Foreword I-5 About the Author I-9
I-11 Acknowledgements I-13 List of Abbreviations I-15 List of Cases I-37
CHAPTER 1
HISTORY,
BACKGROUND AND INTRODUCTION
1.1 History and background 1
1.2 Timeline of the journey so far 2
1.3 Notifications/Circulars/Instructions/Internal orders issued by CBDT from 2015 till date – A snapshot 5
1.4 Transition across the years (from E-Assessments to faceless assessments) 13
1.5 Difference between the E-Assessments and Faceless assessment scheme 13
1.6 Difference between Faceless Assessment Scheme, 2019 and New Faceless Regime, 2020 14
1.7 Faceless Appeals 19
1.8 Faceless Appeals scheme – A chronological overview 23
CHAPTER 2
FACELESS ASSESSMENTS
2.1 Journey so far 25
2.2 Relevant legislative provisions related to faceless assessments
2.2.1 Definition of document [Section 2(22AA) of the ITA, 1961 (corresponding section 2(41) of the ITA, 2025)]
2.2.2 Definition of hearing [Section 2(23C) of the ITA, 1961 (corresponding section 2(48) of the ITA, 2025)]
2.2.3 Assessments section 143(3) of the ITA, 1961 (S. 270(10) of the ITA, 2025)
2.2.4 Issue of notice for scrutiny assessment - S. 142(1) of the ITA, 1961 (S. 268(1) of the ITA, 2025)
2.2.5 Faceless Assessment - S. 144B of the ITA, 1961 (Section 273 of the ITA, 2025)- Salient changes 28
2.2.6 Authentication of notices and other documents – Section 282A of the ITA, 1961 (S. 502 of the ITA, 2025)
2.2.7 Service of notice, summons, requisition, order and other communication - Rule 127 of the IT Rules, 1962 (Rule 232 of the IT Rules, 2026)
