(5), and send a copy of the assessment order to the NaFAC.

 g)  The NaFAC shall, upon receipt of the final assessment order, in the case of an eligible assessee under Section 144C or in other cases, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice.

(16) Communication between units

All communications:

i. among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre;

ii.between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and

iii. between the National Faceless Assessment Centre and various units shall be exchanged exclusively by electronic mode:

However, the board may specify circumstances wherein the enquiry or verification conducted by the verification unit may not be communicated in electronic mode.

The CBDT vide Order F. No. 187/7/2024-ITA-I, Dated 1-8-2024, has specified the following circumstances, for the purpose of enquiry or verification functions by the Verification Unit:

1. Non-availability of digital footprint in respect of the assessee or any other person.
2. Electronic or Online verification is not possible on account of no response to notice issued to the assessee or any other person.
3. Physical verification of assets or premises or persons is required, regardless of the presence of digital footprint.

(17) Completion of faceless assessment & transfer of assessment records to JAO:

The NaFAC shall, after completion of the assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Income-tax Act.

3.4. Step-by-step guide to 'Faceless Assessment Proceedings' under Section 144B

Step 1: Visit the 'e-filing portal':

The assessee is required to visit the 'e-filing portal' from the link: https://www.incometax.gov.in/iec/foportal

Step 2: Log-in the account

Click on the 'login' button located on the top right side of the screen. On the next screen, fill in the 'user id', which is the 'PAN', and click 'Continue'. Then enter the 'password' and click 'continue' to complete the login.

Step 3: Go to 'e-Proceedings' tab:

After login, go to 'Pending Actions > e-Proceedings'. The assessee is redirected to a new page of 'View e-Proceedings related to', which displays all the 'assessment notices' under Section 143(1)(a)/143(2)/147/139(9)/270A, for different assessment years, which the assessee might have received.

Step 4: View the Assessment/Re-assessment Notices

To view the regular assessment proceeding details under Section 143(3), click 'Assessment Proceedings under Section 143(3)/147 > 'View Notices'.

Step 5: Select the Notice to Respond

In the sub-window of 'Assessment Proceedings u/s 143(3)/147', the assessee can see all the notices, say under Section 143(2) or 142(1), issued for that particular assessment year.

This sub-window provides three tabs of (i) View Response; (ii) Notice/Letter Pdf, and (iii) Seek/View Adjournment.

In order to access the relevant notice, click 'Notice/Letter Pdf' tab. The assessee can seek adjournment by clicking "Seek Adjournment", after providing the reason for seeking an adjournment.

Step 6: Download the Assessment Notice

To download the notice, go to 'Pending Actions > e-Proceedings > View Notices > Detailed Notices'. Click on the 'Download' tab at the bottom of the page to download the assessment notice.

After downloading the assessment notice, the assessee can view the scrutiny notice sent by the AO containing the following details:

  • PAN of the Assessee

  • Address of the Assessee

  • Section under which Notice has been issued

  • Assessment Year

  • Notice No.

  • Date of issuing Notice

  • Purpose for sending the Notice

  • Questionnaire, if the notice is issued under Section 142(1).

Under the faceless regime under Section 144B, the notices under Section 143(2) of the Act are not issued by the jurisdictional Assessing Officer but by the National Faceless Assessment Centre (NaFAC).

Step 7: File 'e-Response' to Notice under Section 143(2)

For the purpose of filing/furnishing a 'reply' in response to a notice under Section 143(2), click on the tab 'Submit Response' tab,

Step 8: Tips for filing responses

(a) Partial responses: If the assessee is submitting a response on a piecemeal basis, he needs to choose 'response type' as 'partial'.

(b) Full response: If the submissions have been made on a piecemeal basis, then there would be multiple 'partial responses'. After submitting the 'last partial response', update the 'Response type' to 'Full Response'. If the assessee wants to file just one response to the scrutiny notice, then opt for 'Full Response' in 'response type'.

(c) Multiple Responses: The assessee can submit 'multiple responses' to any single scrutiny notice.

(d) Brief remark to response: The assessee may also furnish a brief 'remark' to its response under the tab 'Add Written Response/Remarks'. The remark cannot exceed 4,000 characters.

(e) Uploading of supporting documents: The assessee may attach the supporting documents as 'attachments' to substantiate his response/submission by choosing different specified categories of attachments mentioned in the dropdown list. The assessee can attach scanned documents in .pdf, .xls, .xlsx, and .csv format. If the supporting document is not in the specified format, choose 'Others' from the dropdown list for attaching such documents. A maximum of 10 attachments/files can be uploaded, with each attachment not exceeding 5 MB. If the limit is exhausted, the assessee can opt for a 'partial response' to upload the remaining attachments.

(f)Name of attachments: Ensure that the names of the two attachments are not the same and should not exceed 100 characters. Only two special characters, hyphen '-' and underscore '_', are permitted in the attachments' name. If the name of the attachment is not as per the guidelines, it will result in an error in uploading the entire submission.

(g) ​Window closure: The facility to submit a response gets auto-closed seven days before the time-barring date of the regular assessment. If there is no time barring date, the AO can close the e-submission if the final order or decision is being prepared. Once the assessment proceeding is closed or completed in ITBA, there will be no e-submission allowed from the assessee.

Step 9: Calling of further information, documents or evidence from the assessee by way of issue of notice under Section 142(1) by the Assessment Unit through NaFAC

The Assessment Unit to which the case has been assigned by the NaFAC may make a request to the NaFAC to obtain such further information, documents or evidence from the assessee or any other person, as it may specify.

Where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the Assessment Unit, the NaFAC issues appropriate notice or requisition under Section 142(1) to the assessee or any other person for obtaining the information, documents or evidence requisitioned by the Assessment Unit.

Step 10: View and retrieve scrutiny questionnaire under Section 142(1) and file 'e-Response'

The initiation of the assessment proceedings by the issue of scrutiny notice under Section 143(2) is proceeded further by issuing a scrutiny questionnaire under Section 142(1) of the Act.

The assessee can access the notice under Section 142(1) by clicking the 'Notice/Letter Pdf' tab. The assessee can download the pdf file of such notice by clicking the 'Download' tab.

The assessee is required to file his 'e-responses' and attach the supporting records and documents in the same manner as in filing of his 'e-response' to notice under Section 143(2) as discussed above.

Step 11: View 'e-Responses'

After submitting the 'e-responses', if the assessee wishes to view the responses filed, he can view them by clicking the link of 'View Response'.

Step 12: Download 'e-Responses/Submissions' along with supporting attachments

The assessee may download all the filed submissions along with the corresponding attachments by clicking the links under the tab 'Attachment'.

Step 13: Preparation of Income or Loss Determination Proposal by Assessment Unit

The assessment unit, after taking into account all the relevant material available on the record, and the replies furnished electronically by the assessee, prepare in writing an Income or Loss Determination Proposal, either accepting the returned income of the assessee or modifying the returned income of the assessee, as the case may be, and send a copy of such proposal to the NaFAC.

Step 14: Examination of the Income or Loss Determination Proposal by NaFAC & Issue of a Show Cause Notice to Assessee

The NaFAC examines the Income or Loss Determination Proposal in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to:

(a) finalise the assessment as per the draft order prepared on the basis of such Income or Loss Determination Proposal and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or

(b) The NaFAC shall provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the Income or Loss Determination Proposal/draft order; or

(c) Assign the Income or Loss Determination Proposal to a Review Unit, through an automated allocation system, for conducting review of such proposal.

Step 15: Filing of 'e-Response' by the assessee to the show-cause notice

The assessee is required to file his 'e-response' to such show-cause notice and upload the relevant supporting records and documents as attachments in the same manner as discussed above.

