CBDT vide Notification No. 3/2021 dated 12.01.2021 issued Directions for giving effect to Faceless Penalty Scheme, 2021. These directions are further amended vide Notification No. 55/2022 dated 27.05.2022.
Read the full text of the Notification No. 3/2021 dated 12.01.2021 on Directions for giving effect to Faceless Penalty Scheme, 2021 as amended and effective from 27th May 2022
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 12th January, 2021
(INCOME-TAX)
S.O. 117(E).—In exercise of the powers conferred by sub-section (2B) of section 274 of the Income-tax Act, 1961 (43 of 1961), for the purposes of giving effect to the Faceless Penalty Scheme, 2021 made under sub-section (2A) of section 274 of the said Act, the Central Government hereby makes the following directions, namely:-
1. The provisions of section 2, section 120, section 127, section 129, section 131, section 133, section 133C, section 136 and Chapter XXI of the said Act shall apply to the procedure for imposing penalty in accordance with the said Scheme subject to the following exceptions, modifications and adaptations, namely:—
“(A). (1) The penalty shall be levied under the said Scheme as per the following procedure, namely:–
(i) where any income-tax authority or the National Faceless Assessment Centre has, in a case,—
(a) initiated penalty proceedings and issued a show-cause notice for imposition of penalty; or
(b) recommended initiation of penalty proceedings,
it shall refer such case, in the form specified in clause (viii) of sub-paragraph (B) of paragraph 4, to the National Faceless Penalty Centre;
(ii) the National Faceless Penalty Centre shall in a case, where reference has been received as per clause (i), assign such case to a specific penalty unit [omitted] through an automated allocation system;
(iii) where in a case assigned to a penalty unit, initiation of penalty proceedings has been recommended, such unit, after examination of the material available on record, may decide to,—
(a) agree with the recommendation and 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; or
(b) disagree with the recommendation, for reasons to be recorded in writing, and send such draft notice or the reasons, as the case may be, to the National Faceless Penalty Centre;
(iv) the National Faceless Penalty Centre shall upon receipt of the draft notice or reasons referred to in clause (iii) from the penalty unit,—
(a) serve the show-cause notice, as per the draft referred to in sub-clause (a) of clause (iii), upon the assessee or any other person, as the case may be, specifying the date and time for filing a response; or
(b) not initiate penalty in cases referred to in sub-clause (b) of clause (iii);
(v) where in the case assigned to a penalty unit, penalty proceedings are already initiated, such unit 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 and send such notice to the National Faceless Penalty Centre;
(vi) the National Faceless Penalty Centre shall serve the show-cause notice, as per draft referred to in clause (v), upon the assessee or any other person, as the case may be, specifying the date and time for filing a response;
(vii) the assessee or any other person, as the case may be, shall file a response to the show-cause notice, referred to in sub-clause (a) of clause (iv) or in clause (vi), within the date and time specified therein, 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;
(viii) where response is filed by the assessee or any other person, as the case may be, the National Faceless Penalty Centre shall send such response to the penalty unit, and where no such response is filed, inform the penalty unit;
(ix) the penalty unit may 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;
(x) the National Faceless Penalty Centre shall, upon receipt of request, referred to in sub-clauses (a) or (b) of clause (ix), 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;
(xi) 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 the notice or requisition, as referred to in clause (x), within the date and time specified therein, 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;
(xii) where a request for conducting of certain enquiry or verification or seeking technical assistance has been made by the penalty unit, the National Faceless Penalty Unit shall send such request to the National Faceless Assessment Centre specifying a date and time for submitting a report;
(xiii) where response to notice referred to in clause (x) is filed by the income-tax authority or the National Faceless Assessment Centre or the assessee or any other person, as the case may be, the National Faceless Penalty Centre shall send such response to the penalty unit, and where no such response is filed, inform the penalty unit;
(xiv) where a report in response to request referred to in clause (xii) is received by the National Faceless Penalty Centre, it shall send such report to the penalty unit, and where no such report is received, inform the penalty unit;
(xv) the penalty unit shall, after considering the material on record including response furnished, if any, as referred to in clauses (viii), (x) and (xii) or report, if any, as referred to in clause (xiv), propose for,–
(a) imposition of the penalty and prepare a penalty imposition proposal for imposition of such penalty;
(b) non-imposition of the penalty, for reasons to be recorded in writing
and send the penalty imposition proposal or reasons, as the case may be, to the National Faceless Penalty Centre;
(xvi) the National Faceless Penalty Centre, in accordance with the guidelines issued by the Board, may,–
(a) in a case where imposition of penalty has been proposed, convey to the penalty unit to pass the penalty order as per penalty imposition proposal referred to in sub-clause (a) of clause (xv); or
(b) in a case where non-imposition of penalty has been proposed, convey to the penalty unit to drop the penalty proceedings under intimation to the assessee or any other person, as the case may be; or
(c) assign the case to a penalty review unit through an automated allocation system, for conducting review of such proposal or reasons, as the case may be;
(xvii) the penalty unit shall, in the case referred to in sub-clause (a) of clause (xvi), pass the order imposing penalty and serve the same on the assessee through the National Faceless Penalty Centre;
(xviii) the penalty unit shall, in the case referred to in sub-clause (b) of clause (xvi), drop the penalty proceedings and send the intimation to the assessee through the National Faceless Penalty Centre;
(xix) the penalty review unit shall review the penalty imposition proposal or reasons for non-imposition of penalty, as referred to in sub-clause (c) of clause (xvi), whereupon it may concur with, or suggest modification to, such proposal or reasons, as the case may be, and prepare a review report and send such report to the National Faceless Penalty Centre;
(xx) the National Faceless Penalty Centre shall, upon receiving the review report under clause (xix), forward the same to the penalty unit which had proposed the penalty imposition proposal or reasons for non-imposition of penalty, as the case may be;
(xxi) the penalty unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein and after recording reasons in case of rejection of such modifications, pass the order imposing penalty or drop the penalty proceedings, as the case may be, and serve the order imposing penalty or intimation for dropping penalty proceedings, as the case may be, on the assessee through the National Faceless Penalty Centre;
(xxii) where an order imposing penalty or intimation for dropping penalty, as the case may be, has been passed, the penalty unit shall send a copy of such order, or intimation for dropping penalty to the income-tax authority, referred to in clause (i), through the National Faceless Penalty Centre, for further action as may be required under the Act.
