CBDT: Introduces The Faceless Penalty Scheme 2021

The Faceless Penalty Scheme 2021 introduces by Income Tax Department 

• Income Tax dept. presents Faceless Penalty Scheme 2021. On the date of its publication in the Official Gazette, it shall accept into force.
• In an additional step to significantly reduce the physical interface between taxpayers and tax authority, the income-tax dept has arrived out with a ‘faceless penalty scheme’.
• It is intended to enhance the faceless assessment scheme by managing penalty guidelines. As part of the tax reforms, the government introduced a faceless tax assessment scheme last year.

Scope of the Faceless Penalty Scheme.

• The penalty shall be levied for the geographical region, persons or class of persons, income or class of income or cases or class of cases, or penalties or class of penalties defined by the Board, as provided for in this Scheme.

Faceless Penalty Centers.

The Board may create for the purposes of this Scheme,

• a National Faceless Penalty Centre to promote, in a centralized manner, the conduct of faceless penalty proceedings and to grant it the power to enforce penalties in compliance with the provisions of this Scheme;
• Penalty units, as may be deemed appropriate, in order to facilitate the conduct of faceless penalty proceedings, to carry out the purpose of drawing up penalty orders, including identifying points or issues for the imposition of penalties under the Act, seeking information or clarification on points or issues so identified, providing the assessor or any other person with an opportunity to be heard, evaluating points or problems so identified.
• Units for the penalty assessment to help in the conduct of faceless penalty proceedings, as it may find it appropriate to perform the functions for the revision of the draft penalty order, which include checks on the records of material facts,
• Whether in the Draft Order it was correctly integrated in the relevant points of fact and law, whether in the Draft Order the questions of which penalty should be imposed were discussed, the arithmetical correctness of the penalty computation review, if the relevant judicial decisions have been considered and discussed in the draught order, If any, and any other functions that may be needed for review purposes, and specify their respective jurisdiction.

(ii) Regional Faceless Penalty Centres shall, as the Regional Faceless Penalty Centres may deem appropriate, facilitate the conduct of faceless penalty proceedings with the competence to impose penalties in compliance with the provisions of this scheme.

Any interaction, as the case may be, between the penalty unit and the penalty review unit or the assessee or any other individual, or any income-tax authority or the National Faceless Assessment Centre, as to the information or records or facts or any other details required for the imposition of the penalty pursuant to this Scheme, shall be communicated by the National Faceless Penalty Centre.

The penalty unit and the penalty review unit shall be created by the following authorities:-

(a) Additional Commissioner or Additional Director or, where necessary, Joint Commissioner or Joint Director;

(b) Deputy Commissioner or Deputy Director or Assistant Director or Assistant Director or, where applicable, Incometax Officer;

(c) any other income tax authority, ministerial staff, executive or consultant, as the Board can find appropriate.

(4) The Board for the purposes of this Scheme, direct the National Faceless Assessment Centre, the Regional Faceless Assessment Centre, the Assessment Unit and the Review Unit to operate as the National Faceless Penalty Centre, the Regional Faceless Assessment Centre, the Assessment Unit and the Review Unit for the purposes of this Scheme until the date on which the National Faceless Penalty Centre or Regional Faceless Penalty Centres, the Penalty Units or Penalty Review Units are formed.

Penalty proceedings.—

The penalty shall be imposed under this Scheme in compliance with the following procedure in the case referred to in paragraph 3, namely:—

(i) Where, in a situation, every revenue-tax authority or the National Faceless Assessment Centre has, if

(a) the introduction of penalty proceedings and the issuance of a notice of demonstration of cause for the imposition of a penalty; or

(b) The suggested initiation of a penalty proceeding shall refer the case to  the National Faceless Penalty Centre in the manner stated in clause (viii) of paragraph 12;

(ii) The National Faceless Penalty Centre shall allocate such a case to a particular penalty unit in any of the Regional Faceless Penalty Centres, where reference has been obtained in accordance with clause I by means of an automated allocation system;

(iii) if the initiation of penalty proceedings has been recommended in a case assigned to a penalty unit, that unit may determine, after reviewing the material available on record, to,

(a) comply with the recommendation and prepare a draft notice requesting, as the case may be, the assessee or any other person to prove why the penalty should not be imposed in compliance with the applicable provisions of the Act; or

(b) disagree, for reasons to be reported in writing, with the recommendation,and send the draught notice or the reasons, where necessary, to the National Faceless Penalty Centre;

(iv) on receipt of the drafted notice or reasons mentioned in paragraph (iii) of the Penalty Unit, the National Faceless Penalty Center shall —

(a) notify the assessee or any other person, as the case may be, of the show-cause, in accordance with the draught referred to in sub-clause (a) of clause (iii), specifying the date and time for filing the reply; or

(b) in the cases referred to in sub-clause (b) of clause (iii), do not initiate the penalty;

(v) if, while assigned to the Penalty Unit, a penalty proceeding has commenced, that unit shall prepare and forward such a draught notice to the National Faceless Penalty Centre. This will demonstrate why a penalty should not be imposed in compliance with the applicable provisions of the Act;

(vi) a notice of display shall be sent to the assesse or any other individual by a National Facless Penalty Centre, according to the draught of Clause (v), indicating, as the case may be, the date and time to send a response;

(vii) within the date and time stated accordingly, and the extended date and time as may be permitted on the basis of an order made in this name, an Assessee or any other person shall file an answer to that show-case correspondence referred to in sub-clause (a) of clause (iv) or clause (vi), with the National Faceless Penalty Center as may be required;

(viii) the National Faceless Penalty Center shall send a response to the penalty unit where a response from the assessee or any other individual may be lodged and notify the unit if such a reaction is not submitted;

(ix) the unit of penalty can submit an application to the national penalty centre for,

(a) the receipt by an income-tax authority or the National Faceless Evaluation Centre of additional information, documents or evidence;

(b) the provision by the assessee or any other person of any additional information, records or evidence;

(c) searching or performing verification of technical assistance;

(x) The National Faceless Penalty Center may send to the income-tax authority, or the National Faceless Assessment Centre, or the assessor, or any others as applicable any such information, document, and proof, as defined by a penalty unit, upon receipt of a request under sub-clause (a) or (b) of paragraph (ix) (ii), the required notice or requisition. (x) The National Faceless Penalty Center may send to the income-tax authority, or the National Faceless Assessment Centre, or the assessor, or any others as applicable any such information, document, and proof, as defined by a penalty unit, upon receipt of a request under sub-clause (a) or (b) of paragraph (ix) (ii), the required notice or requisition.

(xi) a notice or submission, as provided for under paragraph (x), or an extended date and time that could be granted on the basis of an application on that behalf, shall be provided to the National Faceless Center, by the income-tax authority, or the National Faceless Assessment Centre, or by an Assessee or any other person as the case may be;

(xii) the National Faceless Penalty Unit sends such a request to the National Faceless Assessment Center specifying the date and time for sending a report when a request for certain enquiries or verifications is made for or requiring technical assistance from the penalty unit;

(xiii) the National Faceless Center shall send such response to the penalty unit if a response to the correspondence provided for under clause (x) is filed by the income-tax authority or a National Faceless Assessment Center or the assassee, or any other individual, as the case may be.

(xiv) the National Faceless Penalty Centre shall send the report to the penalty unit in response to the request referred to in paragraph (xii) and notify the penalty unit, where no such report is received;

(xv) after considering record content, including response, if any, provided for in (viii) and (xiii) paragraphs, or reports as referred by paragraph (xiv), the penalty unit is to propose,

(a) enforcing a penalty and drafting an order in respect of such a penalty imposition;

(b) no penalty taxes,

For the reasons to be written down and sent to the National Faceless Penalty Center along with certain draught orders or grounds, as the case may be;

(xvi) in accordance with the risk management strategy defined by the Board, including by way of an automated examination method, as referred to in clause (xv), the National Faceless Penalty Center shall review the proposal, where it may decide, –

(a) in the event that the penalty imposition has been proposed, the penalty order is passed and copy it to the assessee or any other person as the case may be in compliance with the provisions of sub-clause (a) of paragraph (xv),

(b) not impose the penalty on an assessee or any other person, as the case may be, in the event of a suggestion that no penalty be imposed;

(c) to assign, through an automated assignment system, the case for revising the proposal to a penalty review unit at each of the Regional Façeless Penalty Centres;

(xvii) for reasons to be reported in writing and to be intimate to the national faceless penalty centre, the penalty review unit may revise the proposed penalty unit as referred to in clause (xv) where it may agree with or propose a modification of such proposal;

(xviii) the National Faceless Penalty Centre shall apply the procedure referred to in (a) or paragraph (b) of sub-clause xvi where the penalty evaluation unit complies with the proposal of the penalty unit; (xviii);

(xix) the National Faceless Penalty Center shall assign the case in a Regional Faceless Penalty Center through an automated allocation system, where the unit implies that the proposal is to be amended under subclause (a) or subclause (b) of clause (xv), rather than the penalty unit referenced in clause (xv). (xix)

(xx) if, after consideration of the material in record including recommendations for changes and reasons reported by the penalty review unit, the case is allocated to a unit of penalty referred to in paragraph (xix), such penalty unit;

(xxi) the National Faceless Penalty Center shall pass a penalty order under that draft on receipt of a modified draft order from the penalty unit as referred to in clause(xx), and shall provide the assessor or other person with copies of it or shall not impose penalties on him/her, as the case may be;

(xxii) If in the case of a copy of an order, or the reasons for not initiating or imposing a penalty on the income tax authority, specified in paragraph (i), or on the National Faceless Assessment Centre, as the case may be, in paragraphs (a) or (b) in subsection I the National Faceless Penalty Centre has passed an order, or has not initiated or imposed a penalty.