Step 16: Passing of the final assessment order by NaFAC

The NaFAC forwards the 'e-Responses' of the assessee to the show cause notice to the Assessment Unit, which in turn, after taking due cognisance of all the e-responses of the assessee, passes the revised draft assessment order. If the assessee so requires, the NaFAC shall provide the assessee with the opportunity of personal hearing via video telephony.

The assessment unit, after taking cognisance of the inputs from such personal hearing as provided to it by NaFAC, again passes the final assessment order, which is uploaded by NaFAC in the registered 'e-Filing' account of the assessee within the time barring limitation period of completion of assessments under Section 143(3) of the Act. The assessment order can be seen and downloaded by clicking the " Download Closure Order" button in the main window by clicking on the icon "For Your Information", under the 'e-proceedings' tab.

Step 17: Transferring all assessment records to Jurisdictional AO

The NaFAC transfers the final assessment order, and all the assessment records to the file of jurisdictional AO for imposing penalty, and recovery of outstanding income tax demand, if any.

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​​​4.1. Evolution of Faceless Appeal Regime

An appellant can file his/her appeal before Commissioner (Appeals) through his/her registered e-filing account, on the e-filing portal of the Income tax Department. However, the appellate proceedings that followed after filing of appeal electronically in Form 35, was neither electronic nor faceless.

In order to ensure that the reforms initiated by the Central Government to eliminate human interface in the assessment proceedings reach the next level of appellate proceedings, the Finance Act, 2020 has inserted new sub-sections (6A), (6B) and (6C) in Section 250 of the Income Tax Act, to provide for the following:

  • Empowering Central Government to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability.

  • Eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible.

  • Optimising utilisation of the resources through economies of scale and functional specialisation.

  • Introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals).

Our Hon'ble PM Sh. Narendra Modi ji on 13thAugust, 2020, while launching the new platform for transparent taxation, "Honoring the Honest", had announced launching of the Scheme for Faceless Appeals on 25th September, 2020, on the birth anniversary of Pt. Deen Dayal Upadhayay.

Accordingly, the CBDT, in exercise of the powers conferred by sub section (6B) of Section 250 of the Income Tax Act, has notified the 'Faceless Appeal Scheme, 2020', vide Gazetted Notification F.No. S.O. 3296 (E), dated 25-9-2020.

Under this Faceless Appeals Scheme, 2020, all Income Tax appeals before the first appellate authority i.e., the CIT (Appeals), shall be finalised in a faceless manner under the faceless ecosystem with the exception of appeals relating to serious frauds, major tax evasion, sensitive and search matters, international taxation and black money. All the pending and new appeals of the taxpayers before the CIT(Appeals) w.e.f. 25-9-2020, shall be adjudicated and disposed of by the dynamic jurisdiction and not by the jurisdictional CIT(Appeals).

Subsequently, the Faceless Appeal Scheme, 2020, was re-nomenclatured as the Faceless Appeal (Amendment) Scheme, 2021 vide Notification No. S.O. 1438(E.) dated 31-3-2021 and the reference to the National e-Assessment Centre in the faceless appeal scheme was substituted by "the National Faceless Assessment Centre."

In this first version of the faceless appeal scheme, the appellant was not having any by-default right of personal hearing through video conferencing and this right was subject to the discretion of the Chief Commissioner or the Director General, in charge of the Regional Faceless Appeal Centre, who may approve such request of the appellant for personal hearing through video conferencing, if the case falls within the ambit of notified circumstances.

Under the amended Faceless Appeal Scheme, 2021, a by-default right of personal hearing through video conferencing has been vested in the appellant. It has been mandated that the appellant may request for a personal hearing through video conferencing, and on receipt of such a request of the appellant, the respective Commissioner (Appeals), in the Appeal Unit shall grant such personal hearing to the appellant through video conferencing.

Further, the role of the Regional Faceless Appeal Centre, as provided in the earlier Faceless Appeal Scheme, 2020, has been done away with, and the National Faceless Appeal Centre, shall assign the appeal, for disposal, directly, to a Commissioner (Appeals) of a specific appeal unit, through an automated allocation system.

Under the faceless appeals, everything from e-allocation of appeal, e-communication of notice/questionnaire, e-verification/e-enquiry, e-hearing and e-communication of the appellate order shall be online, dispensing with the need for any physical interface between the appellant and the CIT (Appeal). There shall be no physical interface between the taxpayers or their counsels and the CIT (Appeal).

4.2. Procedure of Conduct of Faceless Appeals

Under the newly substituted 'Faceless Appeal Scheme, 2021', the appeal of the taxpayer before the CIT (Appeal), shall be disposed of as per the following procedure, namely:

(1)  Assignment of Appeal: The National Faceless Appeal Centre shall assign the appeal for disposal to a Commissioner (Appeals) of a specific appeal unit through an automated allocation system;

(2)  Communications through NFAC: All communication between the Commissioner (Appeals) and the appellant or any other person or the Assessing Officer with respect to the information or documents or evidence or any other details, as may be necessary under this Scheme shall be through the National Faceless Appeal Centre.

(3)  Assignment of Appellate Proceedings: On assignment of an appeal, the Commissioner (Appeals):

 (a) May condone the delay in filing appeal if the appeal is filed beyond the time permitted under Section 249 of the Act and record the reasons for such condonation or otherwise in the appeal order passed by him;

 (b) Shall through the NFAC give notice to the appellant asking him to file his submission within the date and time specified in such notice and also send a copy of such notice to the Assessing Officer either directly or through the NFAC, as the case may be;

 (c) May through the NFAC obtain such further information, document or evidence from the appellant or any other person, as the case may be;

 (d) May through the NFAC obtain a report of the Assessing Officer either directly or through the NFAC, as the case may be, on grounds of appeal or information, document or evidence furnished by the appellant;

 (e) May, through the NFAC, request the Assessing Officer directly or through the NFAC, as the case may be, for making further inquiry under Section 250(4) of the Act and submit a report thereof;

 (f) Shall, through the NFAC serve a notice upon the appellant or any other person, as the case may be, or the Assessing Officer directly or through the NFAC, as the case may be, to submit such information, document or evidence or report, as the case may be, as may be specified by the Commissioner (Appeals) or relevant to the appellate proceedings, on a specified date and time;

(4)  Response to Notice: The appellant shall file a response against the notice received. The NaFAC/AO shall furnish a report in response to the notice within the specified time or extended time as may be allowed based on an application made to the NFAC.

(5)  Forwarding of Response to AU: The NFAC shall forward the response of the appellant or report of NaFAC/AO to the Commissioner (Appeals) in Appeal Unit (AU). However, where no response/report, as the case may be, has been filed/received, then the NFAC shall inform the Commissioner (Appeals) in AU, about the same.

(6)  Raising of Additional Grounds of Appeal: The appellant may file additional grounds of appeal to the Commissioner (Appeals) through the NFAC, in such form, as may be specified by the NFAC, specifying therein the reason for omission of such ground in the appeal filed by him. The Commissioner (Appeals) in AU shall through NFAC, send the additional ground of appeal to NaFAC/AO. The NaFAC/AO shall furnish their comments to the Commissioner (Appeals) in AU through NFAC, within the specified or extended time limit.

(7)  Admission or Rejection of Additional Grounds of Appeal: The Commissioner (Appeals) in AU shall, after taking into consideration the comments, if any, received from the NaFAC/AO, as the case may be,

(a) if is satisfied that the omission of additional ground from the form of appeal was not wilful or not unreasonable, admit such ground; or

(b) in any other case, not admit the additional ground, for reasons to be recorded in writing in the appeal order passed by him.

The NFAC shall intimate the admission or rejection of the additional ground to the appellant.

(8)  Submission of Additional Evidence: The appellant may furnish additional evidence to the Commissioner (Appeals) through the NFAC, in such form as may be specified by the NFAC, specifying therein how his case is covered by the exceptional circumstances specified in sub-rule (1) of Rule 46A. The Commissioner (Appeals) in AU shall, through NFAC, send the additional evidence to NaFAC/AO, for furnishing a report on the admissibility of additional evidence in accordance with Rule 46A of the Rules. The NaFAC/ AO shall furnish their remand report to the Commissioner (Appeals) in AU through NFAC, within the specified or extended time limit.

Before taking into account the additional evidence, the Commissioner (Appeals) in AU shall provide an opportunity to the NaFAC/AO to examine such evidence or to cross-examine witnesses produced by the appellant or to produce any evidence or document or any witness in rebuttal. Accordingly, the NFAC shall serve a notice to the NaFAC/AO.

The NaFAC/AO may request the Commissioner (Appeals) in AU through NFAC to direct the production of any document or evidence by the appellant or the examination of any witness. Based on the examination, the NaFAC/AO shall furnish the report to the Commissioner (Appeals) in AU through NFAC.

Accordingly, the Commissioner (Appeals) in AU, shall serve a notice to the Appellant through NFAC. NFAC shall send the appellant's response to such notice to the Commissioner (Appeals) in AU.

(9)  Admission or Rejection of Additional Evidence: The Commissioner (Appeals) in AU may, after considering the additional evidence furnished by the appellant and the remand report, if any, furnished by the AO/NaFAC, as the case may be, admit or reject the additional evidence, for reasons to be recorded in writing, and the same shall form a part of the appeal order passed by him.

(10)  Enhancement of assessment/ penalty/ reduce the amount of refund: Where the Commissioner (Appeals) in AU intends to enhance assessment or reduce the amount of refund, then he shall prepare a show-cause notice containing the reasons for such proposed action and send such show-cause notice to the appellant through NFAC.

The appellant shall, within the specified or extended time, furnish his response to the NFAC. The NFAC shall send the appellants' response to the Commissioner (Appeals) in AU. In case a response is not received, the NFAC shall inform about the same to him.

(11)  Passing of the Final Appeal Order: The Commissioner (Appeals) shall, thereafter:

(a) prepare in writing, an appeal order in accordance with the provisions of Section 251 of the Act, stating the points for determination, the decision thereon and the reason for decision; and

(b) send such order after signing the same digitally to the NFAC along with the details of the penalty proceedings, if any, to be initiated therein;

(12)  Communication of Final Appeal Order: The NFAC shall, upon receipt of the final appeal order,

(a) communicate such order to the appellant;

(b) communicate such order to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as per sub-section (7) of section 250 of the Act;

(c) communicate such order to the Assessing Officer either directly or through the National Faceless Assessment Centre, as the case may be, for such action as may be required under the Act;

(d) where initiation of penalty has been recommended in the order, serve a notice on the appellant calling upon him to show cause as to why penalty should not be imposed upon him under the relevant provisions of the Act.

The appeal may be transferred at any stage of the appellate proceedings, if considered necessary, by an order in accordance with Section 120 of the Act, to such Commissioner (Appeals) as may be specified in the order.

4.3. No personal appearance in the Appeal Centres or Units & Vested Right of Personal Hearing through Video Conferencing

(1)  A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under this scheme before the income-tax authority at the National Faceless Appeal Centre or appeal unit set up under this Scheme.

(2)  The appellant or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the Commissioner (Appeals), through the National Faceless Appeal Centre, under this Scheme.

(3)  The concerned Commissioner (Appeals) shall allow the request for a personal hearing and communicate the date and time of the hearing to the appellant through the National Faceless Appeal Centre.

(4)  Such hearing shall be conducted through video conferencing or video telephony, including the use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(5)  Any examination or recording of the statement of the appellant or any other person shall be conducted by Commissioner (Appeals) under this Scheme, exclusively through video conferencing or video telephony, including the use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(6)  The Board shall establish suitable facilities for video conferencing or video telephony, including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the appellant, or his authorised representative, or any other person is not denied the benefit of this Scheme merely on the ground that such appellant or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end.

4.4. Step-by-Step guide to file e-Appeal in online Form 35

Step 1: Visit the 'e-filing portal':

The assessee is required to visit the 'e-filing portal' from the link: https://www.incometax.gov.in/iec/foportal

Step 2: Log-in the account

Click on the 'login' button located on the top right side of the screen. On the next screen, fill in the 'user id', which is the 'PAN', and click 'Continue'. Then enter the 'password' and click 'continue' to complete the login.

Step 3: Accessing electronic Appeal Form 35:

After login, go to 'e-File > Income Tax Forms'. The appellant is directed to a new window consisting of various Forms. The appellant needs to select Appeals (Form 35) to proceed further.

Step 4: Electronic Filing of Appeal Form 35

Click the link of 'File Now'. The appellant is directed to a new window containing details like PAN No., Submission Mode as Online, Filing Type and Assessment Year. The appellant needs to select the applicable assessment year, for which the electronic appeal Form 35 needs to be filed, from the dropdown list

After selecting the relevant assessment year, the appellant is directed to a new window containing a reference to the list of documents required for the e-filing of appeal and the instructions for facilitating faster and smoother e-filing of appeal. In order to proceed further, the appellant needs to click "Let's Get Started".

Step 5: Select whether the appeal is to be filed for an order with DIN or for an order without DIN

After clicking the 'Let's Get Started', the appellant is directed to the next screen, which contains the following two options:

(a) File Appeal for an order without DIN

(b) File Appeal for an order with DIN (order issued after 1st October, 2019)

The appellant needs to fill the 'Document Identification Number (DIN No.)', of the Assessment/Re-assessment/Intimation Order for which the appeal is to be filed. Usually, the DIN No. comes automatically in the drop-down list for orders passed on or after 01-10-2019. In case the respective DIN No. is not available in the drop-down, the appellant needs to choose Option 1 of 'Filing Appeal Without DIN', and enter the DIN manually under the field 'Order Number/DIN'.

After filling the DIN No., the appellant is required to select the relevant 'Section and Sub-section' of the Income Tax Act, under which the appealable order has been passed, from the drop-down.

After filling in the relevant section and sub-section, the appellant needs to fill in the 'Date of Order' and 'Date of Service of Order'.

Currently, all orders are electronically uploaded to the registered e-filing account of the assessee, so the date of order and the date of service of the order are the same.

After filling all these details, click on the "Continue" tab to proceed further.

Step 6: Provide details in Seven Specified Columns

After clicking 'Continue' tab, the appellant is directed to a new window containing seven columns as under:

(a) Basic Information;

(b) Order against which appeal is filed;

(c) Pending Appeal;

(d) Appeal Details;

(e) Details of Taxes paid;

(f) Statement of Facts, Grounds of Appeal and additional evidence; and

(g) Appeal filing details.

The appellant needs to provide the relevant details in each one of these seven columns by clicking on the link 'Provide details'.

(1) Basic Details: The appellant needs to fill the basic information like name, address, mobile number, email address, and TAN (if available). The appellant also has to decide whether notices/communication may be sent on email or not. The appellant needs to click the 'save' tab to proceed.

(2) Order against which appeal is filed: The appellant needs to fill the details of the assessment/re-assessment or the intimation order against which the appeal is to be filed like, year type/block period. Details of Assessment Year, DIN No., Section and Sub-section No., Order No., Date of Order and Date of Service of Order get auto-populated. The appellant needs to fill the designation of the Income-tax Authority, passing the order appealed against. Click 'Save' tab to proceed further.

(3) Pending Appeal: The appellant needs to fill in whether other appeal is pending in relation to any other assessment year with any Commissioner (Appeals). If yes, the appellant needs to fill the details of such appeal.

