Faceless Penalty Scheme, 2021

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Faceless Penalty Scheme, 2021

Recently, the Central Board of Direct Taxes, vide notification dated 12th January 2021, introduced ‘Faceless Penalty Scheme, 2021’. The same gets into force from the date of the publication i.e. 12th January 2021. The Scheme is briefly explained in the present article.

Centres working under Faceless Penalty Proceedings

Following Centres will conduct the Faceless Penalty Proceedings-

  1. National Faceless Penalty Centre,
  2. Regional Faceless Penalty Centre,
  3. Penalty Units, and
  4. Penalty Review Units.

Procedure for levying penalty under Faceless Penalty Scheme

  1. The income-tax authority/ National Faceless Assessment Centre will refer already initiated penalty proceeding case or recommended initiation of the penalty proceeding case to the National Faceless Penalty Centre.
  2. National Faceless Penalty Centre will assign the case to a specific penalty unit.
  3. Based on the type of the case, the penalty unit will take any of the following action-
Type of the case Action by the penalty unit
Penalty proceedings already initiated The penalty unit will issue draft notice and send the same to the National Faceless Penalty Unit.
It is recommended to initiate the penalty proceedings

Penalty unit, based on material on record, will either agree or disagree with the recommendation.

If agrees, the penalty unit will draft notice to show cause as to why the penalty should not be levied.

Such draft notice will be sent to the National Faceless Penalty unit.

  1. National Faceless Penalty Centre will serve the notice to the assessee.
  2. The assessee will file the response within the time and date as specified in the notice.
  3. National Faceless Penalty Centre will send the response, if received, to the penalty unit or inform non-receipt of the response.
  4. Procedure for obtaining additional information/ documents-
  • If needed, the penalty unit can request the National Faceless Penalty Centre for obtaining additional information/ documents/ evidence from income-tax authority/ National Faceless Assessment Centre/ assessee.
  • Accordingly, the National Faceless Penalty Centre will issue notice/ requisition for submission of the additional information/ documents.
  • The income-tax authority/ National Faceless Assessment Centre/ assessee should file a necessary response to the National Faceless Penalty Centre.
  1. Procedure for conducting inquiry/ verification/ technical assistance-
  • In case there is need for any inquiry/ verification/ technical assistance, the penalty unit will request for the same to the National Faceless Penalty Centre.
  • National Faceless Penalty Centre will forward the request to the National Faceless Assessment Centre, wherein, the date and time of submitting the report will be specified.
  • The report, if received, will be sent to the penalty unit. However, if no report is received, the same will be informed to the penalty unit by the National Faceless Penalty Centre.
  1. Preparation of draft order-
  • Based on the material on record and additional information/ documents, if any, the penalty unit will propose to either impose the penalty or drop the penalty proceedings.
  • The penalty unit will draft order in case it proposes to impose the penalty. The same will be sent to the National Faceless Penalty Centre.
  • Based on the proposal of the penalty unit, the National Faceless Penalty Centre can decide-
Proposal The action of the National Faceless Penalty Centre
Imposition of penalty Pass the penalty order
Non-imposition of penalty Intimate the same to the assessee
Further review of the proposal Assign the case to a penalty review unit.

Procedure for rectifying the mistake apparent from the record

An application for the rectification of mistake may be filed by any of the following categories of person-

  1. An assessee,
  2. Penalty unit,
  3. Penalty review unit,
  4. Income-tax authority, or
  5. National Faceless Assessment Centre.

Such an application is to be filed with the National Faceless Penalty Centre. On receiving the application, the National Faceless Penalty Centre will follow the below steps-

  • Assign the application to a specific penalty unit via automated allocation system.
  • The penalty unit will examine the application. It will prepare a notice for granting appropriate opportunity and send such notice to the National Faceless Penalty Centre.
  • The National Faceless Penalty Centre will serve the notice to the assessee or the authorities, as the case may be.
  • Penalty unit will prepare a draft order, based on the response, forwarded by the National Faceless Penalty Centre.
  • Penalty unit will send the draft order to the National Faceless Penalty Centre.
  • On the basis of the draft order, the National Faceless Penalty Centre will pass a final order.

Some important points

  1. An aggrieved assessee can prefer an appeal, against the penalty order issued by the National Faceless Penalty Centre, before the jurisdictional Commissioner (Appeals) or the National Faceless Appeal Centre.
  2. Any type of communication, in the matter, between the following, should be carried out only via electronic mode-
    1. National Faceless Penalty Centre and the assessee; or
    2. Internally between the National Faceless Penalty Centre; penalty unit; penalty review unit; National Faceless Assessment Centre; income-tax authority or the Regional Faceless Penalty Centre.
  3. The electronic record will be authenticated as under-
Particulars Manner of authentication
National Faceless Penalty Centre Affixing the digital signature
Assessee/ any other person

·   Affixing the digital signature – if an income tax return is to be filed using digital signature; or

·   Electronic verification code or digital signature – in any other case.

 

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.