Faceless Assessment Now Applies from Initial Notice Stage: Punjab & Haryana High Court Ruling

In a significant development for taxpayers nationwide, the Punjab & Haryana High Court has affirmed that the faceless assessment scheme under Section 151A of the Income Tax Act is applicable right from the stage of issuing a show cause notice (SCN) under Sections 148 & 148A. This means that the National Faceless Assessment Centre (NFAC) holds exclusive authority in these proceedings from the very beginning.

High Court Upholds NFAC’s Authority from Notice Stage

The High Court’s decision clarifies the scope of the faceless assessment scheme, bringing much-needed clarity to the tax assessment process. The ruling emphasizes the importance of a transparent and efficient tax system for all Indian taxpayers.

Impact on Taxpayers

This ruling has substantial implications for taxpayers undergoing reassessment proceedings. Key impacts include:

• All reassessment proceedings initiated under Sections 148 and 148A will now be conducted facelessly.
• Taxpayers will interact solely with the NFAC, ensuring anonymity and reducing opportunities for undue influence.
• This streamlining is expected to lead to faster resolution of tax disputes.

No Dilution of Statutory Provisions

The High Court bench further emphasized that departmental instructions or office memoranda issued by authorities cannot override the statutory provisions outlined in Section 151A and related notifications. This highlights the paramount importance of adhering to the codified law and ensures that lower-level directives do not undermine the intended purpose of the faceless assessment scheme.

This reinforces the principle that the law, as enacted by the Parliament, takes precedence over internal guidelines that may exist within the Income Tax Department.