(4) Appeal Details: The appellant needs to fill the appeal details like section and sub-section, under which appeal is preferred, and if the appeal relates to any assessment or penalty.

(5) Details of Taxes Paid The appellant needs to fill in the details of taxes paid.

(6) Statement of Facts, Grounds of Appeal and Additional Evidence: This is the most important section of the electronic filing of Form 35 with the Commissioner (Appeals). In this section, the appellant is required to submit a statement of facts not exceeding 10,000 characters, and a list of documentary evidences relied upon. The appellant may also furnish additional evidence as per Rule 46A of the Income Tax Rules by enclosing them as attachments in the 'Add Details' tab. The appellant also needs to fill in the grounds of appeal, by clicking the 'Add Details' tab under the 'Grounds of Appeal' field.

After filing the 'Grounds of Appeal' field, the appellant is directed to a new window, requiring him to fill in the requisite details in three sub-columns:

(a) Relevant Section of Income Tax Act, under which the addition/disallowance has been made;

(b) Describing the 'Issue', in 2,000 characters; and

(c) 'Ground of Appeal' in 4,000 characters.

The appellant can add as many grounds of appeal as he requires, and he needs to fill in the above details for each such ground of appeal.

(7) Appeal Filing Details: The appellant is required to fill in details like whether there is any delay in appeal filing. Section 249(2) mandates the filing of an appeal before the Commissioner (Appeals) within 30 days after receiving the assessment/re-assessment/penalty/intimation order against which the appeal is to be filed.

If there is a delay in filing an appeal beyond the stipulated period of thirty days, then the assessee needs to fill in the condonation request and the reason for such delay. Sub-section (3) of Section 249 of the Income-tax Act provides that the Commissioner (Appeals) may condone the delay in filing of appeal by the appellant if such cause is a genuine and reasonable/sufficient one.

The appellant further needs to fill in the details like Challan Serial No., BSR No., Date of Payment etc., of the Appeal Fee.

Step 7: Upload supporting records & documents as attachments

After filling in the required details, the assessee is directed to a new window of 'Attachments', wherein the assessee is required to attach the undermentioned documents, along with the Appeal Form 35:

(a) Copy of Order/Intimation Appealed against (compulsory enclosure);

(b) Copy of Notice of Demand (compulsory enclosure);

(c) Documentary evidence in support of Appeal Submission;

(d) Documentary evidences as additional evidence, if the assessee, so opts.

Important Points: i) Size of each attachment should not exceed 5MB; (ii) All attachments together cannot exceed 50MB; and (iii) All attachments should be in PDF or ZIP (containing PDF only) formats only.

Step 8: Fill the verification form

After uploading all required attachments, the appellant is directed to a new window, 'Form of Verification'. The appellant needs to fill in this brief form and click on the 'Save' button, to proceed further.

Step 9: Preview the Online Appeal

The appellant can 'Preview' the filled Electronic Appeal Form 35, in order to rectify any mistakes, if any.

Step 10: e-Verification & Uploading of Online Appeal

On the Preview page, the appellant needs to verify the details and click 'Proceed to e-Verify'.

Important Points on How to e-Verify Forms on the e-Filing portal

The e-Verify service is available to both registered and unregistered users on the e-Filing portal.

The user can e-Verify his/her Income Tax Return Form and any other Form, like Appeal Form 35, using any of the several modes available. Additionally, the user can also e-Verify any other Income-tax related submissions/services/responses/requests on the e-Filing portal to complete the respective processes successfully. The user can choose any one of the following modes available for e-Verification:

  • Digital Signature Certificate

  • Aadhaar OTP

  • Electronic Verification Code (using bank account/Demat account)

  • Electronic Verification Code (using Bank ATM - offline method)

  • Net Banking

e-Verification Method	Pre-requisite
Digital Signature Certificate	• Valid and active DSC   • Emsigner utility installed and running on your PC   • Plugged-in DSC USB token in your PC   • DSC USB token procured from a Certifying Authority provider   • The DSC USB token is a Class 2 or Class 3 certificate.
OTP on mobile number registered with Aadhaar	• PAN is linked to Aadhaar
Bank Account EVC/Demat Account EVC	• Pre-validated and EVC-enabled bank/demat account
Net Banking	• PAN linked with your bank account   • Net Banking should be enabled for the preferred bank account

After successful e-Verification, a success message is displayed along with a Transaction ID and Acknowledgement Receipt Number. The appellant is advised to note the Transaction ID and Acknowledgement Receipt Number for future reference. An email confirming the successful submission of the Appeal Form is sent to the appellant's registered email ID and mobile number.

After the filing of the Appeal Form 3, the National Faceless Appeal Centre assigns such appeal case to any one Commissioner (Appeals) in the Appeal Unit, based on an automatic allocation system, and such Commissioner (Appeals) issues Appeal Hearing Notice under Section 250 of the Act, to the appellant, through the National Faceless Appeal Centre.

On receipt of such Appeal Hearing Notice under Section 250​ of the Act, the appellant is required to submit his appeal submissions along with the requisite supporting attachments electronically in the e-Proceedings utility of the e-Filing portal, in a similar manner, as that of e-filing of his assessment submissions.

​

​​​With the advent of the Faceless Assessment Scheme, 2019 and to ensure that the reforms initiated by the department to eliminate human interface, it was imperative to launch a Faceless Penalty Scheme along the lines of the Faceless Assessment Scheme, 2019.

Therefore, the Finance Act 2020 has inserted an enabling provision in the form of a new sub-section (2A) in Section 274 of the Act so as to provide that the Central Government may notify an e-scheme for the purposes of imposing penalty so as to impart greater efficiency, transparency and accountability by:

(a) eliminating the interface between the Assessing Officer and the appellant in the course of proceedings to the extent technologically feasible;

(b) optimising utilisation of the resources through economies of scale and functional specialisation;

(c) introducing a mechanism for imposing of penalty with dynamic jurisdiction in which penalty shall be imposed by one or more income-tax authorities.

5.1. Launch of Faceless Penalty Scheme, 2021

In exercise of the powers conferred by sub-section (2A) of Section 274 of the Income-tax Act, 1961, the Central Government has notified the Faceless Penalty Scheme 2021, vide Notification No. S.O. 117 (E), dated 12-01-2021, and for the purposes of giving effect to the Faceless Penalty Scheme, 2021, the Central Government vide Notification No. S.O. 118 (E), dated 12-01-2021, has issued Directions for implementing the Faceless Penalty Scheme, 2021.

5.2. Scope of faceless penalty scheme

This scheme provides that the penalty shall be imposed in respect of specified territorial areas or persons or class of persons or income or class of income or cases or class of cases or penalties or class of penalties. In this respect, vide Order F. NO. 187/4/2021-ITA-I, dated 20-1-2021, Order F. NO. 187/4/2021-ITA-1, dated 26-2-2021 and Order F. NO. 187/4/2021-ITA-1, dated 10-3-2022, the CBDT has notified the following, which shall be outside the purview of this scheme:

(a) Penalty proceedings in cases assigned to Central Charges;

(b) Penalty proceedings in cases assigned to International Tax Charges;

(c) Penalty proceedings arising in TDS charges;

(d) Penalty proceedings arising/pending in the Investigation Wing, the Directorate of I&CI, erstwhile DG (Risk-Assessment) or by any prescribed authority for the purpose of specified penalties;

(e) Penalty proceedings arising out of any statute other than the Income-tax Act;

(f) All the penalties imposable by the officers of the level of Commissioner/Director/Commissioner (Appeals/Appeal Unit) and above. It shall be disposed of by the respective officer; and

(g) Penalty proceedings in cases where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be.

Further, the CBDT has clarified that all the penalties imposable under the Income-tax Act (other than the exclusion provided above) by the officers of the rank of Additional CIT/JCIT and below shall remain with the National Faceless Assessment Centre.

