Transparent Taxation 2020: Faceless Assessment, Appeals and Taxpayers’ Charter
Tax & GST

Transparent Taxation 2020: Faceless Assessment, Appeals and Taxpayers’ Charter

The Hon’ble Prime Minister of India launched the ‘Transparent Taxation – Honoring the Honest’ platform on 13th August, 2020 with the aim to reform and restructure the existing tax assessment system by eliminating corruption and promote Faceless and Paperless Assessments. The Prime Minister reportedly stated “Our effort is that our tax system should be seamless, faceless and painless”. The conventional system of tax scrutiny which usually included a lot of face to face interaction between the assessee and the Assessing Officer will now be discontinued.

Benefits of the New Scheme

The new system is expected to provide following benefits: –

  • Greater transparency
  • Improvement in delivery of services
  • No need for face to face interaction
  • Less paperwork

Features of the New Platform

The salient features of this platform as provided by the Government are –

Components of the New Platform

The newly launched platform consists of 3 major components:-

Each of the above components is discussed herein.


The concept of Faceless Assessment is not completely new. The government, since the last few years have been implementing measures to promote faceless assessment.

Assessments under the Income Tax Act

Section 143(3) of the Income Tax Act, 1961 deals with Scrutiny Assessment. Notice of Scrutiny Assessment ( Notice u/s 143(2) ) may be received by an assessee within 6 months from the end of the financial year in which return in furnished. This notice is sent to those assesses whose files are selected for scrutiny. Usually the selection takes place randomly on the basis of certain parameters. Scrutiny is done to ascertain whether the assessee has correctly shown his income in the return. Usually a scrutiny notice is followed by notice under section 142(1) wherein various information and documents are asked for.

Section 144 of the Act deals with best judgment assessment which is usually done where the assessee does not file return of income or fails to furnish documents / information asked for by the Income Tax Authority.

Section 147 deals with income escaping assessment wherein if the Assessing Officer has reasons to believe that any income chargeable to tax for any Assessment Year has escaped assessment, then he may assess or reassess such income or any other income which has escaped assessment and which comes to his notice subsequently during the course of assessment proceedings even if assessment under any other section has been done earlier.

Faceless mode

Finance Act, 2018 introduced section 143(3A) which provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under section 143(3) so as to impart greater efficiency, transparency and accountability by –

  • Eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible;
  • Optimizing utilization of the resources through economies of scale and functional specialization;
  • Introducing a team based assessment with dynamic jurisdiction.

Subsequently in September, 2019, the Income Tax Department launched the first phase of faceless e-assessment scheme through the ‘E-Assessment Scheme, 2019’ wherein it was decided that scrutiny notices will be issued from National e-Assessment Center. All communications between the assessee and the National e-Assessment Centre will take place electronically. This reduced the requirement of departmental representation by the assessee in case of scrutiny assessments and appeals in future.

With effect from 13th August, 2020 the existing faceless assessment scheme (with certain modifications) have been made mandatory and expanded to all taxpayers.

Amendments in Faceless Assessment Scheme

The CBDT vide  Notification No. 60/2020 dated 13th August, 2020 made a number of amendments to the erstwhile Notification No. 61/2019 dated 12th September, 2019 which includes changing the name ‘E-Assessment Scheme’ to ‘Faceless Assessment Scheme’. A number of amendments have been made to the erstwhile notification, some of which are –

  • Inclusion of Best Judgment Assessment u/s 144 in the definition of assessments.
  • Procedure for assessment now provides that where a notice is issued under section 143(2) or u/s 142(1) or u/s 148(1) by the jurisdictional Assessing Officer, the National e-Assessment Centre shall intimate the assessee that assessment will be completed under this Faceless Assessment Scheme.
  • Penalty order and filing appeal against such order shall also be covered under this scheme.
  • Personal hearing through video conferencing is allowed under this scheme.
  • Rules relating to Authentication of Electronic records has been amended.

Key Features

The most important features of the faceless assessment scheme are:-

Random selection of cases

All cases for scrutiny will now be selected on a random basis in a computer through the use of data analytics and artificial intelligence (AI). There will be no human intervention in the selection of scrutiny cases.

Random allocation of cases

Since the concept of territorial tax jurisdiction has been discontinued, any assessing officer, posted anywhere in India may get to assess a scrutiny case of any assessee. Just like the selection of cases, the allocation of the same will also be done randomly. Ideally an assessing officer posted in a city will be allotted cases from another city.

No physical interface, no face to face interaction

Since the assessee and the Assessing Officer will be based in different cities, selected randomly, there will be no scope for any face to face interaction between the assessee and the Assessing Officer. Since there will be no physical interface, the assessee is not required to visit the Income Tax Office. Personal hearing through video conferencing is, however, allowed in certain cases.

