Rule 176 — Procedure for faceless assessment, reassessment or recomputation under section 273(1). Made under s.268, s.270, s.271, s.273, s.275, s.279 of the Income-tax Act, 2025.
Rule 176 gives effect to Section 268, Section 270, Section 271, Section 273, Section 275 and Section 279 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) requires an assessment, reassessment or recomputation under section 270(10), section 271 or section 279, in cases specified by the Board under section 273(2), to be made in a faceless manner in accordance with this rule.
Sub-rule (2) sets out the procedure as a sequence run through the National Faceless Assessment Centre. The Centre assigns the selected case to a specific assessment unit through an automated allocation system and intimates the assessee that the assessment will be completed under this rule. A notice under section 268(1) or section 270(8) is served on the assessee through the Centre, and the response is forwarded to the assessment unit. The assessment unit may, through the Centre, ask for further information, documents or evidence from the assessee or any other person, ask a verification unit to conduct enquiry or verification, or seek technical assistance from a technical unit on arm's length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter; requests for verification or technical assistance are assigned through the automated allocation system, and the resulting report comes back to the assessment unit through the Centre. Where the assessee fails to comply with a notice, the Centre intimates the failure to the assessment unit, which serves a notice under section 271 through the Centre giving an opportunity to show cause why the assessment should not be completed to the best of its judgment.
The assessment unit then prepares either an income or loss determination proposal, where no variation prejudicial to the assessee is proposed, or a show cause notice stating the proposed prejudicial variations, served through the Centre. After the reply, or after intimation of failure to reply, it prepares an income or loss determination proposal. On receiving that proposal the Centre may, on the basis of the Board's guidelines, either direct the assessment unit to prepare a draft order or assign the proposal to a review unit through the automated allocation system; the review unit's report goes back through the Centre to the assessment unit, which accepts or rejects the proposed modifications, recording reasons for rejection, and prepares the draft order.
Where the assessee is an eligible assessee mentioned in section 275(1) and a prejudicial variation is proposed, the Centre serves the draft order on him; in any other case, it directs the assessment unit to pass the final assessment order. The final order and any penalty notice are served by the Centre along with the demand notice specifying the sum payable or the refund due. An eligible assessee served with a draft order either files acceptance with the Centre or files objections before the Dispute Resolution Panel and the Centre within the period specified in section 275(2); on acceptance or no objection, the assessment unit passes the order in accordance with the draft order within the time in section 275(4), and where objections are filed, it completes the assessment in conformity with the Panel's directions under section 275(5) within the time allowed in section 275(13). After completion, the Centre transfers all electronic records to the Assessing Officer having jurisdiction over the assessee. The assessment unit may, recording reasons in writing, refer a case to the Centre stating that section 268(5) may be invoked, having regard to the nature and complexity of the accounts, volume of accounts, doubts about their correctness, multiplicity of transactions or specialised nature of the business and the interests of the revenue; and the verification function may also be performed by a verification unit located in any other faceless centre.
Sub-rule (3) governs the electronic conduct of the proceeding: authentication of electronic records by the Centre through electronic communication, by the units by digital signature, and by the assessee by digital signature, electronic verification code or by logging into his registered account; delivery of every notice, order or communication by placing an authenticated copy in the registered account, sending it to the registered e-mail address or uploading it on the Mobile App, followed by a real time alert, and to any other person by e-mail followed by a real time alert; filing of responses through the registered account, deemed authenticated on an acknowledgement containing the hash result; determination of time and place of dispatch and receipt under section 13 of the Information Technology Act, 2000; a bar on personal appearance before any unit; the right to request a personal hearing where a variation is proposed and an opportunity to show cause is given, which the income-tax authority of the relevant unit shall allow, conducted exclusively through video conferencing or video telephony to the extent technologically feasible; examination or recording of statements, other than a statement recorded in the course of survey under section 253, exclusively through video conferencing or video telephony; the Board's obligation to establish video conferencing facilities so that no one is denied the benefit of faceless assessment for want of access; and the laying down of standards, procedures and processes by the Principal Chief Commissioner or Principal Director General in charge of the Centre with the Board's prior approval.
