Faceless I-T appeal system erupts as senior officers want reviews sans rulebook
Feb 9, 2026
As India rolls out Draft Income Tax Rules 2026 to simplify filings, the country’s much-touted faceless tax-appeals system is facing its biggest internal challenge ever. Senior tax officers are allegedly seeking access to anonymised appeal orders without a clear legal mandate, putting one of the government’s flagship administrative reforms under pressure and threatening to bring fear back into tax administration.
At the heart of the controversy is the National Faceless Appeal Scheme (NFAS), 2020, rolled out by the Central Board of Direct Taxes (CBDT) on September 25, 2020. The scheme was conceived as a cornerstone of the government’s transparency push: no physical interaction, random allocation of appeals across the country, anonymised appeal units and airtight confidentiality of assessee data. Even the names of Commissioners of Income Tax (Appeals) do not appear onorders, by design.
But that carefully constructed edifice is now under strain.
Orders demanded, rules missing
In letters dated January 16 and January 30, 2026, Principal Chief Commissioner of Income Tax (PCCIT), Chandigarh, AS Saroha, along with GS Phani Kishore, CCIT Ludhiana, directed faceless appeal units to submit “10 quality appeal orderspassed by each appeal unit up to December 2025” for review and appraisal.
The January 30 reminder was sharper, urging immediate compliance as the orderswere “to be reviewed.”
What followed raised even more eyebrows.
On the same day, an office order constituting a five-member screening committee was issued at the direction of Saroha. The committee comprises Vidisha Kalra, CCIT Panchkula (chairperson); Vatsala Jha, DGIT (investigation), Chandigarh(member); GS Phani Kishore, CCIT Ludhiana (member); Manveet Singh Sehgal (member); and Vikas Sood as member secretary.
The committee was tasked not merely with reviewing “quality orders” but also with discussing latest case laws on current issues, deliberating on common mistakes detected by ITATs (income tax appellate tribunals), examining how to deal with requests for adducing additional evidence, identifying best-practice of appellate orders, and organising seminars to improve order-writing standards under Section 250(6) of the Income Tax Act, 1961.
When contacted, Kishore refused to comment on the development. Saroha did not respond to repeated calls and messages.
The jurisdiction, legality debate
The problem, officials within the faceless system say, is not training or quality improvement. It is jurisdiction and legality.
Under the faceless appeal framework, appeal units hold orders and data in a fiduciary capacity on behalf of the NFAC and CBDT. They are explicitly barred from divulging any assessee-specific information to non-authorised officers. There is also no approved standard operating procedure (SOP) for reviewing “quality” ofappeal orders.
Alarmed, the appeal units sought clarification from NFAC/CBDT. The response wasunequivocal.
“As of now, the review format and rules and procedures for review of quality appeal orders are pending for approval with the board. Hence, at present, there is no SOP or guidelines with respect to the review of quality appeal orders,” NFAC said. This reply, dated January 20, 2026, was formally communicated back to CCIT Ludhiana by the appeal units on January 21, 2026, effectively putting the brakes on the demand.
Internally, resistance hardened.
Senior officials within the faceless framework argue that PCCIT Chandigarh has no authority whatsoever to review appellate orders. Even jurisdictional CCITs in Ludhiana for Punjab and Haryana, Shimla for Himachal Pradesh and J&K cannot initiate such reviews without a CBDT and NFAC approved mechanism.
More critically, officers warn that forcing disclosure of anonymised orders to non-jurisdictional authorities risks breaching data privacy, exposing both the department and individual officers to legal and institutional fallout.
As one internal communication bluntly puts it, “The Pr. CCIT, Chandigarh / CCIT, Ludhiana will gradually retire, but in case data is revealed and the assessee takes affront to its information being persued by non-jurisdictional officers, then we all will get into trouble.”
CBDT caught in the middle
The standoff highlights a deeper institutional unease. According to officials familiar with the matter, the Department of Revenue (DoR) has so far not accepted CBDT’s proposal to formalise a review mechanism, precisely because it could dilute the faceless-appeal process, which is one of the government’s most politically touted tax reforms.
The CBDT did not respond to a detailed questionnaire seeking clarification.
Yet, despite this policy vacuum, field-level pressure appears to be mounting.
A fresh letter dated February 3, 2026, issued by Saroha to all CIT (appeal units), explicitly directs officers to “send 10 quality appellate orders immediately for review by the screening committee constituted for this purpose,” adding that the exercise is required for “proper appreciation of appellate performance and identification of best practices.”
The letter further states that the screening committee will “examine quality of appellate orders passed under Section 250(6), deliberate upon common mistakes pointed out by ITATs, discuss recent case laws, and evolve uniform standards for disposal of appeals,” while also facilitating training and seminars for appeal units despite NFAC having categorically confirmed that no SOP exists for any such review.
Officials say the February 3 communication effectively attempts to operationalise a parallel appraisal mechanism through administrative instructions, even as CBDT have not authorised any formal process for review of faceless appeal orders.
The final cut
What is unfolding is more than a bureaucratic skirmish. It is a stress test of India’s faceless governance experiment. If senior officials can demand anonymised appeal orders without legal backing, critics warn, the reform risks sliding back into a culture of informal oversight and invisible pressure, precisely what Section 144B and the NFAS sought to dismantle.
For now, appeal units are holding the line, insisting that any review, appraisal or seminar must wait for a formal SOP from CBDT/NFAC. Until then, they argue, confidentiality is not optional, but it is the law. Whether North Block intervenes to draw clear boundaries, or allows this grey zone to widen, may determine if “faceless” remains a principle or becomes a convenient label.
[The Economic Times]