(2) Notwithstanding anything contained in sub-paragraph (1), the Principal Chief Commissioner or the Principal Director General, in charge of National Faceless Penalty Centre, 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.
(B). (1) A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under the said Scheme before the income-tax authority at the National Faceless Penalty Centre [omitted] or penalty unit or penalty review unit set up under the said Scheme.
(2) The assessee or any other person, as the case may be, or his authorised representative, may request for personal hearing so as to make his oral submissions or present his case before the penalty unit under the said Scheme.
(3) Where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through National Faceless Penalty Centre.
(4) Hearing referred to in clause (3) 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, in accordance with the procedure laid down by the Board.;
(5) The Board shall establish suitable facilities for video conferencing including telecommunication application software which supports video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of the said Scheme merely on the ground that such assessee or his authorised representative, or any other person does not have access to video conferencing at his end.
(C). The provision of section 246A of the said Act shall apply to appealable orders arising out of penalty imposed in accordance with the said Scheme subject to the following exceptions, modifications and adaptations, namely:-
“An appeal against a penalty order made by the National Faceless Penalty Centre under the said Scheme shall lie before the Commissioner (Appeals) having jurisdiction over the jurisdictional income-tax authority or before the National Faceless Appeal Centre, as the case may be; and any reference to the Commissioner (Appeals) in any communication from the National Faceless Penalty Centre shall mean such jurisdictional Commissioner (Appeals) or the National Faceless Appeal Centre, as the case may be.
2. The provisions of section 140 and section 282A of the said Act shall apply to the penalty proceedings in accordance with the said Scheme subject to the following exceptions, modifications and adaptations, namely:—
“an electronic record shall be authenticated by,–
(i) the National Faceless Penalty Centre by way of an electronic communication;
(ii) the penalty unit or the penalty review unit or technical unit or verification unit, as the case may be, by affixing digital signature;
(ii) 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.
Explanation. – For the purpose of this paragraph, “electronic verification code” shall have the same meaning assigned to it in the Explanation to sub-rule (3) of rule 12 of the Income-tax Rules, 1962..
3. [omitted]
4. The provisions of section 282, section 283 and section 284 of the said Act shall apply to the said Scheme subject to the following exceptions, modifications and adaptations, namely:—
“(A). (1) Every notice or order or any other electronic communication under the said Scheme shall be delivered to the addressee, being the assessee or any other person, by way of,––
(a) placing an authenticated copy thereof in the assessee’s or any other person’s registered account, as the case may be; or
(b) sending an authenticated copy thereof to the registered email address of the assessee or any other person, as the case may be, or his authorised representative; or
(c) uploading an authenticated copy on the assessee’s or any other person’s Mobile App, as the case may be, and followed by a real time alert.
(2) Every notice or order or any other electronic communication under the said Scheme shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert.
(3) The assessee or any other person, as the case may be, shall file his response to any notice or order or any other electronic communication, under the said Scheme, through his registered account, and once an acknowledgement is sent by the National Faceless Penalty Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated.
(4) The time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000).
(B). The Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Penalty Centre shall, with the approval of Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Penalty Centre, [omitted] the penalty unit and the penalty review unit set-up under the said 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-proceedings” facility including login account facility, tracking status of penalty proceedings, display of relevant details, and facility of download;
(v) accessing, verification and authentication of information and response including documents submitted during the penalty 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) form for referring a case, in which penalty has been initiated or initiation of penalty has been recommended, as referred to in clause (i) of sub-paragraph (1) of paragraph 5 of the said Scheme, and
(ix) [omitted]
5. This notification shall come into force on the date of its publication in the Official Gazette.
[Notification No. 03/2021/F. No. 370142/51/2020-TPL]
SHEFALI SINGH, Under Secy.
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