CBDT vide Notification No. 76/2020 dated 25.09.2020 has notified the Faceless Appeal Scheme, 2020 under the Income Tax Act, 1961 (“Act”) to provide for e-appeal and for the online hearing and disposal of appeals related to income-tax disputes by the Commissioner (Appeals). This scheme shall become effective from 25.09.2020 and shall apply to all the pending appeals and any further new appeals filed under the Income Tax Act.
The Scheme covers appeals filed under section 246A(1) or section 248 of the Act.
Earlier, on 13.08.2020, CBDT notified the Faceless Assessment Scheme, 2020 vide Notification No. 60/2020. In line with the Faceless Assessment Scheme, 2020 the appeals filed before the CIT(A) shall be decided by a team of CITs with dynamic jurisdiction. The assessee won’t know the details of the CITs deciding their appeals and has to furnish their submissions and paper-books online in their e-filing portal.
The announcement of faceless appeal was made by the Finance Minister Nirmala Sitaraman while presenting the Union Budget 2020 on February 1, 2020. She applauded /praised/plausible the need for introducing faceless appeal under the income-tax law. She said on the Parliament that “Our government is committed to bringing in transformational changes so that maximum governance is provided with minimum government. In order to impart greater efficiency, transparency and accountability to the assessment process, a new faceless assessment scheme has already been introduced. Currently, most of the functions of the Income Tax Department starting from the filing of return, processing of returns, issuance of refunds and assessment are performed in the electronic mode without any human interface. In order to take the reforms initiated by the Department to the next level and to eliminate human interface, I propose to amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment.”
Therefore, the objective of introducing faceless appeal is to eliminate the physical interface between the taxpayers and the income tax authorities. This will help in curbing corruption and the arms twisting tactics by the department.
Appropriate amendments have been carried out in the Income Tax Act, 1961 to give powers to CIT(A) to decide the cases on a faceless manner by the Finance Bill, 2020.
In order to impart greater efficiency, transparency and accountability to the assessment process, a new faceless assessment scheme has already been introduced. It was proposed to amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment. Accordingly, e-Appeals schemes will be notified for faceless proceedings in line with the faceless e-assessment scheme.
Following amendments have been made by the Finance Act, 2020 in section 250 of the Income Tax Act, 1961 which deals with the appeals before CIT (Appeals) to provide for the legal basis to the Faceless Assessment Scheme.
In section 250 of the Income-tax Act, after sub-section (6A), the following sub-sections shall be inserted, namely:—
“(6B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of disposal of appeal by Commissioner (Appeals), so as to impart greater efficiency, transparency and accountability by—
(a) eliminating the interface between the Commissioner (Appeals) and the appellant 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 in which appeal shall be disposed of by one or more Commissioner (Appeals).
(6C) The Central Government may, for the purposes of giving effect to the scheme made under sub-section (6B), by notification in the Official Gazette, direct that any of the provisions of this Act relating to jurisdiction and procedure for disposal of appeals by Commissioner (Appeals) shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:
Provided that no direction shall be issued after the 31st day of March, 2022.
(6D) Every notification issued under sub-section (6B) and sub-section (6C) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.”.
Provision for e-appeal or Faceless Appeal Scheme
In order to impart greater efficiency, transparency and accountability to the assessment process under the Act a new e-assessment scheme has already been introduced. With the advent of the e-assessment scheme, most of the functions/ processes under the Act, including of filing of return, processing of returns, issuance of refunds or demand notices and assessment, which used to require person-to-person contact between the taxpayer and the Income-tax Department, are now in the electronic mode. This is a result of efforts by the Department to harness the power of technology in reforming the system. All these processes are now not only faceless but also very taxpayer-friendly. Now a taxpayer can manage to comply with most of his obligations under the Act without any requirement for physical attendance in the offices of the Department.
The filing of appeals before Commissioner (Appeals) has already been enabled in an electronic mode. However, the first appeal process under the Commissioner (Appeals), which is one of the major functions/ processes that are not yet in full electronic mode. A taxpayer can file an appeal through his registered account on the e-filing portal. However, the process that follows after the filing of an appeal is neither electronic nor faceless. In order to ensure that the reforms initiated by the Department to eliminate human interface from the system reach the next level, it is imperative that an e-appeal scheme be launched on the lines of the e-assessment scheme.
Accordingly, sub-section (6B) in section 250 of the Act is inserted to provide for the followings: —
i) Empowering Central Government to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability.
ii) Eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible.
iii) Optimizing utilization of the resources through economies of scale and functional specialisation.
iv) Introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals).
v) It is also provided that in order to empower the Central Government, for the purpose of giving effect to the scheme made under the proposed sub-section, by notification in the Official Gazette, to direct that any of the provisions of this Act relating to jurisdiction and procedure of disposal of appeal shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. Such directions are to be issued on or before 31st March 2022. It is provided that every notification issued shall be required to be laid before each House of Parliament.
On 13.08.2020, while launching the platform for “Transparent Taxation - Honouring the Honest” by the Prime Minister Narendra Modi, he elaborated that this platform has major reforms like Faceless Assessment, Faceless Appeal and Taxpayers Charter.
It was further announced that Faceless Appeal will be available across the country from 25th September 2020 i.e. Deen Dayal Upadhyay's Birth Anniversary.
In line with the above amendments and the announcements, finally, CBDT has notified the Faceless Appeal Scheme, 2020 to be effective from 25th September 2020 to all the pending appeals as well as new appeals files forthwith before the CIT(A).
Salient features and Highlights of the Faceless Assessment Scheme 2020
The salient features and highlights of the Faceless Assessment Scheme 2020 are outlined below-
1. The Notification No. 76/2020 dated 25.09.2020 on Faceless Appeal Scheme, 2020 is issued under section 250(6B) of the Act.
2. For e-appeal, in line of e-assessment centres, Faceless Appeal Centres - National Faceless Appeal Centre and Regional Faceless Appeal Centres will be created. Under each Regional Faceless Appeal Centres, ‘Appeal Units’ will be created to conduct the appeal proceedings.
3. All the communication between the appeal unit and the appellant or Assessing Officer or any other person shall be through the National Faceless Appeal Centre only and in electronic mode only.
4. Additional evidence shall be filed with the National Faceless Appeal Centre only. The National Faceless Appeal Centre shall forward the additional evidence to the National e-Assessment centre.
5. National Faceless Appeal Centre shall have the power to impose penalty for non-compliance of any notice.
6. National Faceless Appeal Centre is empowered to pass the appeal order.
More detailed articles on Faceless Appeal Scheme, 2020 will be published shortly.
Read the full text of the Notification No. 76/2020 dated 25.09.2020 on Faceless Appeal Scheme, 2020 here.
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