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Faceless penalty proceedings u.s. 271.1.c In many cases penalty proceedings can be dropped to save valuable time of taxpayers and tax authorities – a circular of CBDT is this regard is desirable.

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Faceless penalty proceedings u.s. 271.1.c In many cases penalty proceedings can be dropped to save valuable time of taxpayers and tax authorities – a circular of CBDT is this regard is desirable.
August 6, 2021
All Articles by: DEV KUMAR KOTHARI       View Profile
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 Faceless penalty proceedings u.s. 271.1.c  In many cases penalty proceedings can be dropped to save valuable time of taxpayers and tax authorities – a circular of CBDT is this regard is desirable.

Harassment due to authority not equipped and not having access to documents already available in portal of department.

Un-necessary penalty proceedings:

We can find that there are many notices issued u.s. 271 rws. 271.1.c in which penalty cannot be levied for various settled issues like:

  1. Omnibus notice issued without specific charge of concealment of income or furnishing of inaccurate particulars of income.
  2. Contentious issues where two or more views are possible and one in favour of assessee was taken while filing ITR by assessee or his consultant  but it was  not followed by AO and he applied view in favour of revenue and made addition.
  3. Inadvertent mistake in making a claim which was disallowed.
  4. Other deserving cases where penalty should not be imposed. For example AO makes additions on several say 20 issues out of which only few disallowances are upheld and those can also be deleted if further appeal is carefully filed and prosecuted.

In this regard we can find judgments of honourable Supreme Court and also many High Courts in favour of assessee on this website.

 Therefore, in such cases penalty proceedings should not be initiated, and if it was initiated it must be dropped as soon as possible instead of keeping in abeyance, the same for long period of time  during pendency of appeal and further appeal.

CBDT can issue a circular in this regard so that valuable time of tax authorities in not lost in reporting about penalty matters and taking steps from time to time by issuing notices, receiving replies, adjourning the case of deciding the matter etc.

Faceless penalty scheme – penalty us. 271.1.c.

Faceless Penalty Scheme was launched on 12/01/2021 when old portal of income tax department  was functional. Subsequently new portal has been launched that is

In the old portal also there was problem and faceless penalty officers wanted assessee to furnish all documents including assessment order, appeal documents etc. It seems that faceless authority has been provided only copy of notice issued by AO earlier. The authority is therefore asking assessee to furnish even the assessment order.

Face less authority can examine various issues and drop penalty proceedings when it is not desirable as per settled legal position.

The faceless authority must have access to documents relating to assessee,  available in the portal in my account or other links, so there should not be requirement to ask assessee to furnish assessment order, appeal document, appeal order, VSV declaration etc. However, in annexure face less authority is asking assessee to furnish all such documents.

Tax payers time is also valuable please do not waste it if you want that taxpayer to earn more and pay more tax:

In physical hearings tax payers and  tax consultants had feeling that the tax authority has hardly any regard to their  time.  Waiting for hours took place and then cases were adjourned. Lot of wastage of time took place.

In faceless proceeding also to some extent  same things are happening because tax authorities are asking assessee to furnish various documents which are already available in e-filing account of assessee.

An example of notice for carrying out  penalty proceeding initiated earlier  u.s. 271 1.c  is extracted below:

The notice is dated 15.07.2021 and compliance is fixed  on 22.07.21 allowing very short time particularly in difficult times due to COVID related problems.


                                 National Faceless Assessment Centre Delhi

To assessee  xxxxx  with details of PAN, date DIN etc.             

Show Cause Notice for penalty under section 271(1)(c) of the Income-tax Act,1961


Faceless Penalty Scheme was launched on 12/01/2021 and henceforth all penalties will be disposed of in a faceless manner similar to Faceless Assessment.

2. Kindly refer to penalty proceedings under section 271(1)(c) initiated vide notice dated 09/12/2019 bearing DIN ITBA/PNL/M/271(1)(c)/2021-22/        xxxx , in your case for the aforementioned Assessment Year.

3. You are required to show cause why order imposing penalty under section 271(1)(c) of Income-tax Act,1961 should not be passed as initiated by the penalty notice referred above.

 4. Kindly submit your response along with supporting documentary evidence(s) if any, electronically in 'e[1]Proceeding' facility through your account in e-filing website ( by the midnight (23:59 hours) of 22/07/2021.

 5. If required, you may request for personal hearing so as to make oral submissions or present your case after filing of written reply. On approval of the request, personal hearing shall be conducted exclusively through video conference.

 6. In case you had requested for keeping the penalty proceedings in abeyance, you are requested to upload a copy of the said reply.

 7. In case no response is received by the given time and date, the penalty order shall be passed without the benefit of your explanation.

 Yours faithfully, Additional/Joint/Deputy/Assistant Commissioner of Income-tax/

Note:- The website address of the e-filing portal has been changed from to Income-tax Officer,

 National Faceless Assessment Centre, Delhi Note: Refer to Annexure for additional details, if any.

Page 2 of 3

                      Xxxx               A.Y. 2012-13         ITBA/PNL/F/271F/2021-22/xxxxx    1)


 In connection with the penalty proceedings as referred above, you are hereby required to explain and show cause as to why the aforesaid penalty should not be levied in your case. In case, you have preferred an appeal before the CIT(A), please inform the status of such proceedings. You are also requested to furnish copies of following documents:-

  1. Copy of order against which appeal is preferred before CIT(A).
  2.  Form No.35 with attachments.
  3.  Copy of relevant appellate order, if any.
  4.  Copy of Form in respect of Vivad se Vishwas Scheme opted by you if any.

 Additional / Joint / Deputy / Assistant Commissioner of Income Tax Income-tax Officer, National Faceless Assessment Centre, Delhi

From the above notice it appears that face less authority is also asking for many documents, without looking into record which are available in account of assessee.

Is it not shocking that even for assessment order, assessee is being asked to file the same.

Login is with pass word so e-verification should be optional

Assessee has to log in his account with password, therefore, submissions through logged in account are safe.

In earlier portal submissions could be uploaded without e-verification.  However, in new portal it is not allowed.

Documents must be allowed to be uploaded without e verification ( by various methods)  because e-verification is very difficult and  time consuming.

At present  DSC registration is also not taking place so most of tax payers and tax consultants are facing lot of difficulties in filed reposes.


By: DEV KUMAR KOTHARI - August 6, 2021


Discussions to this article


In faceless proceedings officers can much easily and without fear of hear say or criticism of others , drop penalty procceding, giving reasons. Earlier officers, in physical hearings felt that if penalty proceeding is dropped when appeal is still pending, people may take it otherwise, as to why he favored assessee. Even penalty proceeding was initiated in routine manner.

Even in scrutiny assessments some additions and disallowance s were made, just to make high-pitched assessment, knowingly wrong, just to show that he was not interested.

In faceless proceedings such is not case. Officers can pass justifiable orders without any fear of allegations of doing a favor to assesse or consel. However, it is noticed that in some cases penalty proceeding was initiated, though it was not a fit case. Because addition was due to an advertent mistake of data entry and amount was peanut, in view of size of operations of assessee.

Let us hope mind set will be charged in due course and soon.

Dated: 07/08/2021


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