Issue of notice by National e-Assessment Centre with DIN

All notices for assessment will be issued centrally with Document Identification Number (DIN). The National e-Assessment Centre set up by the Government will be responsible for issuing of notices.

Response from the assessee

In the absence of any physical interface, the assessee is required to submit his responses along with documents / information through the online portal. Scanned copies of the requisite documents are to be uploaded in the portal for review by the Assessing Officer.

3-Stage Assessment Orders

Every assessment order shall be passed through three stages. First the assessment order will be drafted by an Assessing Officer. The draft will be then forwarded to another Assessing Officer for review. After the review is complete, it will be forwarded to a third Assessing Officer who will be responsible for passing the Final Assessment Order.


Through the Transparent Taxation platform launched on 13th August, 2020, the Government has also announced the Faceless Appeal. It will be effective from 25th September, 2020 onwards.

Appeal to CIT(A)

Appeal to Commissioner of Income Tax (Appeals) is also known as First Stage appeal. An assessee being aggrieved by an order or notice of the Assessing officer may choose to file an appeal before the CIT(A). The assessee has to file the following forms / documents in duplicate in order to file an appeal to the CIT(A):-

  • Form No. 35
  • Memorandum of Appeal
  • Statement of Facts
  • Grounds of Appeal
  • Copy of the Order appealed against
  • Notice of Demand, in original
  • Copy of Challan for the payment of prescribed fee

Faceless mode

Finance Act, 2020 introduced section 250(6B) which stated that the Central Government may make a scheme, by notification in the Official Gazette for the purposes of disposal of appeal by CIT(A) so as to impart greater efficiency, transparency and accountability by –

  • Eliminating the interface between the CIT(A) and the appellant in the course of appellate proceedings to the extent technologically feasible;
  • Optimizing utilization of the resources through economies of scale and functional specialization;
  • Introducing an appellate system dynamic jurisdiction in which appeal shall be disposed of by one or more CIT(A).

The Income Tax Appellate Tribunal, New Delhi issued guidelines and Standard Operating Procedures (SOP) for hearings through video conferencing vide circular dt 27th April, 2020 for taking up hearing of extremely urgent matters. Following success of above measures and based on the above, the scheme of faceless appeal has been announced that from 25th September, 2020 onwards all appeals will be decided through faceless mode.

Key Features

The key features of the faceless appeal scheme are:-

  • Random allocation of appeals to any officer in the country
  • Identity of the officer deciding the appeal shall be unknown
  • Team based decision and review


A charter is a written document provided by the legislative power of a country defining the rights, privileges and obligations of a body or a class of persons, etc. Under the Transparent taxation platform, the Government has also announced the Taxpayer’s Charter in which the rights and obligations of the taxpayer’s are defined.

Finance Act, 2020 introduced section 119A which stated that the CBDT shall adopt and declare a Taxpayer’s Charter and issue such orders, instructions, directions or guidelines to other income tax authorities as it may deem fit for the administration of the Charter.

Based on the above, the Government released the following information –

Other Important Aspects

Restriction on Powers to Survey

Section 133A of the Income Tax Act provides power to survey to an income tax authority by entering any building or any place occupied by any person in respect of whom such authority exercises jurisdiction, at which a business or profession or an activity for charitable purpose is carried on.

The CBDT issued an order u/s 119 dated 13th August, 2020 stating that the term ‘Income Tax Authority’ in section 133A shall only include Officers posted in Directorates of Investigation (Investigation Wing) and Commissionerates of TDS. Hence no other Income Tax Authority shall have the power to survey with effect from 13th August, 2020.

Personal hearing through Video Conferencing

An assessment order is passed through 3 stages wherein the draft assessment order is first reviewed by a second Officer and finalized by a third Officer. In case a modification is proposed in the draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such draft assessment order, the assessee or his authorized representative, as the case may be, may request for personal hearing so as to make his oral submission or present his case before the Income Tax Authority in any unit under the Faceless Assessment Scheme.

Exceptions to the Faceless Assessment Scheme

The Faceless Assessment Scheme shall not apply in the following cases:-

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The implementation of the Transparent Taxation platform is a very important milestone in the Income Tax Law of India. This is expected to increase transparency in the process of assessments and appeals. However, since every action is to be undertaken in the electronic mode through the portal, the process will not be free from challenges.

There will be many issues as the access to the electronic medium a concern to certain assesses; complicated cases of high taxpayers, that are much easier to discuss with the Income Tax Authority through face to face interaction, etc which is expected that these issues will gradually be resolved with the passage of time.

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