Faceless Assessment & Faceless Appeal Scheme in India: How Digital Tax Administration Actually Works
- shubhamtulsian05
- Jun 17
- 4 min read
In 2020, India fundamentally transformed how income tax assessments and appeals are conducted — eliminating physical interaction between taxpayers and tax officers for the vast majority of cases. The Faceless Assessment Scheme and Faceless Appeal Scheme represent one of the most significant administrative reforms in Indian tax history. Understanding how this system actually works is essential for any taxpayer who receives a notice today.
Why Faceless Assessment Was Introduced
The stated objectives were to eliminate the scope for corruption and undue influence through physical interaction, ensure consistency in assessment through team-based review rather than a single officer's discretion, improve efficiency through technology, and reduce taxpayer compliance burden by allowing submissions from anywhere without physical visits to the tax office.
How Faceless Assessment Actually Works
Dynamic Jurisdiction
Unlike the old system where a specific Assessing Officer in your local jurisdiction handled your case, faceless assessment uses 'dynamic jurisdiction' — your case can be randomly assigned to any officer anywhere in the country through an automated allocation system. You will likely never know which officer in which city is actually examining your return.
The Team Structure
National Faceless Assessment Centre (NaFAC): The central hub that receives all notices and coordinates the process.
Assessment Unit: Examines the case, identifies issues, and proposes additions or queries.
Verification Unit: Conducts verification of facts, examination of records, and other functions referred to it.
Technical Unit: Provides technical assistance on legal, accounting, valuation, or transfer pricing issues.
Review Unit: Reviews the draft assessment order before finalisation, checking for arithmetic accuracy and whether all relevant facts and judicial decisions have been considered.
This multi-layered structure means your case isn't decided by a single officer's individual judgment — multiple units are involved in different functions, theoretically improving objectivity and consistency.
The E-Proceedings Process — Step by Step
Step 1 — Notice issued electronically: All notices (Section 143(2), 142(1), show cause notices for additions) are issued through the income tax portal and registered email/mobile.
Step 2 — Response submission: Taxpayer responds entirely through the 'e-Proceedings' tab on the income tax portal — uploading documents, written submissions, and explanations as PDF or other prescribed formats.
Step 3 — Personal hearing through video conferencing: If the case involves a proposed addition or where natural justice requires, taxpayers can request a video conference hearing — this is the closest equivalent to the old in-person hearing, though scheduling and technical issues are common practical challenges.
Step 4 — Draft order and show cause: Where additions are proposed, a Show Cause Notice with the draft variation is issued, giving the taxpayer an opportunity to respond before finalisation.
Step 5 — Final order: Issued electronically, followed by a demand notice if applicable.
Faceless Appeal Scheme — How CIT(A) Proceedings Work
Similarly, appeals before the Commissioner of Income Tax (Appeals) are conducted under the Faceless Appeal Scheme, 2021. The structure mirrors faceless assessment — National Faceless Appeal Centre, Appeal Units, and dynamic jurisdiction for appellate officers.
Filing the appeal: Form 35 filed electronically on the income tax portal.
Submissions: All grounds of appeal, statement of facts, and supporting documents filed online.
Hearing: Personal hearing through video conferencing can be requested — and under the current Faceless Appeal Scheme, taxpayers have a stronger statutory right to request a hearing compared to the assessment stage, given the more legal/argumentative nature of appellate proceedings.
Categories Excluded From Faceless Procedure
Certain categories remain outside the faceless scheme and continue with the traditional jurisdictional officer system — including search and seizure cases (Section 153A/153C), international tax and transfer pricing cases assigned to specific international tax charges, and certain categories specifically notified by the CBDT as requiring jurisdictional handling due to their complexity.
Practical Tips for Navigating Faceless Proceedings
Respond comprehensively the first time: Without a face-to-face relationship with an officer who might informally clarify doubts, your written submission must be entirely self-contained and complete — anticipate every possible question.
Use clear headings and structure: Officers reviewing dozens of cases through a portal benefit from clearly structured submissions with headings matching each query raised.
Always request a personal hearing if additions are proposed: Don't assume your written submission alone will be sufficient — formally request a video conference hearing whenever a draft order proposes adverse additions.
Maintain a complete document trail: Since there's no opportunity for informal clarification, ensure every document referenced in your submission is actually uploaded and properly indexed.
Track the portal regularly: Notices and time limits move quickly online — regularly check the e-Proceedings tab rather than relying solely on email/SMS alerts, which can sometimes be delayed or missed.
Criticisms and Practical Challenges
Limited opportunity for informal clarification: The old system allowed informal back-and-forth with the AO to clarify minor points; faceless assessment's formal, written nature means small misunderstandings can escalate into formal additions.
Technical glitches: Portal downtime, upload failures, and video conferencing technical issues have been recurring practical complaints since the scheme's introduction.
Inconsistent application across units: Despite the multi-layered structure, taxpayers and practitioners report variability in how thoroughly different units engage with submitted facts and case law.
How PGT & Associates Can Help
PGT & Associates has extensive experience navigating faceless assessment and faceless appeal proceedings — preparing comprehensive written submissions designed for the portal-based review process, securing and effectively using video conference hearing opportunities, and ensuring complete documentary compliance. Contact us at +91-87994-99189 the moment you receive any notice on the income tax portal.
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