Faceless Revision of Orders [Section 264A]

Section 264A of the Income Tax Act, 1961, introduced by the Taxation Laws (Relaxation and Amendment) Act, 2020, empowers the Central Government to implement a faceless revision scheme for orders passed under Sections 263 (revision by CIT for revenue’s interest) and 264 (revision for assessee’s relief). This scheme aims to enhance transparency, efficiency, and accountability by eliminating physical interactions between taxpayers and tax authorities.

1. Key Features of Faceless Revision [Section 264A]

(A) Objectives

• Eliminate interfacebetween tax authorities and taxpayers, leveraging technology .
• Optimize resourcesthrough functional specialization and team-based revisions .
• Dynamic jurisdiction: Cases are assigned randomly to avoid bias .

(B) Scope

• Applies to revisions under:
  • Section 263(CIT’s suo moto revision for erroneous/prejudicial orders).
  • Section 264(revision for assessee’s relief) .
• Exclusions: Directions under this scheme cannot be issued after March 31, 2022.

(C) Implementation

1. Notification: Central Government publishes the scheme in the Official Gazette.
2. Parliamentary Oversight: Notifications must be laid before both Houses of Parliament.
3. Modifications: The government may exempt or adaptexisting provisions of the Act to align with the scheme.

2. Procedure for Faceless Revision

While Section 264A provides the framework, the operational details are specified in CBDT notifications. The likely process mirrors the Faceless Assessment Scheme (Section 144B) :

1. Case Allocation:

• • A National Faceless Revision Centre (NFRC)assigns cases to Revision Units via automated systems.

2. Team-Based Review:

• • Revision Unitsexamine orders and may seek inputs from:
    • Verification Units(for evidence).
    • Technical Units(for specialized analysis).

3. Taxpayer Interaction:

• • All communications (notices, submissions) occur digitallythrough a centralized portal.
  • Personal hearings(if requested) are conducted via video conferencing .

4. Final Order:

• • The NFRC issues the revised order after due process.

3. Advantages of Faceless Revision

✅ Transparency: Eliminates discretion and potential bias in revisions .

✅ Efficiency: Faster processing through centralized, technology-driven workflows .

✅ Consistency: Team-based reviews reduce individual errors .

4. Limitations & Challenges

⚠ No New Directions Post-2022: The scheme’s operational scope is frozen after March 31, 2022.

⚠ Limited Judicial Precedents: Few cases tested under this provision so far.

⚠ Technical Barriers: Taxpayers unfamiliar with digital processes may face hurdles .

5. Comparison with Traditional Revision

6. Recent Updates (as of August 13, 2025)

Budget 2023 Amendments:

• The Finance Bill, 2023, amended several provisions related to faceless schemes, including Section 264A, to allow the Central Government to modify existing directions issued before March 31, 2022. This ensures flexibility to address implementation challenges or adapt to changing circumstances.
• The amendment took effect retrospectively from April 1, 2022, enabling the government to refine the faceless revision process without being constrained by the original sunset clause.

Income Tax Bill, 2025:

• Clause 532 of the proposed Income Tax Bill, 2025, expands the scope of faceless schemes beyond Section 264A. Unlike Section 264A, which is limited to revisions under Sections 263 and 264 with a sunset clause, Clause 532 grants broader powers to frame schemes for any purpose under the Act, focusing on eliminating taxpayer-authority interfaces and optimizing resources. This indicates a shift toward comprehensive digital tax administration.

Grievance Redressal:

• The Income Tax Department has introduced dedicated email IDs for taxpayers to register grievances related to faceless schemes, including revisions. For example, taxpayers can reach out to faceless.appeal@incometax.gov.in for issues concerning faceless processes, as highlighted in a post by the Income Tax Department on X.

7. Practical Implications

For Assessees:

• To apply for revision under Section 264 in a faceless manner, the assessee must file an application electronically within one year from the date the order was communicated or known, with a fee (e.g., ₹500). Delays may be condoned for sufficient cause.
• For Section 263 revisions, the Commissioner initiates the process, but the assessee is notified electronically and given an opportunity to respond.

Example:

• Suppose Mr. Rao applies for revision under Section 264 to correct an error in an assessment order (e.g., a missed deduction). He submits the application via the e-filing portal. The faceless revision unit, assigned dynamically, reviews the case, communicates digitally, and issues a decision without physical hearings.
• Alternatively, if the Commissioner finds an AO’s order erroneous and prejudicial to revenue (e.g., incorrect exemption allowed), they initiate a faceless revision under Section 263, notifying Mr. Rao electronically for his response.

Grievance Handling:

• If Mr. Rao faces issues (e.g., delays or technical glitches), he can email the dedicated grievance cell, ensuring prompt resolution.