5.3. Authorities to conduct the faceless penalty proceedings

For the purpose of faceless penalty, the CBDT may set-up the following centres and units by specifying their respective jurisdiction:

(1) National Faceless Penalty Centre (NFPC): The purpose of this centre is to facilitate the conduct of faceless penalty proceedings in a centralized manner. All communication among the penalty units and penalty review units or with the assessee or any other person, as the case may be, or any income-tax authority or the National Faceless Assessment Centre, with respect to the information or documents or evidence or any other details, as may be necessary for imposing penalty under this scheme shall be through the National Faceless Penalty Centre.

(2) Penalty Units: It shall perform the function of drafting penalty orders, which includes identification of points or issues for the imposition of penalty, seeking information or clarification on points or issues so identified, providing opportunity of being heard to the assessee or any other person, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for imposing a penalty. The term 'Penalty Unit' shall refer to an Assessing Officer having powers so assigned by the CBDT.

(3) Penalty Review Units: It shall perform the function of review of the draft penalty order, which includes checking the following:

(a) Whether the relevant material evidence has been brought on record;

(b) Whether the relevant points of fact and law have been duly incorporated in the draft order;

(c) Whether the issues on which penalty is to be imposed have been discussed in the draft order;

(d) Whether the applicable judicial decisions have been considered and dealt with in the draft order;

(e) Arithmetical correctness of penalty computation, if any; and

(f) Any other functions required for the purposes of review.

The term 'Penalty Review Unit' shall refer to an Assessing Officer having powers so assigned by the CBDT.

The CBDT vide Order F. No. 187/4/2021-ITA-I, Dated 10-6-2022 (superseding Order F.No. 187/4/2021-ITA-I, DATED 20-1-2021) has directed that the income-tax authorities of the NFAC, AU, and RU shall act as and perform the functions of the corresponding Income-tax authorities of the NFPC, PU, and PRU, respectively.

5.4. Procedure to conduct faceless penalty proceedings

The penalty shall be levied as per the following procedure:

Step 1: Reference of case to National Faceless Penalty Centre

Where any Income-tax Authority or NFAC has initiated penalty proceedings and issued a show-cause notice for imposition of penalty or recommended initiation of penalty proceedings, it shall refer the case to NFPC. Such reference shall be made in the Form specified by the Principal Chief Commissioner or the Principal Director General, in charge of the NFPC.

Step 2: Assignment to Penalty Unit

The case shall be assigned by the NFPC to a specific Penalty Unit through an automated allocation system.

Automated allocation system means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, to optimise the use of resources.

Step 3: Penalty Unit to draft notice or record reasons

Where initiation of penalty proceedings has been recommended in the case assigned to the penalty unit, it shall prepare a draft notice calling upon the assessee or any other person, as the case may be, to show cause as to why penalty should not be levied under the relevant provisions of the Act. However, if Penalty Unit does not agree with the recommendations, it shall record reasons for the same in writing. Such draft notice or reasons, as the case may be, shall be sent to NFPC.

Step 4: NFPC to serve notice to assessee

After receiving draft notice from the penalty unit, NFPC shall serve the show cause notice as per such draft upon the assessee or any other person, as the case may be, specifying the date and time for filing a response. In case Penalty Unit does not agree with the recommendations and recorded the reasons for same, NFPC shall not initiate penalty.

Step 5: Where penalty proceedings are already initiated

Where penalty proceedings are already initiated in a case assigned to Penalty Unit, it shall prepare a draft notice calling upon the assessee or any other person, as the case may be, to show cause as to why penalty should not be levied under the relevant provisions of the Act. Such draft notice shall be sent to NFPC.

Upon receipt of such draft notice, NFPC shall serve the show cause notice as per such draft upon the assessee or any other person, as the case may be, specifying the date and time for filing a response.

Step 6: Assessee to file a response for the show-cause notice

Assessee or any other person, as the case may be, is required to file his response to the show cause notice with the NFPC. Such response is required to be filed within the date and time specified in the notice or within the extended date and time, if allowed on the basis of the application made on this behalf.

NFPC shall send such response to the penalty unit. However, where no response is filed, NFPC shall inform the same to the penalty unit.

Step 7: Request by Penalty Unit for assistance

A Penalty Unit may request the NFPC for the following purposes:

(a) To obtain further information, documents or evidence from any Income-tax authority or the National Faceless Assessment Centre;

(b) To obtain further information, documents or evidence from the assessee or any other person; or

(c) To seek technical assistance or conduct verification.

Step 8: Support to be extended by NFPC

NFPC shall issue an appropriate notice or requisition to the Income-tax authority or the National Faceless Assessment Centre or assessee or any other person, as the case may be, to submit such information, documents or evidence specified by the Penalty Unit. NFPC shall specify the date and time for furnishing a response. The Income-tax authority or the National Faceless Assessment Centre or assessee or any other person, as the case may be, shall furnish a response to the notice or requisition issued by NFPC. Such response shall be furnished to NFPC within the date and time specified therein or date and time extended by it on the basis of an application made in this regard. NFPC shall send the response filed by the Income-tax authority or the National Faceless Assessment Centre or assessee or any other person, as the case may be, to the Penalty Unit. However, where no response is filed, it shall inform the same to the Penalty Unit.

NFPC shall send the request made by Penalty Unit, for conducting certain enquiry or verification or seeking technical assistance, to the National Faceless Assessment Centre for submitting a report within the specified date and time. NFPC shall send such report received from the National Faceless Assessment Centre to the Penalty Unit. In case no such report is received, it shall inform the same to the Penalty Unit.

Step 9: Proposal for imposition or non-imposition of penalty

After considering the material on record including the response or report furnished by the Income-tax authority or the National Faceless Assessment Centre or assessee or any other person, as the case may be, the Penalty Unit shall propose for:

(a) Imposition of the penalty and prepare a penalty imposition proposal for it; or

(b) Non-imposition of the penalty, and record reasons in writing,

Further, it is required to send the penalty imposition proposal or reasons, as the case may be, to NFPC.

Step 10: NFPC to confirm or send the proposal of penalty unit for review

NFPC, in accordance with the guidelines issued by the CBDT, may do the following:

(a) Convey to the Penalty Unit to pass the penalty order as per penalty imposition proposal prepared by such Penalty Unit; or;

(b) Convey to the Penalty Unit to drop the penalty proceedings in case non-imposition of penalty has been proposed by such Penalty Unit; or

(c) Assign the case to Penalty Review Unit through an automated allocation system, to conduct review of proposals or reasons made by the Penalty Unit for the imposition or non-imposition of penalty.

Step 11: Passing or dropping the penalty

Where NFPC conveys to Penalty Unit to either pass the penalty order or drop the penalty proceedings, the Penalty Unit shall:

(a) Pass the penalty order as per the penalty imposition proposal prepared by it and serve a copy of such order on the assessee through NFPC; or

(b) Drop the penalty proceedings and send the intimation to the assessee through NFPC.

Step 12: Review of the assigned case by Penalty Review Unit

Where the NFPC has assigned the case to a Penalty Review Unit, such Penalty Review Unit shall review the penalty imposition proposal made by the Penalty Unit or reasons recorded by the Penalty Unit for non-imposition of penalty. The Penalty Review Unit may concur with or suggest the modification to such proposal or reasons and prepare a review report and send it to the NFPC.

After receiving the review report, the NFPC shall forward such review report to the Penalty Unit.

Step 13: Passing final order after review of Penalty Review Unit

After receiving the review report of the Penalty Review Unit, the Penalty Unit shall accept or reject some or all of the modifications proposed in the review report and, accordingly, pass the order imposing penalty or drop the penalty proceedings. In case modifications proposed in the review report are rejected, the penalty unit shall record the reasons thereof.

The order imposing penalty or intimation for dropping penalty proceedings, as the case may be, shall be served by the Penalty Unit on the assessee through the NFPC.

Step 14: Communication of order

Where the Penalty Unit has passed a penalty order or intimation for dropping penalty, it shall send a copy of such order or intimation to the Income-tax authority referred under Step 1 through the National Faceless Penalty Centre for required action.

5.5. Transfer of case

The Principal Chief Commissioner or the Principal Director General, in charge of NFPC, may transfer such proceedings to the jurisdictional Income-tax authority or National Faceless Assessment Centre at any stage of the penalty proceedings with the prior approval of CBDT.

The CBDT vide Circular No. F. No. 225/97/2021/ITA-II, dated 06-09-2021 has prescribed the following procedure for handling of penalty cases by Jurisdictional AO in respect of such transferred cases:

(a) All processes in transferred cases may be conducted electronically to the extent technically feasible, except in those cases where the assessee does not have an e-filing account/registered e-mail to communicate electronically with Jurisdictional AO. For cases without a digital footprint, the Jurisdictional AO shall endeavor to get the e-filing account of the assessee registered and then electronically conduct the proceedings;

(b) The request for personal hearings shall generally be allowed to the assessee with the approval of the Range Head, mainly after the assessee has filed a written submission to the show cause notice. A personal hearing may be allowed to the assessee, preferably through Video Conference. If Video Conference is not technically feasible, personal hearings may be conducted in a designated area in Income Tax Offices. The hearing proceedings may be recorded;

(c) Use of faceless processes such as a Verification Unit for online verification, Technical Unit for technical inputs, etc., may also be considered for the non-faceless regime to the extent technically feasible;

(d) In penalties, the approval of Range Head is already embedded in Section 274(2), over a specific monetary ceiling of 'penalty imposable'. In order to have consistency, the same may be adhered to.

5.6. Electronic records

(1) All communications to be made through electronic media: All the communications between the NFPC and assessees or any other person or his authorised representative shall be exchanged exclusively by electronic mode. Further, all internal communication between the NFPC, National Faceless Assessment Centre, any Income-tax authority, Penalty Unit or the Penalty Review Unit shall be exchanged exclusively by electronic mode.

(2) Authentication of the electronic records: The NFPC shall authenticate all electronic records by way of electronic communication. The penalty unit or the penalty review unit or technical unit or verification unit, shall authenticate all the electronic records by affixing a digital signature. The electronic records shall be authenticated by the assessee or any other person by affixing his digital signature or under electronic verification code or by logging into his registered account in the designated portal.

(3) Delivery of electronic record: Every notice or order or any other electronic communication shall be delivered to the assessee or any other person by way of the following means and followed by a real-time alert:

(a) Placing an authenticated copy thereof in the registered account of the assessee or any other person;

(b) Sending an authenticated copy thereof to the registered email address of the assessee or any other person or his authorized representative; or

(c) Uploading an authenticated copy on the Mobile App of the assessee or any other person.

Every notice or order or any other electronic communication shall be delivered to any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real-time alert.

The assessee or any other person shall file his response to any notice or order or any other electronic communication through his registered account. Once an acknowledgement is sent by the NFPC containing the hash result generated upon successful submission of a response, the response shall be deemed to be authenticated.

Time and place of dispatch and receipt of the electronic record shall be determined as per Section 13 of the Information Technology Act, 2000.

(4) Meaning of real-time alert: The real-time alert means any communication sent to the assessee by way of SMS on his registered mobile number, or by way of an update on his Mobile App, or by way of an email at his registered email address to alert him regarding the delivery of electronic communication.

(5) Meaning of registered e-mail address: Registered e-mail address means the e-mail address at which an electronic communication may be delivered or transmitted to the addressee, including:

(a) The email address available in the e-filing account of the addressee registered in the designated portal;

(b) The e-mail address available in the last income-tax return furnished by the addressee;

(c) The e-mail address available in the PAN database relating to the addressee;

(d) If an individual possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India (UIDAI);

(e) In the case of a company, the e-mail address of the company as available on the official website of Ministry of Corporate Affairs (MCA); or

(f) Any e-mail address made available by the addressee to the Income-tax authority or any person authorised by such authority.

5.7. Personal appearance at the centre and units

A person shall not be required to appear either personally or through an authorized representative in connection with any proceedings before the Income-tax authority at the NFPC or Penalty Unit or Penalty Review Unit.

However, an assessee or any other person or his authorised representative may request for a personal hearing to make his oral submissions or present his case before Penalty Unit. The Income-tax authority of relevant unit shall allow such hearing, through NFPC.

In such cases, a hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony to the extent technologically feasible.

The CBDT shall establish suitable facilities for video conferencing, including telecommunication application software which supports video telephony at such locations as may be necessary, to ensure that the assessee or his authorised representative or any other person is not denied the benefit of this scheme on the mere ground that he does not have access to video conferencing at his end.

​

​​​6.1. Step-by-Step Guide for e-Filing of Rectification Request

Currently, the assessee can electronically file his rectification request only in respect of Intimation Orders passed by CPC under Section 143(1) or 154, and the online facility for filing of rectification requests under Section 154, in respect of orders passed by AO under Section 143(3)/Section 147/Section 144, is not available. In such cases, the assessee is required to submit his rectification request manually before the jurisdiction AO.

Step 1: Visit the 'e-filing portal':

The assessee is required to visit the 'e-filing portal' from the link: https://www.incometax.gov.in/iec/foportal

Step 2: Log-in the account

Click on the 'login' button located on the top right side of the screen. On the next screen, fill in the 'user id', which is the 'PAN', and click 'Continue'. Then enter the 'password' and click 'continue' to complete the login.

Step 3: Select 'Rectification' type

Click on the icon, 'Services > Rectification'.

Step 4: Raise a request for rectification

The assessee is directed to a new window, wherein he needs to select the relevant assessment year for which he needs to file the rectification request from the drop-down and click on the 'continue' tab to proceed.

Step 5: Select the 'Request Type'

The assessee is directed to a new window, 'Select the Request Type'.

Three types of requests are specified for raising the rectification request:

(1) Reprocess the Return: Select this option if the assessee has furnished true and correct particulars in the Return of Income and CPC has not considered the same during processing;

(2) Return Data Correction (Offline): Select this option if there is a need to make necessary corrections in the data. The assessee needs to re-enter all the entries in the schedules. All the correct entries and the remaining entries mentioned in the ITR filed earlier are to be entered. The assessee needs to make necessary corrections in the data. While doing corrections, the assessee is not supposed to declare any new source of income or claim additional deductions.

(3) Tax Credit Mismatch Correction: Use this option if the assessee needs to correct details in TDS/TCS/IT challans of the processed Return of Income. The assessee needs to re-enter all the entries in the schedules. All the corrected entries and other entries mentioned in the ITR filed earlier are to be entered. The assessee needs to make the necessary corrections in the data. While doing corrections, the assessee is not supposed to claim credits which are not part of the processed return or the Form 26AS statement.

A) Type 1 Request: Reprocess the Return

In raising 'Reprocess the Return' type of rectification request, the assessee is simply required to click on the 'arrow' on the right side and confirm the submission of such type of rectification request. After submission, the assessee is provided with an acknowledgement receipt number (ARN) of such rectification request by CPC.

B) Type 2 Request: Return Data Correction

In raising this rectification request, the assessee is required to give the reason for raising such a rectification request in the column provided for this purpose in not more than 4,000 characters.

Thus, in the column- 'Rectification Reason', the assessee needs to mention this fact as shown below, with a character limit of not more than 4,000 characters.

Further, the assessee is required to upload the JSON file of the revised return being filed by it, as stated above, and click on the 'submit' button to file its rectification request. After submission, the assessee is provided with an acknowledgement receipt number (ARN) of such rectification request by CPC.