Sub-rule (4) defines the terms used, including "automated allocation system" as an algorithm for randomised allocation of cases using suitable technological tools including artificial intelligence and machine learning, "computer resource of assessee", "real time alert", "registered e-mail address" through six sources, "registered mobile number", "Mobile app" and "video conferencing or video telephony", and picks up meanings from the Information Technology Act, 2000 and from sections 275(17) and 515(3)(a).
Section 273 provides for faceless assessment and leaves the procedure to be prescribed. The rule supplies it, and its whole design is to keep the assessee and the officer deciding his case apart: cases and requests are allocated by an automated allocation system, everything passes through the National Faceless Assessment Centre, and no personal appearance is permitted. Because a proceeding conducted entirely on record can still go wrong, the rule builds in a show cause stage before any prejudicial variation, an optional review unit, and a right to a personal hearing by video conferencing.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time for an eligible assessee to accept or object to a draft order | The period specified in section 275(2) | Objections are filed before the Dispute Resolution Panel and the National Faceless Assessment Centre; the rule points to the section and states no period of its own | Sub-rule (2)(y) |
| Time to pass the assessment order in accordance with the draft order | The time period mentioned in section 275(4) | On acceptance of the variations, or where no objection is filed within the time specified in section 275(2) | Sub-rule (2)(aa) |
| Time to complete the assessment in conformity with the Panel's directions | The time allowed in section 275(13) | Where objections were filed and directions are issued by the Dispute Resolution Panel under section 275(5) | Sub-rule (2)(ad) |
| Mode of any personal hearing or examination | Exclusively through video conferencing or video telephony | To the extent technologically feasible and in accordance with the procedure laid down by the Board; examination excludes a statement recorded in the course of survey under section 253 | Sub-rule (3)(h) and (i) |
Every communication runs through the National Faceless Assessment Centre, so a notice, a reply or a report that does not pass through it is outside the procedure the rule lays down. No prejudicial variation can be made without the show cause notice in sub-rule (2)(l)(ii): the income or loss determination proposal route in clause (l)(i) is available only where no variation prejudicial to the assessee is proposed. The review unit is not a right — the Centre decides, on the Board's guidelines, whether to send the proposal for review or straight to a draft order — but the assessment unit must record reasons where it rejects a review unit's modification. Personal appearance is barred by sub-rule (3)(f), yet a personal hearing may be requested once a show cause notice proposing a variation has been served, and where requested the authority shall allow it, conducted through video conferencing. Note where the time limits come from: sub-rule (2) sets no periods of its own for objections or for passing the order and points to sections 275(2), 275(4) and 275(13). A draft order is served only on an eligible assessee mentioned in section 275(1) where a prejudicial variation is proposed; everyone else receives the final assessment order directly.
A company's case is selected for faceless assessment and allocated to an assessment unit by the automated allocation system. The unit proposes a disallowance, so it must serve a show cause notice through the National Faceless Assessment Centre under sub-rule (2)(l)(ii) rather than move straight to a proposal. The company replies and asks for a personal hearing; under sub-rule (3)(g) and (h) the income-tax authority of the relevant unit shall allow it, conducted exclusively through video conferencing. Not being an eligible assessee under section 275(1), the company is served with the final assessment order and demand notice, not a draft order.
In every notice, show cause notice, draft or final order and demand notice issued through the National Faceless Assessment Centre, delivered to the registered account, registered e-mail address or Mobile App with a real time alert, and in the video conferencing hearing if one is requested.
the National Faceless Assessment Centre shall assign the case selected for faceless assessment under section 273 to a specific assessment unit through an automated allocation system
no personal appearance, either in person or through authorised representative, shall be required in connection with any proceedings before any unit set up under section 273
"automated allocation system" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources