Faceless

jurisdiction of income-tax authorities.

245(1)

The exercise of following powers for the purposes mentioned in sub-section (2) shall be as per a Scheme made by the Central Government:––

• (a) all or any of the powers and performance of all or any of the functions conferred on, or, assigned to, income-tax authorities under this Act referred to in section 241; or
• (b) vesting the jurisdiction with the Assessing Officer under section 242; or
• (c) power to transfer cases under section 243; or
• (d) exercise of jurisdiction in case of change of incumbency under section 244.

245(2)

The purposes of the Scheme referred to in sub-section (1) shall be to impart greater efficiency, transparency and accountability by—

• (a) eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible;
• (b) optimising utilisation of the resources through economies of scale and functional specialisation;
• (c) introducing a team-based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, with dynamic jurisdiction.

245(3)

The Central Government may, for the purpose of giving effect to the Scheme made under sub-section (1), by notification, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as specified in such notification.

245(4)

Every notification issued under sub-sections (1) and (3) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

Explanation

Section Summary:

This section introduces the concept of faceless jurisdiction for income-tax authorities in India. It allows the Central Government to create a Scheme that enables income-tax authorities to exercise their powers and perform their functions without physical interaction with taxpayers. The goal is to improve efficiency, transparency, and accountability in tax administration by leveraging technology and team-based approaches.

Key Changes:

1. Faceless Interaction: The new law eliminates the need for face-to-face interaction between taxpayers and tax authorities, replacing it with a digital, faceless system.
2. Dynamic Jurisdiction: Tax cases will be handled by teams of income-tax authorities rather than a single officer, with jurisdiction assigned dynamically based on the case.
3. Centralized Scheme: The Central Government will design and implement a Scheme to govern how these faceless processes will operate, including exceptions or modifications to existing provisions of the Income Tax Act.

Practical Implications:

1. For Taxpayers:
   • Reduced physical interaction with tax authorities, leading to a more streamlined and less intimidating process.
   • Increased transparency, as decisions will be made by teams rather than individual officers, reducing potential bias.
   • Potential delays or confusion during the transition to the new system, as taxpayers adapt to the faceless process.
2. For Tax Authorities:
   • Improved efficiency through functional specialization and resource optimization.
   • Enhanced accountability, as decisions will be team-based and subject to greater scrutiny.
3. For Businesses:
   • Compliance processes may become more standardized and predictable, but businesses will need to ensure their systems are compatible with the new digital framework.

Critical Concepts:

1. Faceless Jurisdiction: A system where tax authorities operate without physical interaction with taxpayers, relying on digital communication and team-based decision-making.
2. Dynamic Jurisdiction: Cases are assigned to teams of tax authorities based on factors like case type, income category, or geographic area, rather than being tied to a specific officer.
3. Scheme: A framework or set of rules created by the Central Government to implement the faceless system, which may override or modify existing provisions of the Income Tax Act.

Compliance Steps:

1. Stay Updated: Taxpayers and businesses should monitor notifications from the Central Government regarding the implementation of the Scheme.
2. Digital Readiness: Ensure all tax-related communications and submissions are prepared for a fully digital process.
3. Documentation: Maintain accurate and complete records, as faceless assessments may rely heavily on digital documentation.

Examples:

1. Scenario 1: A taxpayer receives a notice for an income tax assessment. Instead of visiting a tax office, they upload all required documents to a centralized portal. A team of tax officers reviews the case and issues a decision without any direct interaction.
2. Scenario 2: A business is selected for a tax audit. The audit is conducted by a team of specialists who analyze the business’s digital records and issue findings through the faceless system, eliminating the need for in-person meetings.

This section represents a significant shift toward a more modern, technology-driven tax administration system in India.