Faceless Penalty (Amendment) Scheme, 2022

The Central Board of Direct Taxes (CBDT) has notified Faceless Penalty (Amendment) Scheme, 2022 amending the provisions of the Faceless Penalty Scheme 2021 with effect from 27-05-2022. The 7 major changes introduced by the Amendment Scheme have been discussed in this article. Faceless Jurisdiction of Income-tax Authorities Scheme 2022

Synopsis of Faceless Penalty (Amendment) Scheme, 2022

This new scheme is notified by the CBDT by exercising the powers conferred to it under section 274(2A) of the Income-tax Act, 1961.

Regional Faceless Penalty Centers (RFPC) removed from the Scheme
Penalty Units and Penalty Review Units shall refer to Assessing Officer
Penalty Imposition Proposal replaces Draft Order
Penalty Imposition Proposal to be examined as per Board’s guidelines
Provisions for Rectification Proceedings omitted
Authentication of electronic records
Mandatory Personal Hearing if requested

CBDT notifies Non-Fungible Token (NFT) as Virtual Digital Assets

Regional Faceless Penalty Centers omitted

The Faceless Penalty (Amendment) Scheme, 2022 has removed the Regional Faceless Penalty Centers (RFPC) from the Faceless Penalty Scheme, 2021.

RFPC was responsible to facilitate faceless penalty proceedings as per the scheme.
CBDT announced that References to RFPC wherever occurred in the scheme have been omitted.

Penalty Units and Penalty Review Units shall mean Assessing Officer

The CBDT has specified that the term ‘Penalty Unit’ or ‘Penalty Review Unit’, wherever used in the Faceless Penalty Scheme 2021, shall refer to an Assessing Officer. Such AO has powers as assigned by the CBDT.

Draft Order’ replaced with ‘Penalty Imposition Proposal’

Instead of preparing a draft order for the imposition of a penalty, the penalty unit shall prepare a penalty imposition proposal for the imposition of a penalty under the new ac, 2022.

Rectification Proceedings Omitted

The Faceless Penalty Scheme 2021 allowed the National Faceless Penalty Centre to rectify any mistake which is apparent from the record under this scheme. Application for rectification of mistake was allowed to be filed by the following persons:

Assessee or any other person
Penalty unit, which prepared the order
Penalty review unit, which reviewed the order
Income-tax authority

National Faceless Assessment Centre

Faceless Penalty (Amendment) Scheme, 2022 has completely omitted the provisions related to the rectification of penalty orders for rectifying any mistake apparent from records.

Penalty Imposition Proposal to be examined as per Board’s guidelines

As per the Amendment Scheme, 2022, the National Faceless Penalty Centre shall examine the penalty imposition proposal in accordance with the guidelines issued by the CBDT instead of the earlier parameter of risk management strategy.

Authentication of Electronic Records

Earlier, NFPC was required to authenticate any electronic record by digital signature. Now the same needs to be authenticated by the National Faceless Penalty Centre by way of electronic communication. However, as per the amended scheme, the penalty unit or the penalty review unit or technical unit, or the verification unit is also required to authenticate the electronic records and shall authenticate any electronic record by affixing a digital signature. Assessee or any other person shall continue to authenticate the electronic records by digital signature or EVC. Also read: Section 144B of income tax act: Faceless assessment

Mandatory Personal Hearing if requested

The pre-amended Faceless Penalty Scheme provides for approval of the request for a personal hearing by the Chief Commissioner or Director-General. The power to approve the request was at their discretion. Now, it is mandatory to provide for the opportunity of a personal hearing if the same is requested.

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Frequently Asked Questions

Common questions about Faceless Penalty Amendment Scheme 2022: Key Updates.

The Faceless Penalty (Amendment) Scheme, 2022 is a notification issued by the Central Board of Direct Taxes (CBDT) to amend the provisions of the Faceless Penalty Scheme 2021, with effect from May 27, 2022. It introduces several changes to the penalty proceedings under the Income-tax Act, 1961.

The removal of Regional Faceless Penalty Centers (RFPC) from the Faceless Penalty (Amendment) Scheme, 2022 aims to streamline the penalty proceedings. The RFPC was responsible for facilitating faceless penalty proceedings under the earlier scheme, but its role has been omitted in the amended scheme.

According to the Faceless Penalty (Amendment) Scheme, 2022, the terms 'Penalty Unit' or 'Penalty Review Unit' shall refer to an Assessing Officer assigned powers by the CBDT. This change clarifies the authority responsible for penalty proceedings.

The amended scheme has replaced the term 'Draft Order' with 'Penalty Imposition Proposal'. Instead of preparing a draft order for imposing a penalty, the penalty unit will now prepare a penalty imposition proposal under the new scheme.

The Faceless Penalty (Amendment) Scheme, 2022 has completely omitted the provisions related to the rectification of penalty orders for rectifying any mistake apparent from records. This change aims to streamline the penalty proceedings and reduce the potential for errors.

Under the amended scheme, the National Faceless Penalty Centre shall examine the Penalty Imposition Proposal in accordance with the guidelines issued by the CBDT, instead of the earlier parameter of risk management strategy.

Earlier, the NFPC was required to authenticate electronic records by digital signature. Now, the National Faceless Penalty Centre shall authenticate electronic records by way of electronic communication. Additionally, the penalty unit, penalty review unit, technical unit, or verification unit shall authenticate electronic records by affixing a digital signature.

The amended scheme has made it mandatory to provide an opportunity for a personal hearing if the assessee or any other person requests it. Previously, the approval for a personal hearing was at the discretion of the Chief Commissioner or Director-General.

The primary purpose of the Faceless Penalty (Amendment) Scheme, 2022 is to streamline and enhance the efficiency of penalty proceedings under the Income-tax Act, 1961. The amendments aim to provide clarity, reduce errors, and improve the overall faceless penalty process.

According to the amended scheme, assessees or any other person shall continue to authenticate electronic records by digital signature or Electronic Verification Code (EVC), as per the earlier provisions.