2.2.8 Authentication of notices and other documents - Rule 127A of the IT Rules, 1962 (Rule 233 of the IT Rules, 2026)
2.3 Faceless Regime in FAQs Format
2.3.1 What is faceless assessment and what is the scope of faceless assessments?
2.3.2 What is the procedure of the faceless assessments?
2.3.3 What is the structure of faceless assessment –Centres and functional units
2.3.4 Who are the authorities under AU, VU, TU and RU?
2.3.5 How are communications carried out under Faceless Assessment?
2.3.6 How are electronic records authenticated and communicated under faceless assessment?
2.3.7 Can the assessee make personal appearance in faceless assessment?
2.3.8 What is the procedure for video conference hearing?
2.3.9 Who prescribes the standards and procedures for faceless assessment?
2.3.10 When can a case be referred for special audit under faceless assessment?
2.3.11 Can a case be transferred to the jurisdictional Assessing Officer during faceless assessment? 45
2.3.12 Some important definitions under the faceless regime
2.3.13 Will opportunity to be heard be given before concluding the assessment?
2.3.14 Will the communication between the various units shared with the assessee?
2.4 Bird’s eye view of faceless assessment procedure
2.5 Administrative Structural change in department under faceless assessment
2.6 Standard operating procedures under faceless assessment 51
2.6.1 What categories of cases are assigned to an Assessment Unit (AU) under the Faceless Assessment Scheme?
2.6.2 What must the AU do immediately upon receiving a new case assignment?
2.6.3 What specific preliminary actions are required in ‘Reopened Cases’?
2.6.4 Within what timeframe should the AU issue the initial questionnaire under section 142(1) of ITA 1961?
2.6.5 What databases and tools should the AU consult before issuing the initial questionnaire?
2.6.6 How should the questionnaire be tailored for different case types? 53
2.6.7 What precautions should the AU take when drafting the questionnaire to avoid burdening the assessee? 53
2.6.8 What response timelines are prescribed for the initial notice under section 142(1) of ITA, 1961? 53
2.6.9 What timelines apply to subsequent notices issued under section 142(1) of ITA 1961?
2.6.10 What must the AU do if no response is received to the initial notice by the compliance date?
2.6.11 Can adjournment be granted to the assessee for responding to section 142(1) notices?
2.6.12 Can penalty proceedings be initiated automatically in all cases of non-compliance with section 142(1) notice?
2.6.13 When must a show-cause notice (SCN) under section 144 of ITA 1961 be issued in non-compliance cases?
2.6.14 What is the Role of NaFAC’s insight system in cases of non-responsive assessees?
2.6.15 What happens if the assessee complies after the SCN Stage?
2.6.16 In what circumstances may the AU refer a case to the Verification Unit (VU)?
2.6.17 What approvals and documentation are required before making a reference to the VU?
2.6.18 What types of verification activities can the AU request from the VU?
2.6.19 How should the AU handle VU reports that indicate the subject is not in physical proximity of that VU?
2.6.20 On what matters may the AU seek assistance from the Technical Unit (TU)?
2.6.21 What approvals and timelines apply before seeking assistance from the TU on legal matters?
2.6.22 How should the AU respond to Clarification Requests from the VU or TU?
2.6.23 When must a show-cause notice (SCN) be issued as part of the assessment process?
2.6.24 What mandatory elements must a show-cause notice contain?
2.6.25 What response timeline is prescribed for the assessee to reply to an SCN?
2.6.26 How must the AU handle requests for personal hearing by the assessee?
2.6.27 Is it mandatory to prepare an ILDP in every case? 57
2.6.28 By when must the ILDP be submitted for risk analysis? 57
2.6.29 What happens after the review unit (RU) submits its review report? 57
2.6.30 Within what timeframe must the draft order be prepared and what must it contain? 57
2.6.31 What must the final assessment order mandatorily include?
2.6.32 What are the primary functions of the verification unit? 58
2.6.33 What modes of verification are available to the VU? 58
2.6.34 What must the VU do when it receives a verification reference from the AU? 58
2.6.35 How should the VU handle situations where a new address is discovered during verification? 58
2.6.36 What must a verification report contain? 58
2.6.37 How is cross-examination of a witness (who has no digital footprint) by the assessee conducted? 59
2.6.38 What happens if the witness seeks adjournment or is found at a different address? 59
2.6.39 Within what timeframe must the TU forward references to the designated authority or expert? 59
2.6.40 How should TU handle transfer pricing (TP) References? 59
2.6.41 What must the TU’s Legal Report contain and within what timeframe must it be submitted? 59
2.6.42 What must the review unit examine upon receipt of the ILDP from the AU? 60
2.6.43 What actions can the review report recommend? 60
2.6.44 Within what timeframe must the review report be submitted to NaFAC? 60
2.6.45 What additional action is required by the RU after forwarding a review report in which a variation was proposed?
2.6.46 What must the AU do when PAN has been marked as fraud by ITBA?
2.6.47 What is the AU’s role regarding refunds under section 241A of ITA 1961?
2.6.48 What procedure applies for provisional attachment of assets under section 281B of ITA 1961?
2.7 Step by step procedure to faceless assessment submissions
2.8
2.9
2.8.1
2.8.2
2.9.1 By the time I make all submissions why the session expires?
2.9.2 The size of attachments is restricted to 5MB and I can make only 10 attachments?
2.9.3 Can I make partial submissions if I am not ready with the complete details? Will it be used against me?
2.9.4 If by mistake we may make wrong attachment, can I retract/retrieve what is already submitted?
2.9.5 Under the current portal, adjournment is granted only for 15 days, what should we do if we need more time?
2.9.6 The notice mentions a specific time and day, does one have to submit before that time or by the end of the day is doable?
2.9.7 What if notices are issued on ITD portal but I have not received on any of the emails or SMS – real time alert?
2.9.8 Different jurisdiction whether shall understand the technical operations of industry?
2.9.9 What if there is no speaking order, will it attract section 263/264 of ITA 1961 proceedings?
2.9.10 If we rely on some case laws do we need to submit the same in attachments?
2.9.11 What happens when I don’t reply to notices but have a reasonable reason for not doing so? 77
2.9.12 What is the remedy if the assessment order has considered only part submissions and the submissions filed in response to show cause notice was not considered at all?
2.9.13 Can I request for making directions to Addl. CIT u/s 144A of ITA 1961, the faceless section is silent about the same?
2.10 Legal Conundrum 79
2.10.1 Sufficient time period not given to make assessment submissions, especially the show-cause notice level - natural justice?
2.10.2 Does the department reply to the adjournment request? 81
2.10.3 Set aside matters how will the same be proceeded? 81
2.10.4 Best judgment not exercised by AO 82
2.10.5 Natural justice – right to cross examine, verify and attain a speaking order
2.10.6 Assessment order passed before the date of showcause notice expired
2.10.7 Opportunity to show cause to be given for all additions proposed to be made 84
2.10.8 Can jurisdictional Assessing Officer issue notice u/s 148 (FAO - JAO Controversy) 84
2.10.9 Validity of assessments if DIN is not referenced in any manner 85
2.10.10 Notice u/s 143(2) of the ITA, 1961, is not in adherence to the CBDT Circular F. No. 225/157/ 2017/ITA.II dated 23-6-2017
2.11 DIP stick survey on faceless assessment & appeals 88
2.12 Issue-wise brief summary of case laws
2.12.1 Reasonable opportunity was not provided before passing assessment order
2.12.2 Video conference hearing not granted 102
2.12.3 Addition made without show cause or for reason not specified in the notice 104
2.12.4 Opportunity to show-cause to be given for all additions 104
2.12.5 No show-cause notice was issued at all 105
2.12.6 Reply of assessee not considered before passing order 105
2.12.7 Non-speaking assessment order 107
2.12.8 Best judgment not exercised by AO 107
2.12.9 Adjournment request of assessee not considered 108
2.12.10 Assessment order passed with pre-conceived notion 108
2.12.11 Response page got closed due to technical glitch 109
2.12.12 Regional language document submitted 109
2.12.13 Objections filed with DRP not considered 109
2.12.14 SOPs not followed 109
2.12.15 Not afforded cross-examination and documents relied upon were not provided 110
2.12.16 Personal hearing in case of voluminous attachments 111
2.13 Dénouement 111
CHAPTER 3
FACELESS APPEALS
3.1 Introduction & journey so far 113
3.1.1 Transition across the years (From 1961-2026) 113
3.1.2 Major changes 114
3.1.3 Salient features of Faceless Appeal Scheme, 2021 115
3.1.4 Comparative between the old and new schemes 116
3.1.5 Introduction of E-Appeals Scheme, 2023 119
3.2 Relevant Legislative Provisions
3.2.1 Parellel operation of Income-tax Act, 1961, and Income-tax Act, 2025 119
3.2.2 Provisions regarding appeals before JCIT(A) 121
3.2.3 Appealable orders before CIT(A) (section 246 of the ITA, 1961) 121
3.2.4 Non-appealable order before JCIT(A)/CIT(A) 123
3.2.5 Form of appeal and limitation 123
3.2.6 Conditions for admission of appeal 124
3.2.7 Procedure of hearing 124
3.2.8 Powers of first appellate authorities 125
3.3 FAQs on Faceless Appeal Scheme, 2021 127
3.3.1 From which date faceless appeal scheme applies? 127
3.3.2 Which appeals are covered under the scheme? 127
3.3.3 What are different units created under the scheme and what are their functions? 128
3.3.4 What is the procedure for delay in filing of appeals? 129
3.3.5 What is procedure for calling for information and documents 129
3.3.6 What is procedure for filing of additional grounds of appeal? 129
3.3.7 How to make application of additional evidence? 130
3.3.8 How will the CIT(A) to do enhancement of assessment? 131
3.3.9 How is the appeal finalized? 132
3.3.10 How does appeal get transferred? 132
3.3.11 Can CIT(A) initiate penalty during the appeal proceedings? 132
3.3.12 How can the CIT(A) order be rectified? 133
3.3.13 Where can be appeal filed against the CIT(A) order? 134
3.3.14 How shall there be exchange of communication between various parties involved in the FAS, 2021? 134
3.3.15 How shall the electronic records be authenticated?
3.3.16 How shall the records be delivered to various parties?
3.3.17 Is there any option available to request for personal hearing?
3.3.18 There are various specified amounts, procedures and formats, how shall the same be specified and who shall specify the same?