Where applicable, the Principal Chief Commissioner, or Senior Managing Director for the National Faceless Penalty Center, may move the proceedings to the tax authorities or to the National Facless Assessment Center with jurisdiction over the assessee or to any other group, regardless of anything set out in the subparagraph (1) (1), at any time of penalty proceedings.

Procedures for Rectification  –

(1) The National Faceless Penalty Centre can, through a written order to be given, amend any order passed under this Scheme in order to rectify any apparent error reported.

(2) The request may be filed with the National Faceless Penalty Centre, subject to other provisions of this Scheme, for the rectification of an error, as referred to in sub-paragraph (1),

(a) The assesse or, where applicable, any other person;

(b) The unit of penalty planning the order; (b)

(c) A review unit of penalties that has updated the order;

(d) The authority for income tax;

(e) National Center for Faceless Assessment

(3) In the instance where an application is received by the national-facing penalty centre as provided for in subparagraph (2), the application shall be allocated via an automated allotment system to a special penalty unit in one of the regional facing penalty centres.

(4) The penalty unit shall examine the request and prepare an opportunity notice,

(a), if the application was submitted by the authorities under clauses (b) or (c), or (d), or (e), of subparagraph (2); or (a) by the assessee or any other person, as the case may be;

(b) where the application has been made by an assessment officer or some other person as the case may be, and to the authorities referred to in subparagraph (b) or (c) or (e) of sub-paragraph (2), Send the message to the Penalty Center National Faceless.

(5). In order to determine the grounds why error correction should not be carried out under the applicable Act provisions, setting a date and time, the National Faceless Penalty Center shall, in its proposal under subparagraph (4), inform the assessor or any other person where appropriate, or the authorities referred to in subparagraph (b), (b) or (c) or (e) of paragraph (2).

(6) The reply to the Show Cause Notice referred to in paragraph (5) shall be furnished to the National Faceless Penalty Centre within a prescribed date and time or such extended time as may be permitted on the basis of a request submitted on that behalf.

(7) Where a response, as referred to in sub-paragraph (6), is filed, the National Faceless Penalty Centre shall send such response to the penalty unit, or where no such response is filed, inform the penalty unit.

(8) The penalty unit shall, after taking into consideration the response, if any, referred to in sub-paragraph (7), prepare a draft order,––

(a) for rectification of the mistake; or

(b)or denial of the request for correction, citing the reasons for that request,

And give the order to the Centre for the National Faceless Penalty.

(9) The National Faceless Penalty Centre shall upon receipt of the draft order, as referred to in sub paragraph (8), pass an order as per such draft and communicate such order to, –

(a) the assessee or any other person, as the case, may be; and

(b)for such action as may be needed under the Act, the National Faceless Assessment Centre or the income tax authority with jurisdiction over the event.

Appellate Proceedings.

An application against a penalty order made under this Scheme by the National Faceless Penalty Centre shall be brought before the Commissioner (Appeals) having jurisdiction over the competent income-tax authority or, as the case may be, before the National Faceless Appeal Centre; and any reference to the Commissioner (Appeals) in any correspondence from the National Faceless Penalty Centre shall mean that success

Communication exchange exclusively through electronic mode.

(1) For the purposes of this Scheme,—

(a) all interactions shall be exchanged exclusively by electronic means between the National Faceless Penalty Centre and the assessee or any other individual, as the case may be, or his designated representative; and

(b) all internal correspondence shall be shared exclusively through electronic mode between the National Faceless Penalty Centre, the National Faceless Assessment Centre, the Regional Faceless Penalty Centres, any income-tax authority, the penalty unit.

Electronic record authentication.—

An electronic record is authenticated by the,—for the purposes of this Scheme.

(i) The National Faceless Penalty Center, with its digital signature affixed to it;

(ii) the assessor or any other person, by affixing his or her digital signature, where he or she is required to return his or her income under a digital signature pursuant to the Rules, and, in any other case, by affixing his or her digital signature or electronic verification code.

Explanation. – The definition of the “electronic verification code” for the purposes of this paragraph shall be the same as that provided for in Rule 12 of the Law.

Electronic record delivery.—

(1) Any notice or order or other electronic communication under this Scheme shall be provided by way of,—by the addressee, being the assessee or any other individual,

(a) putting an authenticated copy of it in the registered account of the assessee or any other person, 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 designated representative; or to the registered email address of the assessee or any other person, as the case may be;

(c) upload an authenticated copy, as the case may be, to the Mobile App of the assessee or any other user, and

(2) Any notice or order or other digital means under this Scheme shall be sent to the addressee, being any other individual, by sending an authenticated copy thereof to that person’s registered email address, accompanied by a real-time notification.

(3) An assessee or any other person, as the case may be, shall send his or her reaction to any notice or order or to any other electronic communication under this Scheme via his or her registered account, and the reply shall be deemed to be authenticated once an acknowledgement is sent by the National Faceless Penalty Centre containing the hash result produced upon successful submission of the reply.

(4) In compliance with the provisions of section 13 of the Information Technology Act, 2000, the time and place of dispatch and receipt of electronic records shall be determined (21 of 2000).

No personal presence in the Centers or Units.-

No Individual Appearances: The assessee shall not be permitted to appear either individually or through an authorised representative in link with any proceedings under this Scheme before the revenue-tax authority of the National Faceless Penalty Center or the Regional Faceless Penalty Center or the Sanctions Unit or the Sanctions Review Unit set up under this Scheme. Fortunately, the assessee, his authorised representative, may request a providing personal in order to make oral submissions or to present his case to the penalty unit within this scheme.

(1) A individual shall not be required to appear before the income-tax authority of the National Faceless Penalty Centre or Regional Faceless Penalty Centre or penalty unit or penalty review unit formed under this Scheme either directly or through an appointed representative in connection with any proceedings under this Scheme.

(2) An assessee or any other individual, as the situation may be, or an appointed representative of the assessee, may request a personal hearing in order to make oral submissions or to bring his case before the penalty unit under this scheme.

(3) An application for a personal hearing, as referred to in sub-paragraph (2), may be authorised by the Chief Commissioner or the Director-General in charge of the Regional Faceless Penalty Centre under which the penalty unit concerned is created, if he is of the opinion that the application is protected by the circumstances set out in paragraph 12 of clause (ix).

(4) Where if the request for a context of person has been authorised by the Chief Commissioner or the Director-General in charge of the Regional Faceless Penalty Centre, the hearing shall be conducted exclusively by means of video conferencing, including the use, in accordance with the procedure laid down by the Board, of any telecommunications application software enabling video telephony;

(5) The Commission shall organised appropriate video conferencing equipment, including telecommunications application software, to facilitate video telephony at such locations as may be required in order to ensure that the assessee, or his approved representative, or any other person, is not denied the benefit of this Scheme solely on the ground that the assessee, or his authorised representative, or any other person is not denied the benefit of this Scheme solely on the ground that the assessee, or his authorised representative, or the assessee, or his authorised representative is denied the benefit of this Scheme.

Power to determine format, mode, procedure and processes.

The National Faceless Penalty Centre, the Regional Faceless Penalty Centre, the standards, procedures and procedures for the effective functioning of the National Faceless Penalty Centre, the Regional Faceless Penalty Centre, the penalty unit and the penalty re re re penalty shall be formed with the approval of the Board by the Principal Chief Commissioner or the Principal Director Commanding general of the National Faceless Penalty Centre

(i) the note, order or some other message to be served;

(ii) receipt, in response to a notice, order or any other correspondence, of any information or documents from the person;

(iii) question of acceptance of the person’s response;

(iv) the provision of e-procedures, including the login account facility, the monitoring of the status of the penalty proceedings, the display of relevant information and the download facility;

(v) access to, check and authenticate the details and respond, including the documents submitted during the penalty proceedings;

(vi) the centralised receipt, storage, and retrieval of information or documents;

(vii) in the respective centres and divisions, the general administration and grievance redress mechanism;

The Faceless Penalty Scheme 2021

• In addition, the new system ensures that all communications between the units and the assesses are conducted in digital format via e-mail. or mobile apps, while physical hearing is permitted only with the approval of CBDT.
• In the case of appeals, the assessee may approach the Commissioner responsible for appeals or the national faceless appeal center.
• The new faceless tax regime follows last year’s launch of faceless assessment and faceless appeals. So far more than 58,000 cases described for faceless assessment during the first phase have been finalised in more than 24,700 cases.
• Faceless Appeal. Scheme new -Income Tax Circular

Latest Update on faceless scheme.

Central Board of Direct Taxes  has set up a monitoring cell to track the handling of high pitch cases by the Income tax official & to investigate complaints by Income tax taxpayers under faceless scheme.