C) Type 3 Request 'Tax Credit Mismatch Correction'

The assessee needs to select the relevant type from the two available options:

  •   Details of Tax Deducted at Source on Income as per Form 16A: The assessee needs to tick the particular deductor for which correction needs to be made and submit the rectification request. After submission, the assesse e is provided with an acknowledgement receipt number (ARN) of such rectification request by CPC.

  •   Details of Tax Deducted at Source on Income as per Form 16B/16C/16D, issued by Deductor: The assessee needs to tick the particular deductor for which correction needs to be made and submit the rectification request. After submission, the assessee is provided with an acknowledgement receipt number (ARN) of such rectification request by CPC.​

​

 

​​7.1. Step-by-Step guide for e-filing of response​

Step 1: Visit the 'e-filing portal':

The assessee is required to visit the 'e-filing portal' from the link: https://www.incometax.gov.in/iec/foportal

Step 2: Log-in the account

Click on the 'login' button located on the top right side of the screen. On the next screen, fill in the 'user id', which is the 'PAN', and click 'Continue'. Then enter the 'password' and click 'contin​ue' to complete the login.

Step 3: Select 'Response to Outstanding Demand'

Select 'Pending Actions > Response to Outstanding Demand' tab to proceed.

Step 4: Select the options for response

The assessee is directed to a new window containing the assessment year-wise details of the outstanding demand of the assessee. The assessee needs to select the relevant assessment year for which he needs to file the response. The assessee is provided with three buttons on the right side:

(1) Pay Now: If the assessee agrees with the demand, he can pay the said demand by clicking on 'Pay Now' button.

(2) Download: The assessee can see the demand order/intimation by clicking the 'Download' button.

(3) Submit Response: For submitting the response to the outstanding demand for the selected assessment year, the assessee needs to click on 'Submit Response' button to proceed.

Step 5: Select the response option

If the assessee chooses 'Submit Response', and he agrees with the demand, he needs to choose the 'Demand is correct' option and pay the due tax. If he disagrees with the demand, then he is required to select the 'Disagree with demand (Either in Full or Part) option.

Step 6: Provide reason for disagreement

The assessee is required to select the reason for disagreement with demand from the available options in the drop-down.

If the reason for the disagreement is not covered by any of the available options in the drop-down, then the assessee may choose 'Others'. After choosing this option, the assessee is directed to a new window, wherein he is required to enter the amount of outstanding demand, for which he is in disagreement on account of the said reason. The assessee is also required to provide the remarks and details of such reason for disagreement in not more than 2,000 characters. After providing the same, the assessee is required to click the 'save button' to submit his response to such disagreement with the outstanding demand.

​

​​​The Central Government has undertaken a number of measures to make the processes under the Act, electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. A series of futuristic reforms have been introduced in the domain of Direct Tax administration for the benefit of taxpayers and economy. The faceless procedures are being introduced in a phased manner in the Income Tax Act, 1961 under various sections as under:

8.1. e-Assessment of Income Escaping Assessment Scheme, 2022 (CBDT Notification No. 18/2022, dated 29-03-2022)

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020' (hereinafter referred to as 'The Taxation Relaxation & Amendment Act), has inserted a new Section 151A in the Income Tax Act, w.e.f. 1.4.2021.

Section 151A empowers the Central Government to make a scheme for the purpose of:

(a) Assessment, reassessment or recomputation under Section 147 (Income-escaping assessment);

(b) Issuance of notice under Section 148 for conducting income-escaping assessment; or

(c) Conducting of enquiries or issuance of show-cause notice or passing of order under Section 148A; or

(d) Sanction under Section 151 for the issue of notice under section 148 for conducting the income-escaping assessment.

Such a Scheme is to be formed to impart greater efficiency, transparency and accountability by.

  •   Eliminating the interface between the Income-tax authority and the assessee or any other person to the extent technologically feasible;

  •   Optimising utilisation of the resources through economies of scale and functional specialisation; and

  •   Introducing a team-based assessment, reassessment, recomputation or issuance or sanction of notice with dynamic jurisdiction.​

Now, the Central Government has notified the 'e-Assessment of Income Escaping Assessment Scheme, 2022' for the purpose of these provisions. The Scheme is applicable with effect from 29-03-2022.

The Scheme provides that assessment, reassessment or recomputation under Section 147 and issuance of notice under Section 148 shall be done:

(a) through automated allocation, in accordance with the risk management strategy formulated by the Board as referred to in section 148 for issuance of the notice, and

(b) in a faceless manner, to the extent provided in Section 144B with reference to making assessment or reassessment of total income or loss of assessee.

8.1a. e-Dispute Resolution Scheme 2022 (CBDT Notification No. 27/2022, dated 05-04-2022)

The Dispute Resolution Committee (DRC) is established by the Central Government for each region under the jurisdiction of the Principal Chief Commissioner to resolve disputes arising from orders issued by the Assessing Officer (AO). Taxpayers can approach the DRC to contest a draft assessment order under Section 144C(1), an assessment order, a rectification order under Section 154, or any orders related to TDS or TCS matters.

Alternatively, instead of the DRC, taxpayers may also appeal to the Joint Commissioner (Appeals) or Commissioner (Appeals) for these matters, except in the case of a draft assessment order under Section 144C(1).

The DRC will resolve the taxpayer's application in a faceless manner in accordance with the e-Dispute Resolution Scheme, 2022.

The assessee, who fulfils the specified conditions as referred to in Section 245MA, may file an application in Form No. 34BC electronically for dispute resolution in respect of any specified order to the DRC

The CBDT vide press Release, dated 30-08-2024 has provided the application in Form No. 34BC shall be submitted on the e-filing portal of the Income-tax department along with proof of tax payment on the returned income, if available and a fee of Rs. 1,000. The application shall be filed to the DRC within the following time limit:

(a.) Specified order passed on or before 31-08-2024

If the specified order is passed on or before 31-08-2024, an application to the DRC can be filed on or before 30-09-2024. This is applicable provided that the specified order is either pending in appeal before the Joint Commissioner (Appeals) or Commissioner (Appeals), or the time limit for filing an appeal before these authorities against such order has not yet expired.

If the time limit for filing an appeal before the Joint Commissioner (Appeals) or Commissioner (Appeals) against such specified order has already expired, then an application to the DRC cannot be filed against such an order.

(b.) Specified order passed after 31-08-2024

For specified orders passed after 31-08-2024, an application to the DRC must be filed within 1 month from the date of receipt of the order.

8.2. Faceless Jurisdiction of Income-tax Authorities Scheme, 2022 (CBDT Notification No. 15/2022 dated 28.3.2022)

Section 130 of the Income-tax Act, as inserted by the Taxation Relaxation and Amendment Act, empowers the Central Government to make a scheme for:

a) Exercise of all or any of the powers and performance of all or any of the functions conferred on or assigned to Income-tax authorities under Section 120; or

b) Vesting the jurisdiction with the Assessing Officer under Section 124; or

c) Exercise of power to transfer cases under Section 127; or

d) Exercise of the jurisdiction in case of change of incumbency under Section 129

The Central Government has notified the Faceless Jurisdiction of Income-tax Authorities Scheme, 2022, of the purpose of section 130. The Scheme is applicable with effect from 28-03-2022.

The Scheme provides that the jurisdiction of the Assessing Officer shall be vested in a faceless manner through automated allocation. Such jurisdiction shall be in accordance with and to the extent provided in:

1) Section 144B with reference to making the faceless assessment of total income or loss of assessee;

2) The Faceless Appeal Scheme, 2021 with reference to the disposal of appeals;

3) The Faceless Penalty Scheme, 2021 with reference to the imposition of penalty under Chapter XXI of the Act;

4) The e-Verification Scheme, 2021 with reference to:

a. Calling for information under section 133,

b. Collecting certain information under section 133, or

c. Calling for information by the prescribed authority under section 133C, or

d. Exercise of power to inspect the register of companies under section 134, or

e. Exercise of power of Assessing Officer under section 135.

