Faceless Assessment Under Section 532: Your Right to a Personal Hearing Explained

From Delegated Scheme to Statutory Provision

The faceless assessment scheme was first introduced through executive notifications under Section 143(3A), 143(3B), and 143(3C) of the Income-tax Act, 1961 — provisions that essentially delegated authority to the government to design and notify a faceless assessment scheme by executive order, rather than embedding the scheme's core features directly in the Act itself. While operationally significant (faceless assessment has handled a large share of scrutiny assessments in recent years), this meant the scheme's exact procedures could be modified through notifications without a full legislative amendment.

Section 532 of the Income-tax Act, 2025 changes this by giving faceless assessment direct statutory backing — the core framework (assessment through the National Faceless Assessment Centre, or NFAC, without direct taxpayer-officer interaction in most cases) is now embedded in the Act itself, rather than resting on delegated notifications.

The Big Win for Taxpayers: Statutory Right to Personal Hearing

Perhaps the most taxpayer-friendly change is the codification of the right to a personal hearing via video conferencing. Under Section 532, whenever the NFAC proposes to pass an order that is adverse to the taxpayer — i.e., making additions to income, disallowing claims, or otherwise increasing tax liability beyond what was declared — the taxpayer has a statutory right to request a personal hearing with the assessing officer through video conferencing before the order is finalised.

This addresses a long-standing taxpayer grievance with the faceless system: that written submissions alone sometimes failed to adequately convey context, leading to additions that a brief conversation could have clarified or resolved. Under the 1961 Act framework, video-conferencing hearings were available in some faceless assessment notifications, but as an administrative facility rather than a clearly codified statutory right enforceable by the taxpayer.

The Flip Side: New Penalties for Non-Response

Section 532 (and related provisions) also introduce a new penalty framework for taxpayers who fail to engage with the faceless assessment process. A penalty ranging from ₹10,000 to ₹1,00,000 can be levied for:

• Failing to respond to a faceless assessment notice within the specified time
• Failing to upload requested documents or information
• Not attending a scheduled video-conferencing hearing without reasonable cause

This is a meaningful change from the prior regime, where non-response to faceless notices typically resulted in an assessment being completed based on available information (often unfavourably to the taxpayer) but did not necessarily attract a standalone monetary penalty of this nature for the non-response itself.

What Taxpayers Should Do Differently

• Check your registered email and the e-filing portal regularly — faceless notices are typically communicated electronically, and missing them can now trigger both an adverse assessment and a separate penalty for non-response.
• Respond within deadlines, even if only with a request for extension — a timely request for more time is better than silence.
• If you receive a proposed adverse order, consider requesting a personal hearing — this is now a codified right, not just an administrative courtesy, and can be valuable for explaining context that written submissions may not fully convey.
• Keep digital records of all communications — given that compliance (or non-compliance) with faceless notices now has direct penalty implications, maintaining a clear record of what was submitted and when is more important than ever.

Why This Balance Matters

Together, these two changes represent a 'carrot and stick' approach to faceless assessment: taxpayers get a stronger, codified right to be heard before an adverse decision (addressing a key fairness concern with the faceless model), while the system also gains stronger enforcement tools against taxpayers who simply ignore notices (addressing a key efficiency concern, where unresponsive taxpayers could previously slow down the assessment process without direct consequence for the non-response itself).