3.4 FAQs on E-Appeals Scheme 2023
3.4.1 What is the scope of the scheme and to whom it shall apply
3.4.2 What does “disputed demand” mean?
3.4.3 Who is the authority under this scheme?
3.4.4 How are appeals allocated?
3.4.5 Power of condonation of delay in filing appeal
3.4.6 What is the procedure for calling for information and documents
3.4.7 What is the procedure for filing additional grounds before JCIT(A)?
3.4.8 What is the procedure for furnishing additional evidence before JCIT(A)?
3.4.9 Does JCIT(A) have power of enhancement?
3.4.10 Does JCIT(A) have power to levy penalty?
3.4.11 Does JCIT(A) have power of rectification?
3.4.12 Before whom the appeal against the order of JCIT(A) lies?
3.4.13 What is the mode of communication?
3.4.14 How are electronic records authenticated?
3.4.15 Delivery of Electronic Records
3.4.16 Can the appellant make personal appearance under the scheme?
3.4.17 What are the functions of the Principal Chief Commissioner of Income-tax (National Faceless Appeal Centre)?
3.4.18 Power to specify format, mode, procedure and processes?
3.4.19 Application of provisions of the Act?
3.5 The ever-growing backlog of appeals and efforts taken therein 145
3.6 Bird eye’s view of the appellate procedure under Faceless Appeal Scheme
3.7 Step by step procedure – Filing submissions on the ITBA Portal
3.8 Procedure in filing of appeals
3.8.1 Mandatory electronic filing of appeal
3.8.2 Requisites for filing of appeal
3.8.3 Documents checklist to help Filing Process Faster
3.8.4 General Instructions in filing of online appeal
3.8.5 Step by step guide to file Form 35
3.8.6 Changes in appeal filing form before JCIT(A)/ CIT(A) – From Form No. 35 to Form No. 99
3.9 Practical issues under faceless appeals
3.9.1 How will matter get remanded and whether remand report shall be received by the assessee?
3.9.2 Whether application for additional evidence shall be accepted and then submissions needs to be made or alongwith it?
3.9.3 How to file revised grounds of appeal in specified form?
3.9.4 Is there any specified form in which additional grounds or additional evidence can be filed?
3.9.5 How to request for condonation of delay and file affidavit?
3.9.6 How to withdraw the appeal?
3.9.7 How to apply for stay proceedings?
3.9.8 How can assessee make an application for out of turn hearing?
3.9.9 Who will sanction the prosecution?
3.9.10 Lack of opportunity for representation – Additional ground, Additional evidence & Condonation of delay
3.9.11 In the rectification procedure of orders, even CIT(A) is allowed to make a suo motu rectification but how that shall be managed? How effective has been the rectification proceedings for CIT(A) orders?
3.9.12 Who is an ‘Assessing Officer’ referred in FAS?
3.10 Legal Concerns
3.10.1 Does CIT(A) have powers to make independent verification?
3.10.2 What is jurisdiction for use of precedence of case laws?
3.10.3 What will happen to old appeals already heard physically and where order is awaited? Also in some cases, old documents are not available with any of the parties
3.10.4 No time limits set for rectification, remand reports or appeal orders?
3.10.5 Growing concern of ex parte orders in case of faceless appeals
3.10.6 Dismissal of appeal on account of delay after issuing notice u/s 250 of ITA 1961
3.10.7 Remand to AO as per proviso to section 251 of ITA 1961 without adjudicating legal ground 182
3.10.8 Power to enhance assessments 183
3.10.9 Powers to refer matter to DVO 184
3.10.10 Additional evidence rejection or acceptance 184
3.10.11 Remand to AO in cases where assessment order was not passed u/s 144 of ITA 1961
3.11 Conclusion
CHAPTER 4
FACELESS PENALTY SCHEME
4.1 Background
4.1.1 The journey so far 188
4.1.2 Comparison between the conventional penalty proceedings and faceless penalty scheme 189
4.2 Relevant legislative provisions 190
4.2.1 Comparative table on the procedural provision of penalty under the ITA 1961, and the ITA, 2025 190
4.2.3 Common assessment & penalty order 193
4.2.4 Recent amendments made in penalty provisions by the Finance Act, 2026 194
4.3 FAQs on Faceless Penalty (Amendment) Scheme, 2022 199
4.3.1 What is the scope of the scheme? 199
4.3.2 What are the functions of various faceless penalty centres? 200
4.3.3 What is the procedure as per FPS? 201
4.3.4 Is there any option to transfer proceedings to NaFAC or income tax authority? 205
4.3.5 What is the jurisdiction of appeal to be filed against penalty order? 205
4.3.6 How will the various authorities communicate under FPS? 205
4.3.7 How will the records be authenticated? 205
4.3.8 How will the electronic record be delivered? 206
4.3.9 Is there any personal appearance required under the scheme? 206
4.3.10 Who has powers to specify format, mode, procedure and processes under the scheme? 207
4.4 Standard operating procedures 208
4.4.1 Which penalty cases are assigned to the Penalty Unit (PU) under the faceless penalty scheme? 208
4.4.2 What is the relationship between NaFAC, AU, RU and the entities under the faceless penalty scheme? 208
4.4.3 Who can initiate penalty proceedings under the Faceless Penalty Scheme? 208
4.4.4 What must the PU do when a penalty has already been initiated by an income tax authority? 208
4.4.5 What steps must the PU follow when initiation of penalty is merely recommended (not already initiated)?
4.4.6 In which circumstances must the PU send a draft SCN to NFPC?
4.4.7 What response timeline must be given to the assessee for replying to the SCN?
4.4.8 What must the PU do if the assessee does not respond to the SCN within the compliance date?
4.4.9 Can the assessee seek adjournment for responding to the SCN, and can the PU grant one on its own?
4.4.10 What sources must the PU examine to determine whether a penalty should be kept in abeyance?
4.4.11 What action must the PU take once it determines that a penalty is to be kept in abeyance?
4.4.12 Within what timeframe must the determination and marking in ITBA be completed?
4.4.13 What are the three categories of non-responsive penalty cases, and how does the VU reference differ between them?
4.4.14 What is common to all three categories of nonresponsive cases before making a VU reference?
4.4.15 What actions must the PU generally take within 5 days of receiving the assessee’s reply to the SCN?
4.4.16 What approvals are required before referring a case to the VU for verification after the assessee’s reply is received?
4.4.17 Is the assessee entitled to a personal hearing in penalty proceedings, and how is it conducted?
4.4.18 What factors must the PU consider when preparing penalty imposition or non-imposition proposals?
4.4.19 What are the prescribed formats for the penalty imposition proposal and the penalty non-imposition proposal?
4.4.20 What must the PU do when a case is NOT selected for review?
4.4.21 What is the procedure when a case is selected for review by the PRU?
4.4.22 What preview must the PU conduct before issuing the final penalty order or non-imposition intimation?
4.4.23 What must happen to the penalty order after it is passed, and to case records after penalty proceedings conclude?
4.4.24 What elements must the penalty order mandatorily contain?
4.4.25 What must case history noting include in penalty proceedings?
4.4.26 Can the PU grant immunity from penalty under section 270AA?
4.4.27 How should the PU handle an application for waiver under section 273A?
4.4.28 What types of verification references does the VU receive from the PU?
4.4.29 What modes of verification does the VU use for penalty-related references? 213
4.4.30 What checks must the VU perform before acting on a reference from the PU?
4.4.31 When must the VU prepare and forward its Verification Report to the PU?
4.4.32 What must the VU’s Verification report contain for penalty-related references?
4.4.33 What must the TU do upon receiving a technical reference from the PU?
4.4.34 What must the TU’s technical assistance report include? 214
4.4.35 What must the PRU examine upon receipt of a reference from the PU? 214
4.4.36 What outcomes are possible in a PRU review report?
4.4.37 Within what timeframe must the PRU submit its review report?
4.4.38 What additional obligation does the PRU have after forwarding a Review Report in which a variation was proposed?
4.5 Practical criticalities
4.5.1 Whether the penalty officer has authority to call for information or request verification from technical unit etc.?
4.5.2 Notices for penalty are issued for the pending cases, even where abeyance letters are filed
4.5.3 Multiple penalties and risk of allocation to different FPUs
4.5.4 Non-speaking penalty orders
CHAPTER 5
PRACTICAL GUIDE TO DRAFTING IN THE FACELESS ERA
5.1 Basics of drafting of legal documents 220
5.1.1 Pre-drafting preparation/planning 222
5.1.2 The process of drafting 224
5.1.3 Finalising the draft
5.2 Drafting of grounds of appeal and statement of facts 231
5.2.1 Checklist before filing of appeal and preparing grounds 232
5.2.2 Drafting of grounds of appeal
5.2.3 Drafting of statement of facts
5.3 Drafting of other documents relevant to appeals
5.3.1 Condonation of delay
5.3.2 Affidavit
5.3.3 Application for additional evidence
5.3.4 Application for stay
5.4 Drafting of factual and legal submissions before authorities 260
5.4.1 Submissions for assessment proceedings
5.4.2 Submissions for CIT (Appeal) proceedings 263
5.5 Practical tips to effective submissions 264
5.6 Use of AI in drafting of legal submissions
5.6.1 Risks and pitfalls of blind AI use
5.6.2 Practical Dos & Don’ts for AI use in legal drafting
5.6.3 Best practices - A structured approach
CHAPTER 6
