Faceless Penalty Scheme 2021

The Central Board of Direct tax with the intension to eliminate the interface between the Assessing officer and the assessee during proceedings, optimising the resources through economies of scale and to introduce the mechanism of imposing the penalty with dynamic jurisdiction in which penalty shall be charged by one or more Income Tax authorities, has introduced Faceless Penalty Scheme via 274(2A).

Faceless Penalty centres:

To levy the penalty through electronic mode, CBDT has setup four centres at various levels.

1. National Faceless Penalty Centre: This centre is set up to conduct the faceless penalty proceedings in a centralised manner and vest with the jurisdiction to impose penalty in accordance with the provision.

2. Regional Faceless Penalty Centre: This centre will receive the individual cases from the NFPC and allocate it to the penalty unit for the preparation of draft penalty order.

3. Penalty Units: These units are set to perform the functions like, drafting the penalty orders by considering the points in the act under which penalty can be levied, seeking the information or clarification on the points or issues identified, analysis of the material furnished by the assessee or any other person and performing such other functions required for the purpose of levying the penalty.

4. Penalty review units: For this scheme penalty review units may be set up to perform the review of draft penalty orders, checking whether relevant material evidence has been brought into record, whether the issues on which penalty is to be imposed has been discussed and checking the arithmetical accuracy of the computation of penalty and such other functions required for the purpose of review.

How does the penalty proceedings work in the Faceless Penalty scheme?

Other important points to be noted:

• Currently there is a single window for all the faceless assessment, faceless appeals, and faceless penalty proceedings. In future government may propose to develop a separate window
• At present video conferencing functionalities are in the process of being built and soon the Video conferencing links will be made available in the e-proceedings window.
• Exchange of Communications: In this scheme assessee is not having any by-default right of personal hearing and he may request for video conferencing or telephony to make his oral submission or presenting the case before the penalty unit.

Even the internal communication between the penalty units and the other units shall be entirely on electronic mode.
• Notices may be delivered via email, SMS, or the registered account of the taxpayers’ e-filing portal (www.incometaxindiaefiling.gov.in).
• All communications by the income tax authorities/NFPC/NFAC would carry a Document Identification Number (DIN)
• Similarly, all responses filed by taxpayers must be electronically signed either by way of Digital Signatures or by way of Electronic Verification Code (EVC).
• Only scanned files in pdf format can be uploaded as attachments.
• The maximum size of one attachment which can be uploaded has been increased to 10MB. Before in e-proceedings the maximum size of an attachment was restricted to 5MB.

Disclaimer:“Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”

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Prepared By

Tejas Acharya

CA Final

Date: 02-03-2021