5) The e-Settlement Scheme, 2021 with reference to the settlement of pending applications by the interim Board; and

6) The e-advance rulings Scheme, 2022 with reference to dispute resolution for persons or class of persons, as specified by the Board, who may opt for dispute resolution under Chapter XIX-AA with reference to the dispute arising from any variation in the specified order fulfilling the specified conditions.

8.3. e-Advance Rulings Scheme, 2022 (CBDT Notification No. 07/2022, dated 18-01-2022)

The Central Board of Direct Taxes (CBDT) has notified e-advance rulings Scheme, 2022 applicable with effect from 18-01-2022. The Scheme shall apply to the applications of advance rulings made to the Board for Advance Ruling or applications of advance rulings transferred to such Board.

The CBDT shall devise a process to randomly allocate or transfer the applications for the advance ruling to the Board for Advance Rulings through an automated allocation system. The procedure for filing and processing the application has been laid down under the Scheme.

The applicant shall not be required to appear either personally or through an authorised representative before the Board for Advance Rulings or before the Secretary, ministerial staff, executive or consultant posted with the Board for Advance Rulings.

The proceedings before the Board for Advance Rulings shall not be open to the public. No person other than the applicant, his employee, the concerned officers of the Board for Advance Rulings, the Income-tax authority, or the authorised representatives shall remain present during such proceedings, even on video conferencing or video telephony. An appeal against an order for advance ruling passed by the Board for Advance Rulings under this Scheme shall lie before the High Court.

8.4. e-Verification Scheme, 2021 (CBDT Notification No. 137/2021, dated 13.12.2021)

In exercise of the powers conferred by sub-sections (1) and (2) of section 135A of the Income Tax Act, inserted by the Taxation Relaxation & Amendment Act, the Central Government has notified the e-Verification Scheme, 2021, vide its Notification No. 137/2021, dated 13.12.2021, to be made effective from 13.12.2021.

Scope of the Scheme: The scope of the Scheme shall be in respect of:

(a) calling for information under section 133 of the Act;

(b) collecting certain information under section 133B of the Act;

(c) calling for information by the prescribed income-tax authority under section 133C of the Act;

(d) exercise of power to inspect registers of companies under section 134 of the Act; and

(e) exercise of power of Assessing Officer under section 135 of the Act.

The Scheme shall be applicable to verify the mismatch of the information uploaded to the taxpayer's registered account.

As per the Scheme, where the mismatch between the amount accepted by the assessee and the amount reported by the reporting entity persists, the information after initial e-verification shall be run through a risk management strategy laid down by the Board. The information found to be no/low risk on such risk criteria or where no further action is required shall be processed for closure.

No person shall be required to appear personally or through authorised representative before the Prescribed Authority in connection with any proceedings.

In exceptional cases, where personal appearance is requested by such person, the Prescribed Authority may allow personal appearance through video conferencing or video telephony, to the extent technologically feasible.

Every notice or any other communication under this Scheme from the Prescribed Authority shall be delivered to the person or his authorised representative electronically, to the extent technologically feasible.

The person or the authorised representative shall furnish his response to any notice or any other electronic communication, under this Scheme, to the Prescribed Authority electronically, to the extent technologically feasible.

8.5. e-Settlement Scheme, 2021 (CBDT Notification No. 129/2021 dated 01.11.2021)

In exercise of the powers conferred by sub-sections (11) and (12) of section 245D of the Income Tax Act, inserted by the Taxation Relaxation & Amendment Act, the Central Government has notified the e-Settlement Scheme, 2021, vide its Notification S.O. 4584(E) No. 129/2021, dated 1.11.2021, to be made effective from 1.11.2021.

This Scheme shall be applicable to pending applications in respect of which the applicant has not exercised the option under section 245M(1) of the Act and which has been allotted or transferred by Central Board of Direct Taxes to an Interim Board.

The hearing proceedings before the Interim Board shall take place through video conferencing, without any personal appearance, and the proceedings shall not be open to general public.

All communications between the Interim Board and the applicant or his authorised representative shall be exchanged by electronic mode only.

After hearing the applicant and the Principal Commissioner or the Commissioner, through video conferencing or video telephony, and after examination of all the information, document, record, report and evidence with it, the Interim Board shall pass an Order under section 245D(4) of the Act. Such an Order shall be delivered to the applicant vide the registered email address of the applicant, along with a copy to the Principal Commissioner or the Commissioner.

8.6. Faceless Scheme for Determination of Arm's Length Price [Section 92CA]

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has inserted subsections (8), (9) and (10) in Section 92CA of the Income Tax Act, 1961, w.e.f. 1.11.2020.

The subsection (8) of section 92CA, inter alia, empowers the Central Government to notify a scheme for the purposes of determination of the arm's length price so as to impart greater efficiency, transparency and accountability by––

(a) eliminating the interface between the Transfer Pricing Officer and the assessee or any other person to the extent technologically feasible;

(b) optimising utilisation of the resources through economies of scale and functional specialisation;

(c) introducing a team-based determination of arm's length price with dynamic jurisdiction.

Sub-section (9) of section 92CA further provides that for the purposes of giving effect to the aforesaid scheme, the Central Government may by notification in the Official Gazette direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified.

8.7. Faceless Scheme for Making of Reference to Dispute Resolution Panel [Section 144C]

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has inserted subsections (14B), (14C) and (14D) in Section 144C of the Income Tax Act, 1961, w.e.f. 1.11.2020.

The subsection (14B) of section 144C, inter alia, empowers the Central Government to notify a scheme for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by––

(d) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible;

(e) optimising utilisation of the resources through economies of scale and functional specialisation;

(f) introducing a mechanism with dynamic jurisdiction for issuance of directions of dispute resolution panel.

Sub-section (14C) of section 144C further provides that for the purposes of giving effect to the aforesaid scheme, the Central Government may by notification in the Official Gazette direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified.

8.8. Scheme for Faceless Appeal to Appellate Tribunal [Section 253]

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has inserted subsections (8), (9) and (10) in Section 253 of the Income Tax Act, 1961, w.e.f. 1.11.2020.

The subsection (8) of section 253, inter alia, empowers the Central Government to notify a scheme for the purposes of appeal to the Appellate Tribunal so as to impart greater efficiency, transparency and accountability by––

(a) optimising utilisation of the resources through economies of scale and functional specialisation;

(b) introducing a team-based mechanism for appeal to the Appellate Tribunal, with dynamic jurisdiction.

Sub-section (9) of section 253 further provides that for the purposes of giving effect to the aforesaid scheme, the Central Government may by notification in the Official Gazette direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified.

8.9. Procedure for Faceless Appeal to Appellate Tribunal [Section 255]

The Finance Act 2021 has inserted subsections (7), (8) and (9) in Section 255 of the Income Tax Act, 1961, w.e.f. 1.4.2021.

The subsection (7) of section 255, inter alia, empowers the Central Government to notify a scheme for the purposes of disposal of appeals by the Appellate Tribunal so as to impart greater efficiency, transparency and accountability by –

(a) eliminating the interface between the Appellate Tribunal and parties to the appeal in the course of appellate proceedings to the extent technologically feasible;

(b) optimising utilisation of the resources through economies of scale and functional specialisation;

(c) introducing an appellate system with dynamic jurisdiction.

Subsection (8) of section 255 further provides that for the purposes of giving effect to the aforesaid scheme, the Central Government may direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified.