Faceless Effect of Orders [Section 264B]

Section 264B of the Income Tax Act, 1961, pertains to the faceless effect of orders passed under the Act, introduced as part of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, effective from November 1, 2020. This provision enables the Central Government to establish a scheme for giving effect to orders (such as assessment, appeal, or revision orders) in a faceless manner, promoting transparency, efficiency, and reduced physical interaction. Below is a detailed overview:

Key Provisions of Section 264B

Objective:

• The Central Government may, through a notification in the Official Gazette, formulate a scheme to give effect to orders under the Income Tax Act in a faceless manner, with the following aims:
  • Eliminate physical interface between taxpayers and tax authorities, to the extent technologically feasible.
  • Optimize resources through economies of scale and functional specialization.
  • Implement a team-based approach with dynamic jurisdiction to ensure efficient processing.

Scope:

• Section 264B applies to the implementation or execution of orders passed under the Act, such as:
  • Assessment orders (e.g., under Section 143 or 144).
  • Appellate orders (e.g., by Commissioner (Appeals) or ITAT under Sections 250 or 254).
  • Revision orders (e.g., under Sections 263 or 264).
  • Penalty orders, refunds, or other directions issued by tax authorities.
• It covers the process of giving effect to these orders, such as issuing refund orders, adjusting tax demands, or rectifying mistakes, in a digital, faceless environment.

Mechanism:

• The process is conducted electronically via the Income Tax Department’s e-Proceedings platform, minimizing direct interaction between taxpayers and authorities.
• A team-based approach involves multiple officials to ensure accuracy and impartiality.
• Dynamic jurisdiction allows orders to be processed by units across regions, based on workload or expertise, rather than fixed locations.
• Communications, such as notices, refund orders, or demand notices, are issued digitally through the e-filing portal or registered email.

Power to Modify Provisions:

• Under Section 264B(2), the Central Government may issue directions to apply or exempt certain provisions of the Act, with modifications if necessary, to facilitate the faceless scheme.
• Sunset Clause: No such directions could be issued after March 31, 2022, ensuring the scheme’s framework was finalized within this period.

Parliamentary Oversight:

• Notifications issued under Section 264B(1) and (2) must be laid before both Houses of Parliament for scrutiny, ensuring transparency and legislative accountability.

Alignment with Other Faceless Schemes:

• Section 264B complements other faceless initiatives, such as:
  • Faceless Assessment (Section 144B).
  • Faceless Appeal (Section 250).
  • Faceless Revision (Section 264A).
  • Faceless Penalty (Section 274).
• It ensures that the execution of orders aligns with the broader digital tax administration framework.

Recent Updates (as of August 13, 2025)

1. Budget 2023 Amendments:

• • The Finance Bill, 2023, amended provisions related to faceless schemes, including Section 264B, to allow the Central Government to modify existing directions issued before March 31, 2022. This retrospective amendment (effective from April 1, 2022) provides flexibility to refine the faceless process based on practical experience.
  • The amendment addresses implementation challenges, such as technical glitches or procedural inefficiencies, ensuring smoother execution of orders.

2. Income Tax Bill, 2025:

• • Clause 532 of the proposed Income Tax Bill, 2025, expands the scope of faceless schemes beyond specific provisions like Section 264B. It allows the Central Government to frame schemes for any purpose under the Act, focusing on eliminating interfaces and optimizing resources. This indicates a move toward a comprehensive, technology-driven tax administration system.

3. Grievance Redressal:

• • The Income Tax Department has introduced dedicated channels for addressing grievances related to faceless processes, including the effect of orders. Taxpayers can contact faceless.appeal@incometax.gov.in or similar grievance cells for issues like delays in refunds or incorrect demand adjustments, as noted in posts by the Income Tax Department on X.

Key Features of Faceless Effect of Orders

• No Physical Interaction:

All communications, such as issuing refunds or demand notices, occur through the e-filing portal or email, reducing bias and enhancing accessibility.

• Team-Based Processing:

Multiple officials review and execute orders to ensure accuracy and compliance.

• Dynamic Jurisdiction:

Cases are assigned to processing units based on system algorithms, improving efficiency.

• Transparency:

Digital records and automated workflows provide clear audit trails and traceability.

• Timely Execution:

The faceless system aims to reduce delays in implementing orders, such as issuing refunds or adjusting tax liabilities.

Practical Implications

1. For Assessees:

• • Once an order (e.g., assessment, appeal, or revision) is passed, its execution (e.g., issuing a refund, updating tax demand, or rectifying errors) is handled facelessly.
  • Taxpayers receive notifications via the e-filing portal or registered email and can respond electronically.
  • For example, if an appeal order under Section 250 reduces a tax liability, the faceless unit processes the refund or adjusts the demand without requiring the assessee to visit a tax office.

2. Example:

• • Suppose Mr. Sharma’s appeal under Section 250 results in a refund of ₹5 lakh. Under Section 264B, the faceless unit processes the refund electronically. Mr. Sharma receives a notification on the e-filing portal, and the refund is credited to his bank account without any physical interaction. If there’s a delay or error, he can escalate the issue to the grievance cell (e.g., faceless.appeal@incometax.gov.in).

3. Grievance Handling:

• • Issues such as non-issuance of refunds, incorrect demand notices, or technical glitches can be reported to the designated grievance email or through the e-filing portal’s helpdesk, ensuring prompt resolution.

Key Notes

• Section 264B does not alter the substantive content of orders but focuses on their execution in a faceless, digital manner.
• It aligns with the Income Tax Department’s broader push for e-Governance, reducing human intervention and enhancing efficiency.
• The retrospective amendment in Budget 2023 ensures ongoing improvements to the faceless process, addressing practical challenges.
• Taxpayers should monitor their e-filing portal accounts for updates and maintain registered email IDs for seamless communication.
• For procedural details or notifications, refer to https://incometaxindia.gov.in or contact the Income Tax Department’s grievance redressal channels.