August 7, 2021

SOP for Handling Writ Petitions where Assessment has been Made Under the FAS’19 and/or Penalty Passed Under FPS’21

1. What is a Faceless Assessment Scheme under the Income Tax?

The Faceless Assessment Scheme (FAS) was launched in 2020 with an aim to promote a smooth taxation regime and reduce the need for physical interaction with the stakeholders. India is one of the few nations to adopt FAS.

Earlier, CBDT had passed directions u/s 119 of the Act dated 31.03.2021, which allowed all orders, circulars, instructions, guidelines and communications issued in order to implement the FAS to be applicable u/s 144B of the Act.

2. Reason for Publishing the SOP for Faceless Assessment Scheme

The Central Government observed that National Faceless Assessment Centres (NaFAC) is one of the biggest respondent-litigants in taxation matters.

Since NaFAC has no primary role in defending the writ except in cases where the scheme itself is challenged, the Pr. CIT (Jurisdictional) has been appointed as the authority to defend the case before the Hon’ble High Courts.

3. SOPs Released by the Government:

3.1 SOP for PCIT jurisdictional Charge being Nodal Coordinating Authority for defending writ petitions arising from the assessment/penalty proceedings pending before NaFAC.

Where a writ petition is needed to be filed in case when the assessments or penalties proceedings are pending before NaFAC, following procedure will be followed:

PCIT (Jurisdictional) will handle the writ matters with the help of the Pr. CCIT, CIT (Judicial) of the Region and PCIT (ReFAC) (AU) concerned.

Since the cases filed are with NaFAC, PCIT (ReFAC) (AU) will provide inputs to the PCIT (Jurisdictional). In such cases:-

Information about Writ Petition before the High Court is to be forwarded by CIT (Judicial) or PM (Jurisdictional) to CIT (NaFAC)-3, New Delhi and then the writ will be referred to the PCIT (ReFAC)(AU) concerned.

On receipt of the information from concerned Pr. CCIT (Jurisdictional), the CIT (NaFAC)-3, New Delhi would direct ITBA for identification of the PCIT (ReFAC) (AU) involved immediately without any delay and the writ petition will be referred to PCIT(ReFAC)(AU).

The PCIT (ReFAC) (AU) shall examine the Writ Petition in the context of facts of the case and applicable law.

The PCIT (ReFAC) (AU) shall examine the petition and cross verify it with the information available on record for the case on ITBA.

Parawise comments so received from PCIT (ReFAC) (AU) shall be forwarded to the PCIT(Jurisdictional) and office of Pr. CCIT.

The POT (ReFAC) (AU) would make a reference for seeking specific comments to the NaFAC in the following circumstances:

Any provision related to FAS 2019 or section 144B of the Act is challenged in the writ or during the course of arguments;
Specific inputs are required on any policy issue.

Such reference to NaFAC for comments shall be in the prescribed format as per Annexure-A.

However, the practice of seeking general comments/directions from NaFAC must be avoided.
The PCIT (Jurisdictional) shall defend the case, give directions regarding the arguments and decide on the stand to be taken before Hon’ble Higher courts.

3.2 SOP for PCIT (Jurisdictional) Charge being Nodal Coordinating Authority for defending writ petitions arising from the assessment/penalty orders completed by NaFAC

On receipt of the Writ Petition, the PCIT (Jurisdictional) along with J01 shall examine the Writ Petition.
The POT(Jurisdictional) shall examine the petition of the taxpayer and record para wise comments.
If the facts warrant, the PCIT (Jurisdictional) may seek the comments of the PCIT (ReFAC) (AU) under whose Jurisdiction the assessment order had been passed.
The PCIT (Jurisdictional) shall record reasons in writing and make reference to the NaFAC. After unmasking, the PCIT (Jurisdictional) and PCIT (ReFAC) (AU) may coordinate amongst themselves.
The PCIT (Jurisdictional) will make reference for seeking specific comments to the NaFAC in the following circumstance:
1. Any provision related to FAS 2019 or section 144B of the Act or FPS, 2021 is challenged in the writ or during the course of arguments.
2. Specific inputs are required on any policy issue.

Again, the practice of seeking general comments/directions from NaFAC is to be avoided.
If an unfavourable order of Hon’ble High Court is received in a case where proceedings are pending before NaFAC, inputs and comments of Pr. CIT (ReFAC)(AU) shall be obtained by PCIT (Jurisdictional) for taking a decision on acceptability or otherwise approach the Supreme Court

3.3 SOP for Standing Counsels and CIT (Judicial) of the relevant jurisdiction

The standing counsels or the O/o CIT (Judicial) shall seek comments/directions from the concerned PCIT (Jurisdictional) only. They shall not refer the writ petition directly to NaFAC.
During the course of defending a writ petition, if certain directions/comments are required from the NaFAC, the request for the same shall be made by the concerned PCIT (jurisdictional). The standing counsel shall make a request to the concerned PCIT (Jurisdictional) for the same.

3.4 SOP for PCIT (ReFAC) (AU) concerned:

On receipt of request for giving comments on the writ, the PCIT (ReFAC) (AU) shall ensure that the AU concerned examines the petition of the taxpayer.
The Pr. CIT (ReFAC)(AU) will supervise and monitor the process of framing parawise comments in accordance with FAC, 2019 / section 144B of the Act or FPS, 2021 and the orders, circulars and notifications issued thereunder.
PCIT (ReFAC) (AU) concerned may coordinate with PCIT (Jurisdictional) and complete action within 5 days of receipt of the writ in the O/o PCIT (ReFAC) (AU).

3.5 SOP for NaFAC

On receipt of a writ petition directly from the petitioner or the Standing Counsel of Income Tax Department, a copy shall be forwarded to the PCIT (Jurisdictional)
On receipt of request from the PCIT (Jurisdictional) for unmasking of AU, the NaFAC shall forward the request to the Directorate of Systems for unmasking of the AU.
On receipt of request from the PCIT (Jurisdictional) for specific inputs on policy matters being challenged, the NaFAC shall examine whether the request is accompanied as per Annexure – A.

3.6 SOP for CIT (ITBA), Directorate of Systems

On receipt of request for unmasking of the AU from NaFAC, the ITBA team shall give the details of PCIT (ReFAC) (AU) concerned.
If the modification to returned income is done by the new AU after modification suggestions, such modification reports should be provided.
If High Courts have sent the file back to the Assessing Officer for giving a fresh opportunity to the applicants, then the ITBA shall then automatically transfer the same to ReFAC in which the case was originally assessed for the completion of the same.
If the modification to returned income is done by the new AU after modification suggestions reported by the Review Unit, the work item shall be transferred automatically to the original ReFAC AU in which the case was originally allocated at the first instance for the completion of the same. The work item is to be completed by the ReFAC AU concerned.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

SOP (Standard Operating Procedure) For penalties under Faceless Penalty Scheme-2021

CBDT has prescribed complete Standard Operating Procedures (“SOP”) for penalties under FPS, 2021 vide document issued on 9th August, 2021.

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