Faceless Appeals Conceptual Framework 110323 PDF

FACELESS APPEALS
Conceptual Framework
Presented By CA Nitin Bhuta , Mumbai

DISCLAIMER
All views stated are my personal views, they are not binding on
ICAI/WIRC/Tax Bar Association. My personal views may be
correct/incorrect as they are expressed based on my
understanding of the subject.
All members/listeners are requested to go through tax law
provisions on their own and advise their clients accordingly as each
situation is peculiar in itself.
All Illustrations provided are imaginary and any resemblance to any
situation/s is purely co-incidental and without any intentions to
disclose private and confidential information.
COMPILED AND PRESENTED BY CA NITIN BHUTA 2

1. Foundation
2. Faceless Appeals – Objective & Meaning
3. Faceless Appeals – Peculiarities and Similarities
4. Faceless Appeals – Structure and Functions
5. Faceless Appeals -Appealable/Non Appealable Orders
6. Faceless Appeals – Standard List of Documents
7. Faceless Appeals Procedures – Analytical Comments
OUTLINE 8. Faceless Appeals – Penalty Proceedings

9. Faceless Appeals –Rectification Proceedings
10. Faceless Appeals & Appellate Proceedings
11. Faceless Appeals – Communications
12. Faceless Appeals – Do’s and Don’ts
13. Faceless Appeals – Opportunities, Threats & Challenges
14. Faceless Appeals – Way Forward, Future Developments &
Expectations
15. Faceless Appeals – Conclusions

Foundation

PRESENTATION

Foundation
Digital Footprints – Ocean –Iceberg???
Nebulous
Human Interface
Efficiency
Team Accountability
Data Dashboard/Hash value
Technology plus Communications
Dynamic
Fundamental Rights
A Paradigm Shift –FV ??-FL ??
Is it old wine in a new bottle?

?????

SAC (GST Classification ???)
Articulation &
RCC Foundation Representation
R C C
Science Arts Commerce
Which one is more difficult ??????????

Quality vis-à-vis Quantity ??????????
Knowledge & Communication vis-à-vis Rudimentary practices ??????????

Dynamic Team Based Data/Research

Tax Ecosystem

Tax Ecosystem
Income Tax Law Documents

Forms
Procedures
Alternative remedies
Acts/Rules/Forms
Allowed/
Directory Deductible/
Not allowed
Time Limits
Restrictions Penalty
Heads of Income
Demand and
recovery
Prohibitions Prosecutions

Ascertainment Tax Ecosystem
Computation,
Transactions BOA FS Self Assessment
,ITR and TAR
Scrutiny
ITAT, HC & SC Assessment Intimations
CIT Appeals
Writ petitions &Rectifications
ROI-Return of Income,
Arithmetical
I- Increased , D-Decreased accuracy
E-Exemptions/D- Deductions
A-Allowed/D-Disallowed E/D – R-A/R
ROI-I/D
R-Refund – A- Allowed, R-Rejected A/D Others Determination

Tech Developments
IIncome Tax Law – 10 decades
Timelines – 2 Decades
DIT
Systems PAN ITD
Portal
ITR PAN Challan TDS & Corporate CPC
2005 2009
-1981 1984 2003
2004 2005 Returns 2006
Faceless Assessment E Assessment Expansion E -assessments

Others
13.08.2020 Scheme 2019 2018 2016
ITD
Faceless Appeal Faceless Penalty Faceless Tribunals
25.09.2020 Ver 2
12.01.2021 7.6.2021 25.06.2021

Tax Charter – Income Tax Department
Contours Contours
To provide fair, courteous, & reasonable To maintain confidentiality

treatment
To treat taxpayer as honest To hold its authorities accountable
To provide mechanism for appeal & review To enable representative of choice
To provide complete and accurate To provide mechanism to lodge complaint

information
To provide timely decisions To provide a fair & just system
To collect the correct amount of tax To publish service standards and report
periodically
To respect privacy of taxpayer To reduce cost of compliance

Tax Charter – Tax Payer
Contours
To be honest and compliant
To be informed
To keep accurate records
To know what representative does on this behalf
To respond in time
To pay in time

Faceless Assessments - Functions – Section 144B(3)
Assessment Technical Review Unit

Verification
Unit (iii) Unit (v) (vi)
Unit (iv)
Review of Draft AO
To act as knowledge bank or
Conduct Enquiry Points of Facts and Law
repository incorporated
To make assessment Cross Verification To assist for – Issues on additions/
/reassessments Books examinations Legal, Accounting, Forensic disallowances discussed
Issue Identification Statement of Witness Information technology Whether all documents and
Seeking Information Physical verification on Valuation, Transfer pricing, submissions considered as well as
Analysis of Information approval of Pr.CCIT of NaFAC Management or any other rebuttal
matter Judicial review
Arithmetical accuracy

Diagrammatic - Faceless Assessments
Third Parties
CPC Bangalore NaFAC Assessee
Electronic
Jurisdictional AO RaFAC (X) Next slide
VU TU RU
AU AU AU AU

Communications ( DSC Authenticated) & DIN - Notices
Regd
account Any Other
(Phone/
visit/courier/
Post)
Section
282
E-mail
Mobile SMS
App
Assessee/AR ? Digital Footprints- All sources of connections ?

Electronic Response
( Rule 14C – Not. 14/09/21)- EVC/DSC authentication?
Full /Partial (Hash values)
Document-
Max 50 MB
Max 10 Nos Upload
Each file –5 MB
PDF XLS XLSE and CSV Format
File Name
File Name
- (Hyphen)
/, \, *, &, , , ;, : Space
_(underscore)
Approved/
Adjournment – EVC/OTP/DSC Rejected
Suo Motto
1. Out of Station 2.Gathering of material from multiple sources requires 3.
Multiple Grounds 4. Pre occupied with filing activity 5. Others
PH/Video
Conferencing – 1. Materials submitted not considered in the Draft AO 2. Materials requires
explanation due to complexity 3. Inability to explain properly in writing
post DAO???? 4. Oral Evidence 5. Others
PCIT approval Stage 2 - 6. VC Facility Not available 7. Medical grounds 8. Others

Multiple?
Authorised Representative
Section 288
Chartered Related TP &

Accountant Assessee Employee Others
person Advocates
Appointment Acceptance/Rejection
POA/LOA – Stamping
Every State has different stamp duty rate
Format was provided on old ITD website/but we can draft as per our requirements

Prima facie adjustment or Reassessment Notices

Section 143(1)(a) – prima facie adjustments
Assessment.
143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in
the following manner, namely:—
(a) the total income or loss shall be computed after making the following adjustments, namely:—
(i) any arithmetical error in the return;
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under
sub-section (1) of section 139;
(iv) disallowance of expenditure 68[or increase in income] indicated in the audit report but not taken into account in computing the total income in the
return;
(v) disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in
respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or
(vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic
mode:
Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no
response is received within thirty days of the issue of such intimation, such adjustments shall be made:
Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the
1st day of April, 2018;

Pertinent Litigation Issues
Contours Contours
Notices issued with short time lines ??? Notice is bad in law Where ITRs not filed still notice u/s 143(2) issued followed
whether under old provisions or New provisions ??? by 142(1) questionnaire ???
Replies filed not considered while passing the order ??? Incorrect approval for issuing notice???
Burden of income escapement not proved by the
department ????
Incorrect Section reported or Section not mentioned in the Change of Guard issued notice without application of
order ? Or Non Speaking orders? mind??? Or change of opinion ???
Non issue of SCN ??? No Supply or incorrect supply of RUD, Facts vary based on examination of Digital Trail???
thus Writs filed for seeking such documents ???
SCN Contents and additions different??? Opportunity of Hearing not given. ??? When to seek such
an option ………….
Limited Scrutiny vs. Complete Scrutiny??? Non issuance of Draft order???....if two orders are issued
then……………
Incorrect Findings by the ITOs without verifications or data Serving of Notice etc. ??? Or Notice arising out of Search
collected or duplications of data???.....arising due to data cases before 01.04.21 whether notice to be issued u/s 148
sharing or u/s 153C ??? Penny stock notices – 148/153C???

Pertinent Litigation Issues
Contours Contours
Section 143(1)(a) adjustments issues ??? Defective notices Succession issues ???
u/s 139(9)…………..
Unexplained family of sections??? Section 68, Section 69A, Notices issued to deceased persons??? Notice is bad in
Section 69B, Section 69C & Section 69D etc. law whether under old provisions or New provisions ???
Method of accounting??? ICDS issues ??? Accounting High Pitch assessments ???
Standards issues ?
Valuation issues of properties??? Non disclosure issues etc. Notice authentication ???
Section 43B/Section 40(a)(i)/(ia) disallowances ??? Improper approvals ???
Brought forward and carry forward of losses ? Deviations in Draft Order vis-a-vis Final Order ???
Deemed Dividends ?? Clubbing of Incomes ? Prejudiced mind or Other reasons. ???

Reassessment
New Provisions – further expanded by
Old Provisions – FA 22 ( Data/Information)
Reasons to believe (getting expanded )
NA
Income from
I>1 Income - Normal
Normal S.153A Asset > 50 Lakhs
Lakhs Overseas
S.153C
3 Yrs. 10 Yrs.
4 Yrs. 6 Yrs. 16 Yrs.
S.132/
S132A
End of End of End of End of End of Rel.
Rel. AY Rel. AY Rel. AY On or Rel. AY AY
before
31.03.21 Overseas ???
*Black Money Act/PMLA * Expln. exception 1. RMS 2. CAG 3.90/90A

4. Section 135A (Faceless) 5. Tribunal or court
Reassessment
JAO NaFAC
FAS (144B),
Notice 1.4.21
Assessee
Assessment Declaration of SC Judgement
reopened Additional Income Gkn Driveshafts
ROI u/s 148 /Penalty (India) Ltd vs Income
Y Tax Officer And Ors
2002 Supp(4) SCR 359
Bench: Syed Shah Quadri,
Request Passing of No Arijit Pasayat
Reasons for Order Reopening
reopening N
Convey Filing of cross

Reasons objections

Validity of Reassessment notice issued in June 22 –
Union of India Vs. Ashish Agarwal (04/05) & Cir. (11/05)
In respect of notice issued u/s 148 during the period 01.04.21 to 30.06.21
Information or material shared with assessee issued on or before 02/06/2022 after above judgement is
delivered as well as circular issued. ( if it is not provided then what happens ? Or if no information or
material is available with JAO????? )
Reply filed by the assessee on or before 30/06/2022.(or if adjournment sought by the assessee ??)
New notice u/s 148A(d) is issued by AO on or before 30.06.2022. (Do verify signing date of signature or if
notice is issued before reply received from the assessee)
Proviso 3 to Section 149(1) –The time allowed to the assessee ( as per SCN u/s 148A) shall be excluded to
determine the time limit u/s 149(1) - what happens if BOAs are not available beyond 6 years ????

HC*
Validity of Reassessment notices issued in June 22 –
Union of India Vs. Ashish Agarwal dt 04/05/22 & Cir dated 11/05/22 ( Retrospective- Back from Future???)
Old Law – Income escaping assessment New Law- Reformist provision-– Income escaping assessment
Assessment Time Limits Time Limits Time Limits Validity of Notice Time Limits Time Limits Time Limits Validity of
Years Income < 1 Income >1 Income > 50 * ( for Income > Income < 1 Income >1 Income > Notice * ( for Income
Lakhs Lakhs - Lakhs 50 Lakhs) Lakhs Lakhs 50 Lakhs > 50 Lakhs)
– 4 years 6 Years (+2) -10 years * -10 years *
12-13 31.03.17 31.03.19 31.03.19* TB /TB* 31.03.16 31.03.16 31.03.23 TB /TB*
13-14 31.03.18 30.06.21 30.06.21* TB /Valid or Invalid* 31.03.17 31.03.17 31.03.24 TB /Valid or Invalid*
16-17 30.06.21 31.03.23 31.03.23* Valid/Valid* 30.06.21 30.06.21 31.03.27 Valid/Valid*

22-23 31.03.27 31.03.29 31.03.29 Valid/Valid* 31.03.26 31.03.26 31.03.33 Valid/Valid*
If Time limit is Yes under old scheme as well as under new scheme then only Notice is valid otherwise “ Not valid”
I - Income TB- time barred BOAs > 6 yrs. ??? * My view – New Law
Provisions

Penalty Notices

Common Mistakes
Total
Income/
ROI

TI TI TI TI
Late Fees
Defective
Returns
Common Uncommon
Common Rectifications
Mistakes
Tax Demands
Mistakes Confuse
Penalties

Mandatory
** misreporting May direct
***Mansukhlal of income /Shall pay
***Discretionary
V.CIT (1969) (MRI)
73 ITR 546(SC)
Section
270A/270AA
From
1.4.2017
50% or 200%
Penalties-
* under ***shall be *concealment
Rationalize- reporting of liable to pay of particulars Section
Objectivity, income (URI) instead of of income
271(1)(
Certainty and shall pay c) upto
Clarity 31.03.17
***Hindusta
n Steels Ltd
Misdemeanor
V. State of 100% or
(next slide)– **furnishing
Orissa 300%
graded penalty inaccurate
(1972) 83 ITR
– reducing particulars of
26 ( SC)
discretion income
270A(12) –
Misdemeanor
270A(11) – no
double levy order in writing
Minor wrongdoing
A non indictable offense or less serious crime
Slightly bad or breaks the rule but not a crime ( absence of mens rea)
Act of wrongness or unacceptable
Misreporting of Income*- Section 270A- (8) to (10)
Under Reporting of Income* – Section 270A -(2) to (sub set of under reporting – for prescribing different
(7)/(10) rates of penalties) ( committed offence )
( lesser offence ) 1. Misrepresentation or suppression of facts
1. AI or Deemed TIA/RA > ROI u/s 143(1) (a) 2. Failure to record investments in BOAs
2. AI or Deemed TIA/RA > Threshold Limits 3. Claim of expenditure nor substantiated by
3. ROI filed for the first time u/s 148 evidence
4. Reassessed income > Income assessed or 4. Recording of false entry in BOAs
before reassessment 5. Failure to record any receipt in BOAs having a
5. AI /RA has impact of reducing loss or bearing on TI
converting such loss into income 6. Failure to report any international transactions
or Specified Domestic Transactions
Penalty- a sum equal to 50% of Tax payable Penalty- a sum equal 200% of Tax payable on
on unreported income unreported income as determined.
* Undefined terms – only certain instances are specified

PENALTY
MANDATORY DISCRETIONARY
✓May if conditions satisfied ❖Penalty may be levied
✓Objective of doing away with discretion ❖Judicial precedents u/s 271(1) (c ) supports
the view that it is discretionary –Todarmal
✓Issue of SCN is to ensure that case does not
Safarishmal Lashkar v. CIT [(1979) 118 ITR
fall away under clause (6)
759 (MP)],
✓Section 273B provides that penalty shall not
be levied if assessee establishes reasonable ❖Issue of SCN itself provides that penalty may
cause and the said is not amended to not leviable
incorporate section 270A.

Faceless Appeals

Faceless Appeals – Objective and Meaning

1 . “ Faceless Appeal Scheme 2020 has been ushered in by
introducing section 250(6B) in the Income-tax Act, 1961
with the objective of fostering greater efficiency,
transparency and accountability by:
a. Eliminating Human Interface between Appeal Units

and the Appellant to the extent possible by harnessing
technology;
b. Optimising the use of resources through economies of

scale and functional specialisation;
FACELESS APPEALS - OBJECTIVE

c. Introducing an appellate system with dynamic
jurisdiction in which an appeal shall be disposed of by
one or more Appeal Units.
Comment: With the advent of technology initiatives under the

schema, with the cross linkages of data relating to tax payers
under various laws, with the increasing transparency of
transactions captured by the state machinery, will the
Appellant need to first validate and corroborate the relevant
information with the digital trail of transactions while
preparing and justifying the statement of facts, grounds of
appeals as well as arguments forming part of their written
submissions?

FACELESS APPEALS - MEANING
F Factual, Flawless, Fruitful, Flamboyant (Loud and Extravagant)
A Accurate, Assertive, Artful, Astute(Wise)
C Communication, Contactless, Crafty, Clear (Unblemished)
E Enterprising (Innovative), Efficient, Effective, Effectual
L Limitless, Lateral, Latitude and Longitude (Dynamic Jurisdiction)
E Energetic, Eyeful (Vision), Economic, Endless
S Seamless (All-in-One), Symbolic, Stress-free, Stakeholders (Participants)
S Strategic, Systems (Tech-driven), Synchronisations , Smooth

Commonly Used Terms In The Presentation
Term Meaning Term Meaning Term Meaning
NFAC/RFAC National/ AAS Automated Allocated AET Automated

Regional Systems Examination Tool
Faceless Appeal
Centre
NaFAC/RaFAC National/ RMS Risk Management DO Draft Order

Regional Strategy
Faceless Assessment
Center
Communication Electronic only SOF Statement of Facts GOA Grounds of Appeal
PH or VC or VT Personal Hearing AE Additional Evidence AGOA Additional Grounds of

Appeal
Delivery Mobile App/SMS/E- ITAT Tribunal COD Condonation of

mail Delay

Faceless Appeals – Peculiarities And Similarities

The Central Government may make a
(a) eliminating the interface
scheme, by notification in the Official between the Commissioner
Appeals – Section 250(6B) Gazette, for the purposes of disposal of (Appeals) and the appellant in the
25.09.2020 appeal by Commissioner (Appeals), so as course of appellate proceedings
to impart greater efficiency, transparency to the extent technologically
Faceless
and accountability by
feasible;
The Central Government may make a scheme, by

Assessments- Section 143(3A) notification in the Official Gazette, for the purposes of between the Assessing Officer
making assessment of total income or loss of the
assessee under sub-section (3) or section 144 so as to and the assessee in the course
13.08.2020 impart greater
accountability by—
efficiency, transparency and of proceedings to the extent
technologically feasible;

The Central Government may make a scheme, by
Penalty – Section 274(2A) notification in the Official Gazette, for the purposes of between the income-tax authority
imposing penalty under this Chapter so as to impart and the assessee or any other
12.01.2021 greater efficiency, transparency and accountability
by— person to the extent
technologically feasible;


scheme, by notification in the Official
(b) optimising utilisation of
Appeals – Section 250(6B) Gazette, for the purposes of disposal of the resources through
25.09.2020 appeal by Commissioner (Appeals), so as
economies of scale and
Faceless
to impart greater efficiency, transparency
and accountability by functional specialisation;
The Central Government may make a scheme, (b) optimising utilisation of

by notification in the Official Gazette, for the
Assessments- Section 143(3A) purposes of making assessment of total income the resources through
13.08.2020 or loss of the assessee under sub-section
(3) or section 144 so as to impart greater economies of scale and
efficiency, transparency and accountability by— functional specialisation;
The Central Government may make a scheme, (b) optimising utilisation of the
Penalty – Section 274(2A) by notification in the Official Gazette, for the
purposes of imposing penalty under this Chapter
resources through economies of
12.01.2021 so as to impart greater efficiency, transparency scale and functional
and accountability by— specialisation;


scheme, by notification in the Official (c) introducing an appellate system
Appeals – Section 250(6B) Gazette, for the purposes of disposal of with dynamic jurisdiction in which
25.09.2020 appeal by Commissioner (Appeals), so as appeal shall be disposed of by one
to impart greater efficiency, transparency
Faceless
or more Commissioner (Appeals).
and accountability by
The Central Government may make a scheme,

Assessments- Section 143(3A)
by notification in the Official Gazette, for the (c) introducing a team-
purposes of making assessment of total income
13.08.2020 or loss of the assessee under sub-section based assessment with
(3) or section 144 so as to impart greater
efficiency, transparency and accountability by
dynamic jurisdiction.
The Central Government may make a scheme,

(c) introducing a mechanism for
Penalty – Section 274(2A) by notification in the Official Gazette, for the imposing of penalty with dynamic
purposes of imposing penalty under this Chapter jurisdiction in which penalty shall be
12.01.2021 so as to impart greater efficiency, transparency imposed by one or more income-tax
and accountability by—
authorities.

Faceless Appeals – Structure & Functions

Faceless Appeals Compositions
Not. No 76 & 77 of 2020 dt 25.09.20
Not. No 139 of 2021 dt 28.12.21
NFAC
CIT (A) Section
250(6B) & (6C)
Sd/-
Metropolitans
CIT(A)
X RFAC Cities
CIT (A) AU PAN India
Finance Bill 2023- Additional CIT(A) shifted to JCIT (Appeals) w.e.f 01.04.23.- 100 +

Functions
Not. No 139 of 2021 dt 28.12.21
NFAC – CIT(A) RFAC (X) AU –CIT(A)

• To facilitate the conduct of e-
• To facilitate the appeal proceedings
• Disposing of Appeal
conduct of e- • To facilitate the • Admission of additional
appeal proceedings conduct of e- grounds of appeal and making
inquiry making further inquiry as
in a centralised appeal proceedings desired
manner • Directing NFAC or AO Seeking
information and/or verification
• Jurisdiction to Seeking documents
• Jurisdiction to dispose appeal as • Granting opportunity of being
heard;
dispose appeal as per scheme • Analysis of information
per scheme • Review of Draft Order
• Determination of Jurisdiction

Functions - Analysis
Scheme provides communication only in the electronic mode through use of the
prescribed channels, but clarifications on the following points from the CBDT are
desirable and will be welcomed:
Not. No 139 of 2021 dt 28.12.21
• What happens to appeals arising out of old assessment cases which were filed
manually by the Appellant at the first stage of adjudication and which were never
digitalised?
• Will AU – CIT (A) have access to such records?
• Will AU- CIT (A) need to depend upon the documents/information/statements etc.
that would be provided by NaFAC or PO?
• Would the Appellant be entitled to seek copies of internal communications between
NFAC- CIT (A), RFAC (X) and AU- CIT (A) or is it that such copies would not be
provided to the Appellant for his/her documentation/records?
• Standard Operating Procedures internally followed for implementation of the
scheme should be made available in public domain for obtaining clarity on the
procedures followed.

Diagrammatic - Faceless Appeals
Not. No 139 of 2021 dt 28.12.21
Third Parties
CPC Bangalore
NFAC – [ CIT (A)] Appellant
NaFAC
Jurisdictional AO RFAC (X)
AU-CIT AU-CIT AU-CIT AU-CIT

VU ? TU ? RU ?
(A) (A) (A) (A)

Faceless Appeals–
Appealable/Non Appealable Orders
(Section 246/246A/248- Rule 45)

Faceless Appeals
Section 246A Section 248
Section 246A provides for appeal against

many issues, mainly relating to quantum of
Section 248 provides for appeal in the
income/loss, Amount of tax determined,
matter of TDS u/s 195, borne by the
characterisation of income, TDS related
payer and who denies liability to
issues including fees for late filing of TDS
deduct tax.
return, penalties under various provisions
of the Income Tax Act, 1961

Appeals directly before ITAT
Section 252 not appealable
1. The income is assessed in accordance

with the direction by Dispute Resolution • Refusal of Immunity provided u/s
Panel u/s 144C 270AA
2. Orders passed by CIT or higher
authority – such as 12A/12AB, 80G, • Amount of Interest u/s
S.263, penalty orders by CIT or above 234A/234B/234C unless the
etc. assessee claims he is not liable to
3. GAAR Orders passed by AO under the such interest.
approval of PCIT/CIT u/s 144BA

Faceless Appeals
Appealable Orders Non Appealable Orders
Order passed by Assessing Officer for Appeal arising out of

giving effect to appellate orders
serious frauds and investigation matters;
Order giving effect to APA u/s 92CD- major tax evasions matters;
subsection (3) sensitive and search matters;
international taxation matters;
Order passed by Assessing Officer for Black Money (Undisclosed Foreign Income
giving effect to the direction of CIT-A and Assets) And Imposition of Tax Act,
u/s 263 2015.

Faceless Appeals
Appealable Orders Non Appealable Orders
Refusal order as regard finding •Order u/s 197(1) – LDC in Form 13.
of Partition of HUF (total •Agreed additions in the assessment or
partition) – S. 171 rectifications.
Returns filed under Updated •Interest u/s 220(C)

Returns schema – Section •Order of Refusal for a grant of Stay of
139(8A) Demand.
•Issue of TRC certificate etc.

Faceless Appeals–
Standard List of Documents

Standard List of Documents
Filing of Appeal to CIT-A should be in Form 35, which is online for

quite some times, which includes Statement of Facts and Grounds
of Appeal and is to be accompanied by self certified copy of each of
the following:
Order Appealed against
Notice of Demand u/s 156
If it is an appeal against levy of penalty, the order from which
the penalty arose
TP order, if applicable
Evidence as regard the payment of Appeal Fees.

Appeal Filing Fees
Appeals to CIT(A)/NFAC under the scheme Amount of fees payable
Assessed Income Not exceeding Rs. 1,00,000 Rs. 250
Assessed Income exceeding Rs. 1,00,000/- but Not exceeding Rs. 500
Rs. 2,00,000
Assessed Income exceeding Rs. 2,00,000 Rs. 1,000
When the subject matter of the appeal is not covered by the Rs. 250
aforesaid cases

Data Size Limits
Particulars Limit Remarks
Statement of facts 1000 Words It can be filed as

Annexure, if larger in size
Each Ground of Appeal 100 Words It can be filed as

Prayer for condonation of delay 500 Words It can be filed as

The following also should be noted:

a) Total data limit is 50mb
b) All the files should be in PDF form or Zip Form

Faceless Appeals Procedures –
Analytical Comments

Digital Synchronisations
Digital VC/VT or Data Sharing

Dashboard software & Research
verifications
Word, PDF,
Electronic Disc, Cloud Any
Information 360*/720*
Records Data, ERP combinations
Systems
Electronic Security/
Dynamic Evidence Timelines
Privacy

Faceless Appeals – Analysis Foundation
Appeal Documents
Income Tax
• Online Form 35 –
SOF,GOA,COD,AGOA,AE etc.
• Order Appealed against Corporate &
Other Laws
SEBI Laws
• Notice of Demand u/s 156
• If it is an appeal against levy of
penalty, the order from which Appeal
the penalty arose Synchronisation
• TP order, (NA in case of Faceless Indirect Tax-

Appeal Scheme ) Excise
Labour Laws
• Evidence as regard the payment VAT
of Appeal Fees. Customs
FEMA Laws

Faceless Appeals – Analysis
Before Ongoing After

• First level submissions • Drafting SOF, GOA,
• Issue analysis AGOA, COD, AE etc.
• Exposure involved • Documentation
• Law & Rules Analysis Maintenance
• Order Review
(including judicial • Drafting written
• Verification of Post
submissions with
pronouncements) Hearing Summary
synopsis which are
• Document involved • Post Appeal effect
factual, precise and
• Risk Management • Alternative remedies
accurate & conclusions
Strategy • Cross Referencing
• Scratch Drafting • PH/VC
• Professional support • Post hearing summary

Faceless Appeals – Clubbing Provisions- Property
Before Ongoing After
• Drafting SOF, GOA, AGOA,

• Clubbing Provisions COD, AE etc. • Order Review – positive
• Section & Rules • Documentation
or adverse
• Existing reporting Maintenance – First and
Appeal stage – Property • Verification of Post
• Withholding review laws , Form 26S & ITR Hearing Summary -
• First level submissions • Drafting written submissions deviations
review with synopsis which are • Post Appeal effect -
factual, precise and applications
• Documentation accurate and conclusions
• Alternative remedies -
• Law Analysis • Cross Referencing
• PH/VC ITAT
• Order examinations
• Post hearing summary

Faceless Appeal - Procedures
Steps Procedure
1 Appeal filing by appellant on ITD Portal
2 NFAC – CIT(A) to allocate to RFAC (X) under automated allocation

system
3 RFAC (X) checks the compliance as regard time of filing and payment
of self assessment tax S. 249
4 If appeal is beyond time, RFAC (X) will go though whether
condonation of delay can be granted based on the reasons
5 RFAC (X) will also verify, if relevant, applicability of S. 249(4)(b)
exemption

Appeal Procedures
Step 4 Comment
Rejection of Appeal • If the Appeal is rejected by the NFAC, one of the

by NFAC - CIT(A) remedies available with the appellant is to
approach the Jurisdictional High Court under writ
or
route. ( No change after changes also)
Admission of
Appeal by NFAC- • If the Appeal is admitted then the NFAC shall
CIT(A) forward appeal to RFAC who in turn shall allocate
the appeal through AAS to any of the AU as per
the scheme for further processing of the appeal
filed by the appellant.

Not. No 139 of 2021 dt
28.12.21 Admission Of Appeal
Appropriate Competent NaFAC – CIT (A) Order U/s 143(3), 144 r.w.s
Authority Passing an 147, 154 ....Appealable
Order orders only
Assessee/Any Other person
Appeal Docs
No
change NFAC- CIT (A)
COD TO AU -
Yes CIT (A)
No
COD In No
time
Yes
A/R
AU - CIT D
(A)

Steps Procedure
6 If appeal is admitted, it will allocate appeal to an AU – CIT(A) on the

basis of automated allocation system
7 AU – CIT(A) may request to NFAC - CIT(A) for further information
which, in turn will communicate with appellant or any other person
including NaFAC.
8 Appellant or any other person will communicate with NFAC –
CIT(A) with details, request for time etc.
9 Appellant or any other person will communicate with NFAC –
CIT(A)with details, request for time etc.
10 NFAC – CIT(A)will send such communication to AU – CIT(A)

Food For Thought
• Step 7- Whether internal copies of such information/statements/documents/report could be
provided to the Appellant?
• Whether Appellant can file any cross-objection(s) or make submissions pursuant to obtaining of
information from the NaFAC or AO ?. clarification is desired promptly from CBDT on the same;
• Additional Grounds – any form? Or on plain paper ? There is a substantial difference between
additional grounds of appeal vis-à-vis Additional evidence as contemplated under Rule 46A of the
Income-tax Rules, 1962………. Appellant should aptly validate and corroborate such appeal
submissions while filing the appeal under the scheme. It is emphasised here that at times, Appellant
and/or their advisors don’t differentiate between “additional grounds” of appeal and “additional evidence”
in the appellate proceedings. They are inclined to think that both the terms can be used
interchangeably. Essential difference – “additional grounds” of appeal would mean grounds of appeal
which could have been emphasised by the appellant at the first stage of assessment proceedings even
though such document/statement and information was filed before the AO but was overlooked and it then
came to notice while reviewing application for the filing of first appeal. Whereas “additional
evidence” would require to justify the test of stipulations and/or conditions specified under Rule
46A of the Income-tax Rules 1962 and such additional evidence would draw support from the provisions
of the Indian Evidence Act 1872 and its subsequent amendments.

Steps Procedure
11 Such process may continue multiple times ( Step No 7 to 10)
12 Appellant may file additional ground to NFAC -CIT(A) which will be

sent to NaFAC which in turn will send the same to assessment unit
for their Report
13 NFAC -CIT(A) will send the response/non response of NaFAC or AO
to AU-CIT(A)
14 NFAC-CIT(A) will communicate to appellant as regard acceptance or
non acceptance of additional ground
15 Similar process will be carried out as regard the additional evidences
and acceptance or non acceptance of additional evidences will be
communication to the appellant

Food For Thought
• Step 11- The Scheme does not provide an option to file cross objections in a scenario
where such additional grounds of appeal are rejected.
• Isn’t desirable that the Scheme should provide such an opportunity to ensure and demonstrate
fairness and transparency in the faceless appeal mechanism.
• If such inbuilt recourse would benefit both the parties, by not being compelled to raise the
additional grounds of appeal later through alternate remedies available, such as when filing before
the Tribunal or resorting by way of writ petitions under the article 14 of the constitution of India before
the High Court’s having jurisdiction over the matter.
• Step 14- filing of additional evidence……………. – any form? Or on plain paper ? ………. Whether internal
copies of such information/statements/documents/report could be provided to the Appellant if
such additional evidence is rejected or whether there is any opportunity to file cross objections?
Such report, whether positive or adverse; should be provided mandatorily to both parties. Suitable
clarification should be provided by CBDT.
• It is known to each one of us it well settled Rule of Law that opportunity of examination, cross-
examination, raising objections and submitting responses shall be provided equally to all the
affected parties;
• SOPs for admitting or rejecting additional evidence should be explicitly stated by the Legislature so
that it acts as a yardstick to evaluate the effectiveness of the process;

28.12.21 Filing Of Evidence
Chart 1 Appeal Unit- CIT(A)
Submission with Additional Notice to Assessee/Appellant/Any

Evidence Other person
NFAC- CIT(A)
Submission with
Notice Received
Additional
Evidence Assessee/Appellant/Any
Other person
Chart 2

Not. No 139 of 2021 dt Admission Of Additional Ground/Evidence -( By both the parties)
28.12.21
Chart 2
Chart 1
AU -CIT(A)–
Submission in response to
different in all notice and submissions
the stages Is it additional
evidence/Fresh
Chart 3
Ground
No
AU- DO by AU- NFAC-

AU- CIT(A)
Through CIT(A)
CIT(A)
CIT(A) NFAC- CIT(A)
In review Review
SCN-DO Points
Through
NFAC-CIT(A)
Final Appeal Submission
Order to SCN
Appellant/Any Other persons

28.12.21 Additional Evidence Admission Process ( By both the parties)
Jurisdictional AO Chart 2
NaFAC Is it AE/FG ?
AO Through NFAC- -
CIT(A)
Ground for
Report
calling AE
AU -CIT(A)
Additional Evidence/Fresh
Ground/New Ground
No
A/R
Chart 2
AE or FG or NG
Yes D/R
Through NFAC
-CIT(A)

Steps Procedure
16 AU -CIT(A)may request NFAC-CIT(A) for further documents from

appellant
17 Similarly AU-CIT(A) or Assessment Unit -CIT(A) may request
assistance from VU/TU, which will be conveyed to NFAC-CIT(A)
18 NFAC -CIT(A)will convey report of VU/TU to assessment unit and
ultimately to AU
19 AU -CIT(A) may convey NFAC-CIT(A) for enhancement with reasons.
20 NFAC-CIT(A), in such case, will give opportunity to the appellant in

respect of such proposed enhancement

1. It
Appeal Procedures
Step 16 & 17 Comment
• Opportunity of live hearing through Video Conferencing or

Action by NFAC -CIT(A) on Personal Hearing (PH) should be liberally granted. ( now it is
mandated if sought)
receipt of request from
• Time limit of 30 minutes in the case of PH could be
NaFAC and/or AO
insufficient considering the complexity of the matter under
& consideration, in such cases a liberal view should be taken and
adequate time granted for the live hearing;
AU -CIT(A) intends to • Appellant should be allowed to record the personal hearings
enhance an assessment, or wherever possible on their computer systems so that they have a
enhance a penalty or record and need not ask for the same from the NFAC -CIT(A);
reduce the amount of • Considering the size and complexity involved, filing of high-
resolution documents should be permitted. Also, uploading
refund
of larger sized files should be suitably facilitated by the
designated portal and electronic interface systems;

Appeal Procedures 1. It
Step 16 & 17 Comment – contd.
• Opportunity of seeking adjournment should be considered

Action by NFAC -CIT(A) on liberally after judiciously evaluating all relevant facts;
receipt of request from • Time limit for filing of electronic response should provide for at
NaFAC and/or AO least 14 working days excluding Saturdays and Sundays and
notified public holidays;
&
• Filing of documents in vernacular languages supported by
AU -CIT(A) intends to English Transcripts may be provided with well explained SOPs
in simple, lucid and precise manner;
enhance an assessment, or
enhance a penalty or • To facilitate easier verification of the documents/statements
and information pursuant to Appellate Proceedings,
reduce the amount of designated VU units should be preferably located near to the
refund usual place of residence or usual place of business or the
system should permit electronic verification of documents by AO;

• in the scheme itself.
1. It
Appeal Procedures
Step 16 & 17 Comment
• Time limits for the disposal of the Faceless Appeals

Action by NFAC -CIT(A) on should be provided with well documented SOPs for the
receipt of request from same in the interest of all the stakeholders;
NaFAC and/or AO • Request to seek early hearing should be provided in the

appeal rules, particularly where amounts involved are
& substantially high and considering the genuineness of the
facts involved. Interim remedy to be provided in the form of
AU -CIT(A) intends to speedier obtention of stay order against the demand and
enhance an assessment, or recovery proceedings as per the provisions of the Income-
enhance a penalty or tax Act 1961.
reduce the amount of • In genuine cases, where it is not practically possible to
refund explain all aspects of the matters involved
electronically, after due review and appraisal, the
facility of physical hearing should be granted.
• or the system should permit electronic verification of documents by
AO;

Steps Procedure
21 Appellant may e-file his/her submissions to NFAC-CIT(A) in regard to

the proposed enhancement
22 AU-CIT(A) also may convey initiation of penalty proceedings to NFAC-
CIT(A)
23 NFAC-CIT(A), in such case, will issue notice of initiation of penalty to
appellant
24 Appellant or any other person may e-file his/her submissions in
regard to the penalty proceedings to NFAC-CIT(A)
25 NFAC -CIT(A)will send such submissions of the appellant or any other
person to the AU-CIT(A)

Appeal Procedures
Step 18 to Step 24 Comment
• No provision of sharing draft order with appellant as compared to

such provision provided under faceless assessment scheme notified
under section 144B of the Income-tax Act 1961;
Methodology, • Provision of sharing draft order should be introduced in the Faceless

Appeal Scheme;
Formulation and • If there is revision or variation proposed in the draft order, the
appellant should be made a party to the process of determining
passing of the outcome, because ultimately the appellant’s affairs are getting
affected by such proposed revision or variation whether favourable or
Appellate Orders adverse;
• In the case of adverse revisions, appellant should be given an

opportunity to file cross objections as well as make submissions
to oppose such revisions due to RMS or AET used by NFAC;
• SOPs to be followed in passing and framing the order, should be shared

in public domain in the interest of all the stakeholders;

Steps Procedure
26 AU -CIT(A)will prepare draft appeal order and draft penalty order, if any, and
send to NFAC-CIT(A)
27 X NFAC -CIT(A)will send such draft orders to another AU-CIT(A) (AU 2-CIT(A)) on
the basis of automated allocation system. ( Review is done away now) X
28 X AU 2 -CIT(A)may convey agreement with or variation in draft appeal order and

penalty order, if any, to NFAC -CIT(A) ( Review is done away now) X
29 X If no variation, NFAC -CIT(A) will prepare final order of appeal and penalty and
will convey to appellant, jurisdictional AO and others as per SOP-( Review is done
away now) X
30 X If AU 2 -CIT(A)suggests variation to the Draft Appeal Order or Draft Penalty
Order, if any, to NFAC-CIT(A), it will send the same to third appeal unit (AU 3) -
CIT(A)on the basis of automated allocation system. -( Review is done away now) X

Steps Procedure
31 X AU 3 -CIT(A)may give its observation or prepare draft of the final appeal

order and penalty order, if any. and send the same to NFAC-CIT(A). -(
Review is done away now) X
32 NFAC-CIT(A) will prepare final order of appeal, penalty, if any and send
to appellant, jurisdictional AO and others as per SOP.
Stay of Demand – unclear
Powers of Transfers are now governed by Section 120.
Communication – requires only in case of Real time alerts

Not. No 139 of 2021 dt 28.12.21
Can Appellant use the Yes it can be used as savings clause in the new scheme which states that the
above notification against supersession of the earlier notification shall be except as respects things done
the verdict of old appeals ? or omitted to be done before such supersession
If Appellant is before ITAT in Yes, An Appellant , whose appeal has been disposed of under the old scheme
view of order passed under may take an argument before ITAT, that the matter can be sent back to be
old appeal scheme, then disposed of as per the new scheme, as the appeal was disposed of under an
can such matter be
remanded back?
absolutely flawed scheme
Is old appeals adjudicated Considering the language of Notification No. F. No. 279/Misc./66/2014-SO-
are bad in law ? ITJ(Pt.1) 29 December 2021 viz. CBDT has notified that all appeals filed under
section 246A and 248 of the Act, other than those in the Central Charge and
International Tax Charge. But in my opinion they are not bad in law.
Early hearing ? Guidelines for priority disposal dated 29.12.2021 –F No 279/Misc./M-102/2021-ITJ
- Request made to be considered by PCCIT NFAC- Demand above Rs. 1 crore/
refund exceeds Rs. 1 lakh/ directions issued by Courts/ Senior Citizens/ other
case of genuine hardships

Faceless Appeals –
Penalty Proceedings
(Notification No 02/2021 & 03/2021
January 12,2021)

Penalty Proceedings
Appeal Appellant /
AU 1 Scheme only Any other person
No Concept of
Review Order
NFAC
Non
Compliance Penalty
Draft Order -Levy/
Process Drop Order
Notice Direction Order

AU 2
Appellant /
NFAC NFAC RFAC
Any other person

Rectification Proceedings

Rectification Proceedings
NFAC –
OR
CIT (A)*
AU/NaFAC/AO No concept of
Appellant/ Time Limit Review Order
Any Other person Reply
Application Allow/ * By the same

Reject CIT(A)
Mistake
Notice
Apparent S.154
AU – CIT (A) Draft Order/

RFAC (X) * Reject Order

Faceless Appeals &
Appellate Proceedings

Ministry of Ministry of The ITAT works under the directions

Finance Law and control of Ministry of Law whereas
NFAC works under the directions and
control of Ministry of Finance. It is
important that their respective roles, the
modus of synchronisation between
them viz. ITAT and NFAC need to be
well defined and functionally laid
NFAC ITAT down. This assumes greater
importance in cases where appeals
are set aside by the ITAT or referred
Sangam back to NFAC.
??????

Ministry of Ministry of
• When a matter is set aside, how it would be
Finance Law reinstated in the system needs to be
clarified, particularly as to the methodology to
be followed for this under Faceless Appeal
Scheme 2020, this is not yet specified;
• Such clarification with SOPs applicable for

such situations needs to be issued by CBDT
through Ministry of Finance
NFAC ITAT • Similarly, regarding matters referred back
from the Supreme Court, how it would be
addressed under the scheme and how they
would be disposed of needs to be explained by
Sangam a well-defined process incorporated in the
?????? Faceless Appeal Scheme ?????.

Faceless Appeals
Exchange of Communications,
Authentication of record
Delivery of Electronic record

28.12.21 Exchange of Communications
Communications Electronic RFAC (X)/AU/Appellant

form writing and/or any other person
with DIN only
Authentication DSC/EVC All records
Regd.A/c/
SMS/E- Time records/Hash
Delivery
mail/Mobile records
App etc.

Exchange of Communications
• Faceless Appeal scheme strives to deploy technology optimally, effects economies of scales to the
extent possible while achieving the objective of faceless interaction, by doing away with personal
interface between/among the parties under the unique dispensation of dynamic jurisdiction.
• All of us need to be reoriented and geared differently to deal with this new reality in the annals of
assessment dynamics in our country. This is a process that entails embracing new technology,
learning, unlearning and relearning newer ways of communicating, to respond to inquiries and
provide the documents, statements and submissions supported by electronic records in accordance
with the methods prescribed under the scheme;
• Age old systems of face-to-face communication, physical delivery of notices, attending personal
hearings and order adjudications in different fora are being replaced by modern means of digital
communication. All stakeholders need to ensure that all their digital information is synchronised
and validated as they prepare to comply in the new regime.

No Personal Appearance In The Centres Or Units

Provisions
• A person viz. all types of assessee shall not be required ---------appear -------------
personally -----------authorised representative – before NFAC or RFAC (X) or AU
under this scheme.
• Appellant or any other person may (optional) request for PH if desired -------to
make oral submissions or present his case before AU.
• CC Or DG in charge of RFAC(X) – jurisdictional charge – AU - may (optional)now
mandatorily granted if such request sought.
• If application is approved, then hearing would be conducted through VC or VT or
any other mode of communications as per procedures.
• Examination or recording of the statement by Commissioner Appeals in AU
exclusively through VC or VT or any other mode of communication

Circumstances ( not specified till now ) under which PH may be granted/approved
The Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless
Appeal Centre shall, with the prior approval of Board, lay down the standards, procedures and processes for
effective functioning of the National Faceless Appeal Centre, Regional Faceless Appeal Centres and the
appeal unit set-up under this Scheme, in an automated and mechanised environment, including format,
mode, procedure and processes in respect of the following, namely:
(i) service of the notice, order or any other communication;

(ii) receipt of any information or documents from the person in response to the notice, order or any other
communication;
(iii) issue of acknowledgment of the response furnished by the person;
(iv) provision of “e-appeal” facility including login account facility, tracking status of appeal, display of
relevant details, and facility of download;

Circumstances ( not specified till now ) under which PH may be granted/approved ( contd)
(v) accessing, verification and authentication of information and response including documents
submitted during the appellate proceedings;
(vi) receipt, storage and retrieval of information or documents in a centralised manner;
(vii) general administration and grievance redressal mechanism in the respective Centres and units;
(viii) filing of additional ground of appeal;
(ix) filing of additional evidence; ( no format prescribed till date as well as for additional grounds of
appeal)
(x) specified amount referred to in sub-clause (a) of clause (xix) in respect of draft orders…………;
(xi) circumstances in which personal hearing referred under the scheme ( no such SOPs provided till
date)
shall be approved.

No Personal Appearance In The Centres Or Units - Comments
• Virtual hearing: This may not be in accordance with the settled doctrine of Audi Alteram Partem in
the traditional sense, which inherently requires personal/face to face hearing for the simple reason
that written words have their own limitations and even a thesis may not fully convey to the reader
understand what the author wants to convey.
• To what extent these proceedings are deemed to be judicial proceedings within the meaning of
sections 193, 196 & 228 of Indian Penal Code, as the notification only prescribes the mechanism and
the modalities, the emphasis is more on the procedure prescribed. Similar situations were examined
by the High Court in J.S. Parker v. V.B. Palekar, 94 ITR 616 held that what was meant by saying that
the Evidence Act did not apply to proceedings under the Income Tax Act was that the rigour of the
rules of evidence contained in the Evidence Act, was not applicable to income tax proceedings. So,
applying such judicial precedent and ratio decidendi, participants can validate that even though the
proceedings under the Income Tax Act, 1961 in the course of faceless assessment and faceless appeal are
no doubt quasi-judicial in nature, and to that extent strictly speaking the Code of Civil Procedure,
the Code of Criminal Procedure and Law relating to Evidence as applicable in Courts of Law in
judicial proceedings may not strictly apply.
• As protocol guidelines & SOPs are not yet formulated and therefore not made available in public
domain in respect of the scheme, the question arises as to how satisfaction would be recorded under the
schema u/s 14A, 68 to 69C etc. for any appeal matter under consideration? Will it be recorded by
Assessment Unit or Verification Unit or Review Unit or Technical Unit or RFAC or NaFAC?

Faceless Appeals -
Do’s and Don’ts

Do’s and Don’ts
• Use of Language in Communications – English or Vernacular
• You – Reader receptive Communications
• ABC–Accurate(Precise/Perfect),Bold(Daring/Audacious)and Constructive (Helpful/Positive)
• Use of Sentences – Long, Short & Complex – grammar usage – past , present and future
• Use of Commas, Punctuations, Semi Colons, Exclamations, Brackets, Paras, Flow etc.
• Use of Legal Jargons
• Use of Judicial Precedents & Legal Opinions
• Use of Previous Assessment Orders
• Use of Contextual references and linkages in submissions
• Use of Synopsis, Issues calibrations, Articulations and Conclusions
• Use of Documentations – original , copies and transcripts
• Dressing, Network, Recording, Surrounding, Time Commitments
• Sanitization of Document compilations
• Use of Flow Charts , Pictures and Graphs
• Summary records
• Others

Scanning Practices for Documents uploads
Taxpayers may kindly note that whenever any document is uploaded to the e-Filing website
in support of any service request, the following best practices should be complied.
Scan settings Key points to avoid poor quality

✓ Scan to a PDF. ✓ Documents with faint or faded text.
✓ Scan at 300dpi. ✓ Handwritten documents that contain
✓ Scan in Black and White only. important identifying information such as Pan
✓ Do not upload files with Read/Write/Password etc. making it difficult to read.
protection. ✓ Documents with ink bleeding or smudging.
Scanning Source Documents ✓ Clipped or cut forms that exclude important
✓ Scan the original tax document to avoid identifying information.
scanning copies and faxes. Note:
✓ Scan the document in A4 or Letter size only. Department proposes to impose file size limits
✓ Scan multi-page documents together, in for uploaded documents. It is, therefore, strongly
logical order. recommended to follow above mentioned
✓ Do not leave the tray cover open when guidelines.
scanning single pages on a flatbed scanner.

Opportunities, Threats and Challenges

Opportunities Threats And Challenges
Threats Challenges
Opportunities
• Neuro Socio
• To provide PAN India • Aptitude Issues
Factors
Services – any age • Technology Issues
• Adaptations
group • Investment • Communications
• Professional Network • Language Barriers • Lack of Research
• Revenue Sharing • Revenue Sharing • Documentation
• To develop written • Fear – adverse
and spoken
• Area operability
orders • AR registrations
communication skills
• Inter-personal • Language
• To optimise use of
technology and interactions Transcripts
time • Documentation

Natural Justice – Reality or Dream or Fantasy

The principle of “Natural Justice” essentially derives its essence from the legal maxims “Rule against bias”
(nemo iudex in causa sua) and “the right to a fair hearing” (audi alteram partem). Both the terms
fundamentally stress on the “duty to act fairly as well as neutrally” while reaching any suppositions in
connection or in relation or ancillary and incidental to matters under reviews.
Nemo judex in causa sua (or nemo judex in

sua causa) is a Latin phrase that means,
Audi alteram partem (or audiatur et
literally, "no-one is judge in his own cause." altera pars) is a Latin phrase meaning
It is a principle of natural justice that no "listen to the other side", or "let the
person can judge a case in which they have other side be heard as well". It is the
an interest. In many jurisdictions the rule is principle that no person should be
very strictly applied to any appearance of a judged without a fair hearing in which
possible bias, even if there is actually none: each party is given the opportunity to
"Justice must not only be done, but must
respond to the evidence against them.
be seen to be done”

Faceless Assessment Faceless Appeals
“ Faceless Appeal Scheme 2020 has been ushered in by

“ Faceless Assessment Scheme 2020 has been ushered
introducing section 250(6B) in the Income-tax Act,
in by introducing section 143(3A in the Income-tax
1961 with the objective of fostering greater
Act, 1961 with the objective of fostering greater
efficiency, transparency and accountability by:
efficiency, transparency and accountability by:
a. Eliminating Human Interface between Appeal
a. Eliminating Human Interface between Assessing
Units and the Appellant to the extent possible by
Officer and the Assessee to the extent possible by
harnessing technology;
harnessing technology;
b. Optimising the use of resources through
b. Optimising the use of resources through
economies of scale and functional specialisation;
economies of scale and functional specialisation;
c. Introducing an appellate system with dynamic
c. Introducing team based assessment with dynamic
jurisdiction in which an appeal shall be disposed of
jurisdiction
by one or more Appeal Units.

