CBDT vide Notification No. 3/2021 dated 12.01.2021 issued directions issued u/s 274(2B) for the purpose of giving effect to the Faceless Penalty Scheme, 2021 notified vide Notification No. 2/2021 dated 12.01.2021 under the Income Tax Act, 1961 (“Act”).
The provisions of section 2, section 120, section 127, section 129, section 131, section 133, section 133C, section 136 and Chapter XXI of the Act shall apply to the procedure for imposing penalty in accordance with the Faceless Penalty Scheme, 2021 subject to the certain exceptions as specified in the Scheme.
Update:
CBDT amends Faceless Penalty Scheme, 2021
Under this, where any income-tax authority or the National Faceless Assessment Centre has initiated penalty proceedings and issued a show-cause notice for the imposition of penalty or recommended initiation of penalty proceedings, it shall refer such case to the National Faceless Penalty Centre.
As per the directions, the National Faceless Penalty Centre (NFPC) shall assign the case to a specific penalty unit in any one of the Regional Faceless Penalty Centres (RFPC) through an automated allocation system.
Where a penalty case is assigned to a penalty unit, it may agree or disagree with the proposed penalty proceedings and shall communicate the same to the NFPC. The NFPC shall upon receipt of the communication from the penalty unit serve a show-cause notice upon the assessee or any other person specifying the date and time for filing a response, where a penalty proceeding is proposed to be initiated.
The NFAC shall be the authority to issue show-cause notices for pending penalty proceedings upon the assessee or any other person, as the case may be, specifying the date and time for filing a response.
The assessee or any other person, as the case may be, has to file a response to the show-cause notice within the specified date and time or such extended date and time as may be allowed on the basis of an application made in this behalf, with the National Faceless Penalty Centre. Thereafter, the NFPC shall send such response to the penalty unit, and where no such response is filed, inform the penalty unit.
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The penalty unit has to make a request to the National Faceless Penalty Centre for –
(a) obtaining further information, documents or evidence from any income-tax authority or the National Faceless Assessment Centre; or
(b) obtaining further information, documents or evidence from the assessee or any other person; or
(c) seeking technical assistance or conducting verification;
The National Faceless Penalty Centre shall, upon receipt of request issue appropriate notice or requisition to the income-tax authority or the National Faceless Assessment Centre or the assessee or any other person, as the case may be, to submit such information, documents or evidence, as may be specified by the penalty unit, specifying the date and time for furnishing a response.
The income-tax authority or the National Faceless Assessment Centre or the assessee or any other person, as the case may be, shall furnish a response to such notice or requisition within the specified date and time or such extended date and time as may be allowed on the basis of an application made in this behalf, to the National Faceless Penalty Centre.
The National Faceless Penalty Centre shall send such response to the penalty unit, and where no such response is filed, inform the penalty unit.
Where any penalty unit makes a request for conducting certain enquiry or verification or seeking technical assistance, the National Faceless Penalty Unit shall send such request to the National Faceless Assessment Centre specifying a date and time for submitting a report. The National Faceless Penalty Centre shall send such a report to the penalty unit, and where no such report is received, inform the penalty unit.
The National Faceless Penalty Centre shall examine the proposal of imposition of penalty received from the penalty unit and then pass a draft penalty order to be served upon the assessee or any other person. In a case where non-imposition of penalty has been proposed, the NFPC shall not impose a penalty and an intimation to that effect shall be given to the assessee or any other person.
In case the proposal of the penalty unity needs to be reviewed by the NFPC then NFPC shall assign the case to a penalty review unit in any one of the Regional Faceless Penalty Centres through an automated allocation system.
The penalty review unit shall review the proposal of the penalty unit. It may concur with, or suggest a modification to, such proposal, for reasons to be recorded in writing, and intimate the National Faceless Penalty Centre and where the penalty review unit proposes modification, the NFPC shall re-do all the previously mentioned steps.
The Principal Chief Commissioner or the Principal Director General, in charge of National Faceless Penalty Centre, shall have the overriding power and may at any stage of the penalty proceedings, if considered necessary, transfer such proceedings to the income-tax authority or National Faceless Assessment Centre having jurisdiction over the assessee or any other person, in whose case the penalty proceedings are initiated, with the prior approval of the Board.
No person shall be required to appear either personally or through an authorised representative in connection with any proceedings under the Faceless Penalty Scheme, 2021 before the income-tax authority at the National Faceless Penalty Centre or Regional Faceless Penalty Centre or penalty unit or penalty review unit set up under this Scheme. However, a request for personal hearing so as to make his oral submissions or present his case before the penalty unit under this Scheme may be made.
The Chief Commissioner or the Director-General, in charge of the Regional Faceless Penalty Centre, under which the concerned penalty unit is set up, may approve the request for a personal hearing.
Where the request for a personal hearing is approved, it shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with the laid down procedure.
Read the full text of the Notification No. 3/2021 dated 12.01.2021 on Directions for giving effect to Faceless Penalty Scheme, 2021 here.
Update:
Read the full text of amended Directions for giving effect to Faceless Penalty Scheme, 2021 (As amended subsequent to amendments in Faceless Penalty (Amendment) Scheme, 2022) here
Download CBDT Notification No. 3/2021 dated 12.01.2021 on Directions for giving effect to Faceless Penalty Scheme, 2021 in pdf format
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