LEGAL GUIDE TO DRAFTING WITH CASE SCENARIOS AND SPECIMENS
6.1 Introduction
6.2 How to research for case laws and legal theories
6.3 How to read and cite an order
6.4 Doctrines, legal concepts and maxims
6.4.1 Concept of Per incuriam
6.4.2 Concept of Sub-silentio
6.4.3 Concept of Obiter dicta
6.4.4 Concept of Ratio decidendi276
6.4.5 Concept of Stare Decisis276
6.4.6 Concept of Res judicata276
6.4.7 Principle of Estoppel
6.4.8 Specific prevails over general
6.4.9 Act always prevails over the rules, circulars, notifications, memorandum to finance bill
6.4.10 Concept of Ejusdem generis
6.4.11 Concept of Casus Omissus278
6.4.12 Concept of Charging and Machinery provisions
6.4.13 Deeming Provisions
6.4.14 Binding nature of Circulars
6.4.15 Different Constructions
6.4.16 Doctrine of Precedence
6.5 Case scenarios and submissions/replies specimens
6.5.1 Submissions on bogus purchases
6.5.2 Submissions on cash deposits addition under section 104 of the ITA, 2025 (Section 69A of the ITA, 1961)
6.5.3 Additions based on re-assessment out of change of opinion 291
6.5.4 Opportunity to cross-examination not given 294
6.5.5 Additions made without providing documents which were relied upon 296
6.5.6 Addition of deduction of donations made to political parties 298
6.5.7 Hardship compensation taxed as income 300
6.5.8 Re-assessment based on incorrect ‘information’ 302
6.5.9 Additions based only based on investigation report 304
6.5.10 Non service of notice u/s 281(1) of the ITA, 2025 (Section 148A(1) of the ITA, 1961) 306
6.5.11 Addition of on money/cash payment for purchase of property 309
6.5.12 Penalty for under-reporting in consequence of misreporting of income 312
6.5.13 Addition on account of penny stock 315
6.5.14 Sanction issued u/s 284 of the ITA, 2025 (Section 151 of the ITA, 1961) without signature and without application of mind 317
6.5.15 Applicability of section 92(2)(m) of the ITA, 2025 (Section 56(2)(x) of the ITA, 1961), to sale of tenancy rights 320
CHAPTER 7
OTHER FACELESS OR E-PROCEEDINGS UNDER THE INCOME TAX ACT
7.1 Introduction 324
7.2 Relevant legislative provisions – ITA, 1961 v. ITA, 2025 325
7.3 FAQs of the faceless/E-Schemes notified under ITA 1961 329
7.3.1 e-Verification Scheme, 2021 329
7.3.2 Faceless Inquiry or Valuation Scheme, 2022 336
7.3.3 Faceless Jurisdiction of Income Tax Authorities Scheme, 2022 336
7.3.5 e-Assessment of Income Escaping Assessment Scheme, 2022 342
7.3.6 E-Advance Rulings (Amendment) Scheme, 2023 343
7.3.7 E-rectification of Mistakes as per section 157 344
CHAPTER 8
ALTERNATIVE REMEDIES
8.1 E-Nivaran
8.1.1 Who can raise a grievance?
8.1.2 Which are the departments to whom grievances can be raised?
8.1.3 What is the procedure of raising a grievance? 349
8.1.4 How to track progress on your grievance? 352
8.2 Submissions/complaints through email
8.3 Writ petitions before High Courts
8.4 Right to Information Act
8.4.1 Introduction
8.4.2 Areas in which RTI can be filed
8.4.3 FAQs on RTI
8.5 CPGRAMS
8.6 Provisions to avoid repetitive appeals - Section 375 of the ITA, 2025 (Section 158A of the ITA, 1961)
8.6.1 Applicability
8.6.2 Procedure to avail benefit of the section
8.6.3 Step by step procedure
8.7 Immunity Provisions 363
8.7.1 Penalty not to be imposed in certain cases 365
8.8 Dispute resolution committee – Section 245MA 365
8.9 Accessing jurisdictional authorities in the Faceless era 367
8.9.1 Role and powers of the jurisdictional Assessing Officer 367
8.9.2 Supervisory powers of the Commissioner
8.9.3 Powers of the Principal Commissioner
8.9.4 Powers of the Commissioner (Appeals) 368
8.9.5 Importance of exhausting statutory remedies
8.10 High pitched assessment committee
8.10.1 Introduction
8.10.2
APPENDICES
Appendix 1: Faceless Assessments
Appendix 2: Faceless Appeals & E-Appeals
Appendix 3: Faceless Penalty
Appendix 4: Other Faceless Schemes/E-Schemes
Appendix 5: Press Release
LEGAL GUIDE TO DRAFTING WITH CASE SCENARIOS AND SPECIMENS
“A nation’s growth and prosperity depend upon the wise use of (a) tangible resources, (b) intangible resources like ability, energy, and enterprise and (c) time. The intangible resources and the time of the citizens are far more important than the tangible resources of the country. You can print money; you cannot print time. Time is more perishable than anything else; you can-not carry forward today’s hours to tomorrow. No nation has a future where the administrative set-up ensures a tragic waste of the time and energy of the citizens”
6.1 INTRODUCTION
In the earlier chapter we went through the basics of drafting and more into the art of drafting accurately. In this chapter, I want to focus on some legal as well as practical insights into drafting. Every practitioner who has drafted a petition, reply, or written submission before an Income Tax authority knows the moment of quiet anxiety that accompanies the citing of a judicial precedent: Is this the right case? Am I reading it correctly? Does the ratio actually support my proposition? These questions are not born of timidity they are born of professional rigour. The use of case laws in income tax drafting is far more than a rhetorical device for impressing adjudicators. It is the craft of translating judicial reasoning into persuasive legal argument, firmly grounded in the architecture of legal precedent.
Income tax litigation in India is, by its very nature, precedent-intensive. The statute the Income Tax Act, 1961 (now ITA 2025) — is one of the most extensively litigated pieces of legislation in the country. Decades of judicial pronouncements from the Supreme Court, various High Courts, Income Tax Appellate Tribunals (ITAT), and the Authority for Advance Rulings have created a vast, layered landscape of precedent. Within this landscape, a drafter must navigate not merely to find cases that favour a client, but to understand why those cases matter, how they bind, what limitations they carry, and how they interact with one another. CHAPTER
271 HOW TO RESEARCH FOR CASE LAWS AND LEGAL THEORIES
This chapter is structured around three interlocking themes. First, we explore strategies for researching case laws and developing the legal theories that underpin an argument. Second, we examine how to read a judgment carefully and how to extract and cite it with precision. Third, we study the doctrinal concepts that determine the authoritative weight of a judgment, like ratio decidendi, obiter dicta, per incuriam, and sub silentio etc. and explain how a working understanding of these doctrines transforms a drafter from a mere citation-hunter into a legal architect.