When common objectives are reviewed under the lenses, salient features emerge
which are as under:
• No Human Interface or face to face communications
• Transparency and efficiency
• Dynamic Jurisdiction
• Team Based Working
• Functional Specialisation
• Optimum Utilisation of Technology resources

System Pitfalls
1. Non disclosing of Internal electronic communications between NFAC/RFAC/AU/NaFAC/RaFAC/ ASU/VU/TU/RU etc.

with the Taxpayers;
2. Non disclosing of Internal authorisation processes between NFAC/RFAC/AU/NaFAC/RaFAC/ ASU/VU/TU/RU etc. with
the Taxpayers;
3. No opportunity to file cross objections in the cases where appeal is rejected or where remand report is derived from
NaFAC/JAO etc. or where additional grounds of appeal is rejected or where additional evidence as per Rule 46A of the
Rules is rejected;
4. No opportunity to cross examine the witnesses which are examined for passing adversarial and prejudicial orders against
the Taxpayers and also countering their statements collated during such faceless proceedings;
5. Discretionary and non-liberal policies for granting the opportunity of personal hearing or video conferencing and/or any
other means of electronic communications etc. and even if the same is granted it is restricted to just 30 minutes in
general and recording of such proceedings is also not shared with the Taxpayer;
6. Non-Liberal policy as well as curtailing the right of adjournments to maximum of 3 times or not providing time limits
exceeding 15 days to the Taxpayer;

Judicial References
a. A. K. Kraipak v. UOI AIR 1970 SC 150

b. Tar Lochan Dev Sharma v. State of Punjab
[2001] 6 SCC 260.
Serving of Show c. Umanath Pandey v. State of UP [2009] 12 SCC
Cause Notice is a 40
must and d. Biecco Lawrie Ltd v. State of West Bengal
obligatory – Held [2009] 10 SCC 32
“SCN is a must” e. Maruti Suzuki India Ltd. v. Addl. CIT [2010]
192 Taxman 317 (Delhi)
f. CCE v. ITC Ltd. [1995] 2 SCC 38 (SC)

Judicial References
All proceedings
a. CIT v. Panna Devi Saraogi [1970] 78 ITR 728
must provide
(Cal.)
adequate
b. Smt. Ritu Devi v. CIT [2004] 141 Taxman 559
opportunity of
(Mad.)
being heard - Held
c. E. Vittal v. Appropriate Authority [1996] 221
“Opportunity has
ITR 760 (AP)
to be given ““

Judicial References
Adjournment should
be granted liberally &
such opportunity a. Union of India v. W. N. Chadha AIR 1993 SC
should not be termed 1082
as “Rigid Doctrine” – b. Chairman Mining Board v. Ramjee 1977 AIR
Held – “to be granted
965 SC
liberally and it cannot
be rigid”

Judicial References
a. Kishan Lal v. UOI [1998] 97 Taxman 556 (SC)

Orders must be
b. Asstt. Commissioner Commercial Tax Department, Works
“speaking order” Contract and Leasing Quota v. Shukla & Bros. [2010] (4) JT
covering all facts 35 (SC)
c. Santosh Hazari v. Purushottam Tiwari [2001] (2) JT 407
clearly and they
(SC)
should be factual –
d. S. N. Mukherjee v. Union of India AIR 1990 SC 1984
Held – “Order has e. Woolcombers of India Ltd. v. Woolcombers Workers’ Union
to be speaking AIR 1973 SC 2758

f. Baidya Nath Sarma v. CWT [1983] 11 Taxman 158 (Gau.),
order”
g. Rasiklal Ranchhodbhai v. CWT [1980] 121 ITR 219 (Guj.)

Judicial References
Principles of
Natural Justice do
a. Thakur V. Hariprasad v. CIT [1987] 32
not supplant law
Taxman 196 (AP HC).
but supplement it -
Held “Supplement
it “

Judicial References
Principles of
Natural Justice
a. Swadeshi Cotton Mills Co. Ltd. v. Union of
operate in areas
India [1981] 51 Comp. Cas. 210/AIR 1981 SC
not excluded by
Legislature – Held
“Yes “

Judicial References
Principles of a. Peerless General Finance & Investment Co.

Natural Justice Ltd. v. Dy. CIT [1999] 236 ITR 671 (Cal.)
apply even when b. Rajesh Kumar v. Dy. CIT [2006] 157 Taxman
they are not 168 (SC)
expressly provided c. Sahara India (Firm) v. CIT [2008] 169 Taxman
in the law – Held 328 (SC)
“it applies.”

Judicial References
a. Thakur V. Hariprasad v. CIT [1987] 32 Taxman 196 (AP HC)

b. Grindlays Bank Ltd. v. ITO [1980] 3 Taxman 38 (SC)
c. State of Orissa v. Dr. (Miss) Binapani Dei [1967] 2 SCR 625
Whether order
d. Ridge v. Baldwin [1964] AC 40
passed in violation e. Anisminic Ltd. v. Foreign Compensation Commission [1969]
of natural justice is 2 AC 147
f. R. B. Shreeram Durga Prasad and Fatechand Nursing Das
void or voidable? – v. Settlement Commission [1989] 43 Taxman 34 (SC).
Held Void ab initio g. R. v. Paddington Valuation Officer [1966] 1 QB 380, 402
(CA)

Judicial References
a. Ponkunnam Traders v. Addl. ITO [1972] 83

If principles of ITR 508 (Ker.)
Natural justice are b. Addl. ITO v. Ponkunnam Traders [1976] 102
not followed – ITR 366 (Ker.).
c. State of Kerala v. Shaduli Grocery Dealer (K.T.)
whether it has any
AIR 1977 SC 1627
impact on
d. Barnard v. National Dock Labour Board [1953]
jurisdiction – Held
2 QB 18/1 All ER 1113 (CA)
Yes

Judicial References
Whether
technicalities and
irregularities do a. State Bank of Patiala v. K Sharma [1996] 3 SCC 364
not occasion failure

of justice – Held
“No “

Judicial References
Silence provided a. Smt. Maneka Gandhi v. Union of India AIR

1978 SC 597, 624.
under the law can’t
b. Swadeshi Cotton Mills Co. Ltd. v. Union of India
be deemed as
[1981] 51 Comp. Cas. 210/AIR 1981 SC 818
exclusion of
c. Dy. CIT v. Muthoottu Mini Kuris [2003] 128
opportunity- Held Taxman 240 (Ker.).
“yes “

Judicial References
a. Kishinchand Chellaram v. CIT [1980] 4 Taxman

Principle of Natural 29 (SC)
Justice and Cross b. Sona Electric Co. v. CIT [1984] 19 Taxman 160
Examination – Held (Delhi)
“they need to be c. Nathu Ram Prem Chand v. CIT [1963] 49 ITR
followed always” 561 (All).

Judicial References
a. Suraj Mall Mohta and Co. v. A. V. Visvanatha

Sastri [1954] 26 ITR 1 (SC),
b. Dhakeshwari Cotton Mills Ltd. v. CIT [1954]
Do principles of
26 ITR 775 (SC)
Natural Justice
c. Gargi Din Jwala Prasad v. CIT [1974] 96 ITR
apply to Income
97 (All. HC)
Tax Proceedings? –
d. Sirpur Paper Mill Ltd. v. CWT [1970] 77 ITR 6
Held “yes” (SC).

