Short overview of the National Faceless Appeal Scheme-2021

The National Faceless Appeal Scheme has finally been implemented. It has replaced the National e-Assessment Scheme. With this, e-assessment Scheme has now been renamed to National Faceless Assessment

Each and every operation of the department is turning out to be almost in e-mode wherein assessment as well as appeal vis a vis verification etc will be carried out in e-mode only.

There are few important deviation in the National Faceless Appeal Scheme vis a vis National Faceless e-Assessment scheme. Though the Faceless Appeal Scheme witnessed a makeover & refinements but still there are few issues which need to be addressed. It may be noted that the constitutional validity of National Faceless Appeal Scheme has been challenged before the Bombay High Court. In the petition filed before the Hon’ble Supreme Court in the case of Lakshya Budhiraja [2021] 131 taxmann.com 51 (SC), the Additional Solicitor General has submitted that the Income-tax Dept. is considering the change in the Faceless Appeal Scheme, 2020 and the has sought the time of around 3 months to change the law, which the Supreme Court duly granted.

Central Board of Direct Taxes (CBDT) has notified the Faceless Appeal Scheme 2021, effective from 28-12-2021which is in suppression of the earlier Faceless Appeal Scheme, 2020. Let us know about the Facless Appeal Scheme  – 2021 which has become operational now:

1. Assignment of the cases to Appeal Unit:
   Each and every case will be assigned to the  Appeals (Unit) through automated system and procedure. The Commissioner to whom the case s assigned will handle the same till its completion. The assignment will be jurisdiction free and through software system only.

2. Appeal Unit to be headed by Commissioner (Appeals):
   Same like the present system, every Appeal Unit will be headed by Commissioner (Appeals). There will be various other staffs, officers that will be there to assist the Commissioner (Appeals). Orders passed by Commissioner (Appeals) to be digitally signed only.

3. Appeal Unit empowered to initiate penalty proceedings;
   Significantly deviating from the present system of imitating penalty, new Faceless Appeal Scheme provides & empowers the Appeal Unit to initiate the penalty. There will not be any need now to send a recommendation to NFAC for initiation of the penalty proceeding. In short, the penalty proceedings to be initiated by same Commissioner (Appeals).

4. No draft appeal order:
   There is no concept of the draft appeal order in the case of “Faceless Appeal Scheme-2021”. The concept is very nicely and aptly introduced in the “Faceless Assessment Scheme”. In my view, the concept of “Draft Appeal Order” before passing the final order would reduce the litigation in the tax department. In various cases, assesses makes the submission and the same is overlooked or do not find the observation of the CIT (Appeal). Introducing the concept of “Draft Appeal Order” would reduce the number of litigation before the ITAT. CBDT must introduce this concept in the National Faceless Appeal Scheme.

5. No Opportunity of personal Hearing but opportunity through Video Conferencing permitted:

   The National Faceless Appeal Scheme – 2021 rightly provides for the option to exercise the facility of “Video Hearing” if requested by the assessee. This would give the opportunity to better present the case and make the tax atmosphere friendly and comfortable.

The same is contained in Rule 12 to the National Faceless Appeal Scheme which reads as under:

 

12. No personal appearance in the Centers or Units.––(1) A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under this Scheme before the income-tax authority at the National Faceless Appeal Centre or appeal unit set up under this Scheme.

(2) The appellant or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the Commissioner (Appeals), through the National Faceless Appeal Centre, under this Scheme.

(3) The concerned Commissioner (Appeals) shall allow the request for personal hearing and communicate the date and time of hearing to the appellant through the National Faceless Appeal Centre.

(4) Such hearing shall be conducted 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.

 

6. Appeal by Non Filers of Income Tax Returns:

   As in earlier system, there is no exemption from paying tax in case of a non-filer of return in case of Faceless Appeal Scheme 2021