Click Here To Know Legal Framework of Faceless Assessments & Appeals
Key Features
Jurisdiction-less & Anonymous System
- Cases are randomly allocated via an automated system
- Taxpayer and officer never meet
- No local Assessing Officer has control, eliminates territorial bias and influence
Functional Specialization
Work is distributed across dedicated units, each with a focused role:
- Assessment Unit (AU) – Notices, scrutiny, draft orders
- Verification Unit (VU) – On-ground checks, third-party verification
- Technical Unit (TU) – Legal, TP, forensic, valuation inputs
- Review Unit (RU) – Draft review for factual and legal accuracy
- Appeal Units (in CIT-A cases) – Handle appellate functions under NFAC
Fully Digital Communication
All communication (notices, replies, submissions) is through:
- E-filing portal
- Registered email
- Income-tax mobile app
Real-time alerts via SMS/email for every action
No Physical Interface
- In-person hearings are not allowed under normal circumstances
- Only video conferencing is permitted (on request and in select situations)
- Officers remain anonymous to the assessee
Use of Technology & Automation
Uses AI/ML-based systems for:
- Case selection
- Risk profiling
- Allocation and review mechanisms
Ensures consistency and minimizes discretion
Procedural Safeguards
- Show-cause notice issued before making adverse additions
- Opportunity of being heard must be granted (including VC)
- Digital signatures used to authenticate all documents
Legal Backing
- Faceless assessments: Section 144B
- Faceless appeals: Section 250 (with NFAC/Appeal Units)
Legal &Practical Challenges in Faceless Assessments & Appeals
While the faceless regime under Sections 144B and 250 marks a revolutionary shift in India’s tax administration, its real-world implementation has revealed several challenges. These can be broadly divided into legal (constitutional/procedural) and practical (operational/technical) concerns.
Legal Challenges
Violation of Principles of Natural Justice
Several assessments were completed without granting the assessee a proper opportunity of being heard.
Denial of video conferencing requests, especially in cases with significant proposed additions, has been held as a breach of the audialterampartem principle.
Case Law
LakshyaBudhiraja v. NFAC (Delhi HC) – Assessment was quashed due to denial of hearing, despite specific request.
Incomplete Sharing of Adverse Material
- In some cases, assessments were made using third-party or backend data without providing the Assessee access to such material.
- This undermines the fairness of the proceedings and violates Sec 144B(6) which mandates prior disclosure before variation.
Practical Challenges
Technical Glitches and Portal Errors
- Frequent errors in uploading files, portal crashes near deadlines, and auto-logouts hinder timely and complete responses by assessees.
- These are especially problematic for small taxpayers, senior citizens, or those in low-connectivity zones.
Delayed or Unresponsive Communication
- Officers sometimes fail to respond promptly to clarifications or rectification requests, as there is no one-point contact.
- This leads to breakdowns in coordination between functional units, especially when a case is passed between AU, VU, and TU.
Judicial Viewpoints on Faceless Assessments & Appeals
Indian courts have actively reviewed the implementation of faceless schemes under Section 144B and Section 250, especially where procedural lapses have impacted taxpayers' rights. The judiciary has largely supported the intent of the scheme but emphasized the need for compliance with due process, natural justice, and technical fairness.
LakshyaBudhiraja v. NFAC (Delhi High Court, 2022)
- Facts: The assessee requested a personal hearing (video conferencing), which was denied.
- Held: Denial of VC despite express request violated principles of natural justice. The assessment was quashed.
- Significance: Reinforced that Section 144B(6)(vii) isn’t merely procedural, but ensures a fair hearing opportunity in digital mode.
Sahara India v. Principal Commissioner (Allahabad HC, 2021)
- Facts: Order passed without considering detailed submissions due to rigid format-based processing.
- Held: The Court held that non-speaking orders defeat the purpose of fair adjudication and violate Section 250(6).
- Significance: Established that CIT(A) must provide a reasoned decision even in faceless mode.
Conclusion
Faceless assessments and appeals represent a significant leap toward transparent and efficient tax administration. By eliminating physical interface and enabling a tech-driven structure, the system aims to reduce discretion and enhance trust.
With continued refinement and balanced execution, the faceless scheme can become a true symbol of modern, accountable, and just tax governance in India.
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