Faceless Assessment- Issues and Challenges

Last Updated On: June 8, 2021, 11:32 p.m.



The Central Government introduced the Faceless Assessment Scheme to provide higher transparency, efficiency and accountability in Income Tax assessments.

All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are introduced to

  • Remove the interface between the Assessing Officer and the assessee during the course of proceedings.
  • Maximum  utilisation of resources through the economies of scale and functional specialisation; and
  • Launch a team-based determination of arm’s length price with dynamic jurisdiction.


In the Union Budget 2019, the Finance Minister proposed the introduction of a scheme of faceless e-assessment. The scheme aims at highlighting the human interface between the taxpayer and the income tax department. The scheme lays down the procedure to carry out a faceless assessment through electronic mode. From 13 August 2020, the e-assessment scheme of 2019 stands amended and hence known as the Faceless Assessment scheme.


The Government had set up a fool proof procedure for completing the assessments which consisted of different units and centers which are as under: –

a) National Faceless Assessment Centre

b) Regional Faceless Assessment Centers

c) Assessment Units

d) Verification Units

e) Technical Units

f) Review Units.

As per available data about 1,94,000/- cases were allocated for faceless assessment out of which 1,06,400/- cases were disposed off till 31/03/2021 (Economic Times Dt 08/04/2021)

My brief experience with faceless assessment scheme show that it is not manned by officers having good knowledge or grip over the law. In many cases they are not even seriously going through submissions made and are reverting back with the same questionnaire or little modification sticking to their stand. This is giving rise to uncalled for litigation and cause mental agony to the tax payers. Though I have with me few such illustrations to suggest lack of knowledge or application of mind to the issue.

In a number of cases various High Courts decided the petitions in favor of Assessee. To name a few are as under: –

The impugned assessment order was passed without waiting for the completion of the time frame given in show cause notice cum draft assessment order to file response.

2) Ritnand Balved Education Foundation Vs. N.F.A.C. & Others (Delhi H.C.)

No approval for personal hearing was granted. The assessment was set aside.

3) Renew Power Pvt. Limited Vs. National E-Assessment Centre Delhi (Delhi High Court)

The assessment order was passed before the time prescribed for filing the reply.

4) Ikam Baram Sukumaran Vs. ITO (Madras H.C)

Assessment order was passed before the time prescribed for filing the reply.

5) KBB nuts Private VS. National Faceless Appeal Centre (Delhi H.C.)

The objection filed in response to show cause notice was not considered.

There are end numbers of cases where Principles of natural justice were violated giving rise to avoidable litigation. Every assessee is not able to afford the financial burden of litigation.



Sh. Narinder Modi Prime Minister of India launched the scheme of Transparent Taxation-Honoring the Honest and Tax Payer’s Charter on 13th August 2020. Union Budget 2020 introduced a new section 119A in the IT Act, 1961, to Notify taxpayer’s rights and obligations.


Section 119A

“The Board 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 such Charter”.

The objective is to end taxpayer’s harassment or undue scrutiny from tax officers by providing for clean and corruption free governance. The charter also provides to ensure accountability for the actions of the Income Tax Officers. It also seeks to reduce the cost of tax compliance for a taxpayer.



Although the taxpayer’s charter provides to ensure accountability for the action of the Income Tax Officers but, it has no constitutional backing in India. CBDT must create and enforce policies procedures and other rules to hold the officials accountable for their acts of omission and commission. Then and only then the orders passed in violation of principles of natural justice can be curtailed.



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