6.2 HOW TO RESEARCH FOR CASE LAWS AND LEGAL THEORIES
Reading the law and the relevant legislature relating to the matter in hand is the first step before one starts on legal research. Also, reading all the related circulars, notifications, instructions and office orders, etc. should be undertaken. Sometimes the law is so clear that one need not even find case laws to support the case.
Reading commentaries is useful and gives an idea for the thought process one should have in some cases, as well as provides insight into the history of section and intention. The commentaries also provide a wealth of case laws which are almost basic to that particular section.
Search browsers should be used only to locate judgments and not to analyse them. Whenever there is any analysis available online, one must read the same, but keeping in mind that it is the view point of the person writing the same and therefore cannot be blindly relied upon.
The tax research softwares also provides search by words criteria, and also articles by experts on specified topics can be used for reference.
Reading professional journals and books on those topics helps in finding not only some relevant case laws but also the associated theories and view-point of authors.
Relevant allied laws should also be read if they have any impact on taxation of a particular issue. Case laws from those faculties of law may also be helpful to place reliance on.
In the age of AI, using trusted software with reliable backed up repositories also helps in good case law research. While using AI, one needs to keep a check on the hallucination on random usage. The quoting of non-existent case laws has been a recent trend and has been heavily looked down by the judiciary. While AI may be used in search of case laws and their citations or official docket numbers, one should extract the complete ruling from the judicial platforms and rely on it after reading the complete judgment.
At times, there are certain research papers also on certain topics which are written by scholars and academicians; these are vital to understand the complete thread for deep research.
6.3 HOW TO READ AND CITE AN ORDER
Read the full order and not just snippets or head notes. Remember head notes are analysis of the publication and not from the court, and therefore it can be incorrect and misleading too.
No order is in favour or against the assessee, the ratio is relevant and therefore, rather than searching for case laws from whether it is against or in favour, one should analyse the holding part of the judgement. Sometimes, even though the judgment may be held against the assessee. However, the rationale and analysis of law in the judgment may help the assessee nevertheless.
Develop Speed reading – Speed reading involves skimming the relevant parts of the judgment without compromising the gist of the judgment. Speed reading can be developed only after experience and practice and requires person to comprehend the information as quickly as possible. Speed reading is essentially helpful in cases which are voluminous and one cannot afford to read them word by word. Speed reading involves developing an art of selective and careful reading by proper elimination of reading paragraphs which are too wordy, repetitive in nature and paying extra stress to facts and holding part of the case laws. If not followed correctly, it can have hazardous results, and therefore, one needs to practice it before using it. Speed reading is essential, especially as mentioned in reading of too many case laws on a topic which are running into more than 100s of pages at times. One such judgment is of the Supreme Court in the case of Keshvanand Bharati, which runs into massive 2100 pages. Speed reading is not a shortcut in any way, but it enables smarter working practices and is normally useful to people who work on litigation matters on a daily basis.
While reading a judgement the readers should focus their attention on three main aspects:
- Facts – This shall help to either use the case in case of similar facts or it can help in distinguishing the ruling stating that facts are not the same.
- Issues raised or grounds of appeal – The context in which the ruling is set is really important, at times practitioners rely on a ruling just based on some observations or by just reading arguments of the parties without actually looking into the main grounds of appeal in the matter.
- Observations and findings of the court – These are the crux and helps the most to place a reliance, sometimes the findings may not be connected or relevant to your facts of the matter, however the observations of the court also have great precedence value.
Never forget to use your own creativity while reading the judgment, always critically analyse the verdict and utilise your own legal knowledge and own understanding in ascertaining the accuracy of the same. This practice helps you to enhance your creativity. Always ask yourself “Why”, and try to reach upon a decision as that of a judge in the Court of Law based on your understanding.
Always keep in mind the context in case of the assessee, while reading the case laws. This will help in practical usage of case laws catering to specific facts of case and in law in question. I have often found it amusing how the same judgment made different sense to me every time I read it with different facts of the assessee.
Case laws can be differentiated on the facts of the case and therefore never rule out reading a judgment altogether just because it has held against the assessee in that particular situation. Always try to find out points to distinguish the facts of case of assessee for the non-applicability of case law used by the Revenue.
In the case of Commissioner of Income-tax v. Sun Engineering Works (P.) Ltd. [1992] 64 Taxman 442 (SC) , the Hon’ble SC had imparted certain words of wisdom on how to read an order, certain excerpts are as under:
“It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings.
In Madhav Rao Scindia v. Union of India (1971) 1 SCC 85: (1971) 3 SCR 9 this court cautioned, “It is not proper to regard a word, clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.”
Another interesting ruling in this context is the order of the Apex Court in the case of Balwant Rai Saluja v. Air India Ltd. [2014] 8 taxmann.
com 693 (SC), where one of the observations is that not every part of a judgment is binding and one has to find out what is the ratio of the judgment so as to use it as a precedent, rest everything would be obiter dicta. The relevant text is reproduced as under:
“the binding nature of a decision would extend to only observations on points raised and decided by the Court and neither on aspects which it has not decided nor had occasion to express its opinion upon. The observation made in a prior decision on a legal question which arose in a manner not requiring any decision and which was to an extent unnecessary, ought to be considered merely as an obiter dictum. We are further of the view that a ratio of the judgment or the principle upon which the question before the Court is decided must be considered as binding to be applied as an appropriate precedent.”
How to quote and use jurisprudence in drafting:
- What can be used is only the ratio and observations. Submissions made by the assessee or department during the proceedings cannot be used while quoting the judgments.
- Case laws of non-income tax faculties can also be used to explain the rationale of the law. Like many a times we use ratios set up in Wealth Tax cases for valuation issues, many times references are also placed in other civil and criminal cases for onus of proof or cross examinations etc.