Judicial References
Applicability of
Article 226 of a. Commissioner of Income Tax and Others vs.
Constitution of Chhabil Dass Agarwal 2014 (1) SCC 603
India by following
the principles of
Natural Justice –
Held “Followed “

Judicial References
Failure to follow a. Zuari Cement Ltd V. ACIT (decision dated 21st

February 2013 in WP(C) No.5557/2012),
mandatory
b. Vijay Television (P) Ltd. Vs. Dispute Resolution Panel
procedures
& Ors. (2014) 369 ITR 0113 (Mad),
prescribed in the c. Turner International India (P) Ltd. Vs. Deputy
Statute can’t be Commissioner of Income Tax,
termed as d. JCB India Vs. Deputy Commissioner of Income Tax
procedural (2017) 298 CTR 0558 (Del),
irregularity

Judicial References
a. Magick Woods Exports Private Limited v

Assessment Order
Additional/ Joint/ Deputy/ Assistant
passed without Commissioner of Income Tax/ Income Tax
Officer, National E-Assessment Centre, Delhi
considering
WP No.10693/2021 (Madras High Court)
Assessee’s request
b. KBB Nuts (P.) Ltd. v. National Faceless
for adjournment
Assessment Centre Delhi [2021] 127
taxmann.com 194 (Delhi)

Judicial References
a. Antony Alphonse Kevin Alphonse v ITO

Final Assessment National E-Assessment Centre, Delhi WP
Order passed before No.8379/2021 (Madras High Court)
lapse of time given a. Ekambaram Sukumaran v ITO National E-

in Notice Assessment Centre, Delhi WP No.10433/2021
(Madras High Court)

Judicial References
Final Assessment
Order passed
a. YCD Industries v. National Faceless
without passing Assessment Centre, Delhi WP ( c ) 5552/2021
draft assessment
order

Judicial References
Final Assessment
a. Ritnand Balved Education Foundation v NFAC
Order passed W.P.(C) 5537/2021, TS-426-HC-2021(Del)
without giving
a. Satia Industries Limited v NFAC TS-423-HC-
opportunity of 2021-(DEL)
personal hearing

To conclude, considering all above judicial precedents and references and instances of lacunae
observed in the Faceless Scheme, it is desirable that suitable and remedial changes are enabled in the
schema. This would not only mitigate the prospects of avoidable litigation but would also lay down a
robust design, a solid foundation of principles and related operative systems. It is easy to imagine that this
nascent Indian experience involving Faceless Schema will be closely watched by the world for drawing
cues, imbibing and adapting them in their Tax Ecosystems. If enabling changes are introduced swiftly,
then verdicts delivered under the Faceless Schema would be looked upon as conforming to the vital
tenets ingrained in the overall principle of “Natural Justice.” Only then, it can be conclusively stated
that this vital and sacred legal pre-requisite of “Natural Justice” is seen as an embodiment of reality,
rather than as a dream or fantasy in the blurring distance. Only the time to come will reveal how the
whole schema of Faceless Assessment will play out, whether the concept progressively unfolds to harvest
the fruits of an efficient, effective, techno-enabled, seamless and truly faceless mega-initiative,
which constitutes a generational advancement in the annals of tax governance in our country.

Way Forward, Future Developments & Expectations

Way Forward, Future Developments & Expectations
• Faceless Penalties
• Faceless Rectifications
• Faceless Tribunals ( launched on 25.06.2021 )
• Faceless High Courts
• Faceless Supreme Courts
• Faceless International Taxation Matters
• Faceless Search and seizure matters
• Faceless Dispute Resolution Scheme
• Faceless Demand and Recovery Proceedings
• Faceless Arbitrations and Reconciliations
• Group Assessments
• Unison - CBDT, CBIE, Customs, Ministry of Law etc.
• Digital Synchronisation(#)/Asynchronisations (???)–Double Edge Sword

Conclusions

Tax Ecosystem
Computation,
Transactions BOA FS Self Assessment
,ITR and TAR
Paper Book
Scrutiny
ITAT, HC & SC Assessment Intimations
CIT Appeals
Writ petitions &Rectifications
Arithmetical
ROI-Return of Income,
I- Increased , D-Decreased accuracy
E-Exemptions/D- Deductions
A-Allowed/D-Disallowed E/D – R-A/R
ROI-I/D
R-Refund – A- Allowed, R-Rejected A/D Others

Faceless Schema - Conclusions
• Faceless schema - major event in the annals of tax administration in India.

• Faceless Schema – complex geography and culture – reconfiguration and
recalibration – time to stabilize
• Faceless Schema – need to be aligned to Indian realities – demographics,
education, technology, geography, grass root realities etc.
• Faceless Schema – to believe the same to be transparent , just, painless,
seamless and beneficial system
• Faceless Schema – Positive climate in future – lead to lesser litigation and
lesser propensity to seek alternative remedies
• Faceless Scheme – Progressive or Regressive ??????
• Faceless Scheme – A Paradigm Shift

Foundation
Digital Footprints – Ocean –Iceberg???
Nebulous
Human Interface
Efficiency
Team Accountability
Data Dashboard/Hash value
Technology plus Communications
Dynamic
Fundamental Rights
A Paradigm Shift –FL
Is it old wine in a new bottle?

133
SURROUND YOURSELF WITH PEOPLE WHO TALK ABOUT VISION AND IDEAS NOT PEOPLE
Appreciated all of You.

CA Nitin Bhuta
+919820295319
nitin.bhuta@gmail.com
Nitin Bhuta & Co.
134

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FACELESS APPEALS

Presented By CA Nitin Bhuta , Mumbai

COMPILED AND PRESENTED BY CA NITIN BHUTA 2

OUTLINE 8. Faceless Appeals – Penalty Proceedings

COMPILED AND PRESENTED BY CA NITIN BHUTA 3

COMPILED AND PRESENTED BY CA NITIN BHUTA 4

COMPILED AND PRESENTED BY CA NITIN BHUTA 5

COMPILED AND PRESENTED BY CA NITIN BHUTA 6

COMPILED AND PRESENTED BY CA NITIN BHUTA 7

Science Arts Commerce

Which one is more difficult ??????????

COMPILED AND PRESENTED BY CA NITIN BHUTA 8

COMPILED AND PRESENTED BY CA NITIN BHUTA 9

COMPILED AND PRESENTED BY CA NITIN BHUTA 10

Income Tax Law Documents

COMPILED AND PRESENTED BY CA NITIN BHUTA 11

COMPILED AND PRESENTED BY CA NITIN BHUTA 12

IIncome Tax Law – 10 decades

Faceless Assessment E Assessment Expansion E -assessments

COMPILED AND PRESENTED BY CA NITIN BHUTA 13

To provide fair, courteous, & reasonable To maintain confidentiality

To provide mechanism for appeal & review To enable representative of choice

To provide complete and accurate To provide mechanism to lodge complaint

COMPILED AND PRESENTED BY CA NITIN BHUTA 14

To be honest and compliant

To keep accurate records

To know what representative does on this behalf

COMPILED AND PRESENTED BY CA NITIN BHUTA 15

Assessment Technical Review Unit

COMPILED AND PRESENTED BY CA NITIN BHUTA 16

CPC Bangalore NaFAC Assessee

COMPILED AND PRESENTED BY CA NITIN BHUTA 17

COMPILED AND PRESENTED BY CA NITIN BHUTA 18

COMPILED AND PRESENTED BY CA NITIN BHUTA 19

Chartered Related TP &

Every State has different stamp duty rate

COMPILED AND PRESENTED BY CA NITIN BHUTA 20

COMPILED AND PRESENTED BY CA NITIN BHUTA 21

COMPILED AND PRESENTED BY CA NITIN BHUTA 22

COMPILED AND PRESENTED BY CA NITIN BHUTA 23

Section 43B/Section 40(a)(i)/(ia) disallowances ??? Improper approvals ???

Deemed Dividends ?? Clubbing of Incomes ? Prejudiced mind or Other reasons. ???

COMPILED AND PRESENTED BY CA NITIN BHUTA 24

*Black Money Act/PMLA * Expln. exception 1. RMS 2. CAG 3.90/90A

Convey Filing of cross

COMPILED AND PRESENTED BY CA NITIN BHUTA 26

COMPILED AND PRESENTED BY CA NITIN BHUTA 27

16-17 30.06.21 31.03.23 31.03.23* Valid/Valid* 30.06.21 30.06.21 31.03.27 Valid/Valid*

21-22 31.03.26 31.03.28 31.03.28* Valid/Valid* 31.03.25 31.03.25 31.03.32 Valid/Valid*

22-23 31.03.27 31.03.29 31.03.29 Valid/Valid* 31.03.26 31.03.26 31.03.33 Valid/Valid*

COMPILED AND PRESENTED BY CA NITIN BHUTA 28

COMPILED AND PRESENTED BY CA NITIN BHUTA 29

COMPILED AND PRESENTED BY CA NITIN BHUTA 30

COMPILED AND PRESENTED BY CA NITIN BHUTA 31

COMPILED AND PRESENTED BY CA NITIN BHUTA 33

✓May if conditions satisfied ❖Penalty may be levied

COMPILED AND PRESENTED BY CA NITIN BHUTA 34

COMPILED AND PRESENTED BY CA NITIN BHUTA 35

COMPILED AND PRESENTED BY CA NITIN BHUTA 36

a. Eliminating Human Interface between Appeal Units

b. Optimising the use of resources through economies of

FACELESS APPEALS - OBJECTIVE

Black Money Act/PMLA Expln. exception 1. RMS 2. CAG 3.90/90A