- While quoting certain excerpts from the case laws, the same should be marked in italics and in inverted commas. This should be done only in case of verbatim reproduction of such language. If the assessee uses own language to explain the rationale of case laws, then the quoting is not required.
- Always use citations while referring to case laws in submissions. One citation is enough and not all alternate citations are required. If the case is not reported in any tax journal, use the original appeal nos. allotted by the Tribunal or Courts.
- Emphasis can be supplied to relevant texts in case the same is reproduced in the submissions.
- Cross-verify the citations and rulings in case using AI. There have been several recent cases, where AI has generated non-existent case laws and the same have cited by the practitioners.
- While citing and quoting case laws, connect the rationale with the facts or situation of the case. Often people tend to refer case laws without establishing a link to the facts, which reduces their effectiveness. So just citing and reproducing isn’t enough.
- Do not overuse case laws. Please read the section of Doctrine of precedence for quoting case laws.
6.5.3 Additions based on re-assessment out of change of opinion
Scenario – New-reassessment law post 1-4-2021
Brief Facts:
The appellant’s case was originally assessed u/s. 270(10) of the ITA, 2025 (section 143(3) of the ITA, 1961), during which the AO had specifically called for details of derivative transactions through a notice u/s. 268(1) of the ITA, 2025 (section 142(1) of the ITA, 1961). The appellant furnished complete details including ledger accounts, bank records, books of account, and other supporting documents relating to the derivative transactions. The assessment was subsequently reopened on the very same material already available on record, without any new information or tangible material.
Submissions:
The appellants were already assessed u/s. 270(10) of the ITA, 2025 (section 143(3) of the ITA, 1961) (copy of assessment order is annexed herewith as Annexure A). The AO had issued notice u/s. 268(1) of ITA 2025 (section 142(1) of the ITA 1961), asking for details of derivatives transactions. In response, the appellants replied vide letter dated ______ and submitted the ledger for all the derivative transactions. (copy of the reply filed by the appellant is attached herewith as Annexure C). All the details like bank records, books of account, other relevant documents, and trading records were submitted to the AO. Therefore, reopening the assessment based on the details that were already on record is a mere change of opinion and is invalid and without jurisdiction. The AO has no power to review his own assessment when the same information was provided and considered by him during the original assessment proceedings.
It is submitted that even under the amended reassessment regime introduced with effect from 1-4-2021, the settled legal position continues to hold good that reassessment cannot be initiated merely on account of a change of opinion. The substitution of sections 279 to 284 of the ITA, 2025 (sections 147 to 151 of the ITA, 1961), does not confer any power of review upon the AO. Where the issue was examined during the original assessment proceedings and a view was consciously taken, reopening on the very same material would amount to a mere change of opinion, which remains impermissible in law even under the new reassessment framework.
In this regard, the appellant would like to rely on the following judgements wherein the Hon’ble Court have quashed the reassessment proceeding based on change of opinion under the amended regime:
The Hon’ble Bombay High Court in the case of Sir Jamsetjee Jejeebhoy Charity Fund v. ITO(E) [(2025) 180 taxmann.com 401 (Bom HC)] held that: “29. Our view is supported by the judgment of this Court in Chandrakant Narayan Patkar Charitable Trust v. ITO (Exemption) [2022] 138 taxmann.com
Para 6.5 LEGAL GUIDE TO DRAFTING WITH CASE SCENARIOS & SPECIMENS 292
564/287 Taxman 685 (Bombay). In this case, this Court has taken a view that when there is no tangible material or no new information and no fresh material was placed before the Revenue, then the Revenue cannot justify the reopening of the assessment. The reopening cannot be based on a change of opinion. In the present case, all the material particulars and documents were before the Assessing Officer when the original assessment was conducted. There is no new material before the Revenue, nor are there any new facts or information to justify the reopening of the assessment………….
This decision in Siemens Financial (supra) is not affected by the decision of the Hon’ble Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC) insofar as the present issue is concerned. Therefore, we find that the reassessment proceedings initiated by the 1st Respondent are not justified on any count. In the present case, we find that the order initiating the re-assessment has been based not only on a change of mind but also on the non application of the mind.”
The Hon’ble Gujarat High Court in the case of Rasna Private Limited v. DCIT [2025] 174 taxmann.com 930 (Guj. HC) held that:
“35. In that view of the matter merely because there is an escapement of income by not deducting the loss of earlier year for computation of deduction under section 80-IC of the Act would amount to mere change of opinion as the said issue was already considered by the Assessing Officer in the regular assessment proceedings. Therefore, in any view of the matter, the Assessing Officer could not have assumed the jurisdiction to reopen the assessment for the year under consideration.”
Prayer and Conclusion: In light of the above, it can be inferred that the AO has merely used the reassessment as a tool to review his assessment. Further, mere reliance on the Investigation Wing report cannot be the sole basis for re-opening the assessment. The AO needs to establish a nexus between the information available and the escapement of income. The derivative losses claimed by the appellants were already before the AO in the regular assessment and the genuineness of the losses was not doubted by him at that time. Thus, it was important for the AO to carry out proper enquiries before reopening the assessment especially when the regular assessment was done and the derivative loss was one of the issues involved. Therefore, it is requested before your good-self to kindly quash the reassessment proceedings based on change of opinion.
Scenario – Old-reassessment law before 1-4-2021
Brief facts:
The appellant’s assessment was originally completed u/s. 143(3) of the ITA, 1961, wherein all details relating to share and derivative transactions, including ledger accounts and supporting documents, were duly furnished and examined by the Assessing Officer. The loss incurred on such trans-
293
CASE SCENARIOS AND SUBMISSIONS/REPLIES SPECIMENS Para 6.5
actions was accepted after due verification during the original assessment proceedings. Subsequently, the assessment was reopened u/s. 147 of the ITA, 1961, based on information received from the Investigation Wing, and the Assessing Officer disallowed the same loss without alleging any failure on the part of the appellant to disclose material facts.
Submission:
At the outset, it is submitted that the reassessment proceedings are bad in law and without jurisdiction as the same have been initiated merely on account of change of opinion. The appellant’s case was originally assessed u/s. 143(3) of the ITA, 1961, wherein complete details of share and derivative transactions, including F&O losses, were duly furnished, examined, and accepted by the Assessing Officer.
The reopening has been initiated on the basis of information received from the Investigation Wing without any new tangible material and on the very same facts already available on record during the original assessment. This amounts to a mere review of the earlier assessment, which is impermissible in law.
In this regard, the appellants rely on the following case laws:
The Hon’ble Gujarat High Court in the case of Hemanshu Ramniklal Shah v. ITO [2025] 171 taxmann.com 19 (Guj HC) held that:
“12. In addition to the aforesaid, it is a matter of record that at the time when the assessment order under section 143(3) of the Act was passed, the then Assessing Officer was in possession of the transaction details through M/s. Divya Commodities and thereby, the same cannot be made subject matter again to assume jurisdiction under section 148 of the Act for reopening of assessment, as the same has already been concluded. In our view, the opening on the basis of the same details is nothing but change of opinion and the same is not permissible in the eye of law.”
The Revenue had filed an SLP against the aforesaid judgement, which was dismissed by the Hon’ble Apex Court in the case of ITO v. Hemanshu Ramniklal Shah [2025] 174 taxmann.com 543 (SC) and held that:
“1. There is a gross delay of 308 days in filing the present Special Leave Petition, which has not been satisfactorily explained by the petitioner.
2. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court.
3. The Special Leave Petition is dismissed on the ground of delay as well as on merits.
4. Pending applications stand disposed of.”
The Hon’ble Delhi High Court in the case of CIT v. Eicher Ltd. [2007] 163 taxmann.com 259 (Del HC) held that:
“17. Insofar as the present appeal is concerned, we find that the assessee had placed all the material before the Assessing Officer and where there was a doubt, even that was clarified by the assessee in its letter dated 8-11-1995. If the Assessing Officer, while passing the original assessment order, chose not to give any finding in this regard, that cannot give him or his successor in office a reason to reopen the assessment of the assessee or to contend that because the facts were not considered in the assessment order, a full and true disclosure was not made. Since the facts were before the Assessing Officer at the time of framing the original assessment, and later a different view was taken by him or his successor on the same facts, it clearly amounts to a change of opinion. This cannot form the basis for permitting the Assessing Officer or his successor to reopen the assessment of the assessee.
18. In sum and substance, this was the decision rendered by the Tribunal and we do not find any fault in the view taken. Consequently, we are of the view that since the case is one of a mere change of opinion, that does not justify the Assessing Officer’s reopening the assessment of the assessee.”
Prayer: In view of the aforesaid facts and settled legal position, it is submitted that the impugned reassessment proceedings are wholly without jurisdiction and liable to be quashed. The reopening has been initiated without there being any new tangible material. The action of the Assessing Officer thus amounts to a mere change of opinion, which is impermissible in law. Therefore, it is requested before Your Good-self to kindly quash the reassessment proceeding based on change of opinion.
Author’s Note: Change of opinion when it comes to re-assessment is a concept, and the rationale and jurisprudence does not change because of amendments in law. The main concept is that if the AO already has perused and gone through facts of the assessee, re-assessment provisions cannot be used as a fresh lease to tax something which remained earlier. Though, I have provided decisions in both old and new law just for ease, the old decisions also equally apply to the new law. Once an opinion was formed, the same information cannot have different opinion of the AO unless there is some fresh information which suggest escapement.
6.5.4 Opportunity to cross-examination not given
Brief Facts:
During the assessment proceedings, the AO proposed additions based on statements of certain third parties alleging that the losses claimed by the appellant were bogus. The appellant had requested an opportunity to cross-examine these parties; however, the AO denied the request, alleging that the appellant had not furnished relevant material.
Submissions:
During the assessment proceedings, the appellant vide letter dated 1-1-2021 had requested for cross-examination of the parties on whose statements
CASE SCENARIOS AND SUBMISSIONS/REPLIES SPECIMENS Para 6.5
the AO had proposed to make additions. However, the AO denied the same alleging that the appellant failed to furnish relevant documents to establish the genuineness of the losses claimed. The relevant extract on page 26 of the assessment order is reproduced as under for your reference:
“Further, the assessee has requested for cross examination of the third parties for verification. The question of cross verification arises only when the assessee brings in relevant material on record against the material relied upon in the above paragraphs. The assessee out rightly ignored to counter the evidences brought on record about the bogus nature of the losses. The same is also corroborated by the facts in SEBI’s orders and incriminating material found during the search and seizure action. Hence, in the absence of discharge of onus by the assessee, the request for cross examination of third parties is not accorded.”
The above allegations of the AO are incorrect, as the appellant had submitted the following documents to prove the genuineness of the losses claimed:
Ledger account of broker (Annexure A)
Broker’s note for transaction (Annexure B)
Extracts of bank statement reflecting the transactions with brokers. (Annexure C)
By submitting the above documents, the appellant had discharged their onus of proving the genuineness of the losses claimed. Thus, the contentions of the AO in not allowing the appellant the opportunity to cross-examine the parties, for non-furnishing of relevant documents is incorrect.
The appellant would like to rely on the decision of the Apex Court in the case of Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC), wherein the Hon’ble Supreme Court held that:
“According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority.”
Reliance is also placed on the decision of the Hon’ble Supreme Court in the case of Kishinchand Chellaram v. CIT [(1980) 4 Taxman 29 (SC)] wherein it was held that:
