How Income Tax Faceless Appeals Work Under Act 2025: Complete Guide

If you disagree with an income tax assessment order, a penalty order, or an intimation under Section 143(1), your first recourse is an appeal before the Commissioner of Income Tax (Appeals) - CIT(A). Since 2020, all first-level appeals are processed through the National Faceless Appeal Centre (NFAC) in a fully digital, jurisdiction-free, and anonymous manner. The taxpayer never meets the appeal officer, all communication is electronic, and the case is randomly allocated to a CIT(A) in a different city.

This guide explains how the faceless appeal process works under the Income Tax Act, 2025, the step-by-step filing process, your right to a personal hearing, what documents you need, common procedural defects to watch for, and how the appeal hierarchy connects with ITAT and High Court.

What Is a Faceless Appeal and Why Was It Introduced?

The Faceless Appeal Scheme was introduced in September 2020 (and subsequently amended in 2021) to eliminate physical interaction between taxpayers and appellate authorities. Under the scheme, all appeals before CIT(A) are filed, processed, heard, and decided entirely through the e-filing portal. The identity of the CIT(A) handling the appeal is not disclosed to the taxpayer, ensuring anonymity and impartiality.

Under the Income Tax Act, 2025, Section 130 provides the Central Government with the power to make faceless jurisdiction schemes for all income tax proceedings. Section 532 (corresponding to Section 144B of the 1961 Act) governs the faceless assessment procedure. The faceless appeal scheme continues unchanged under the new Act with the same NFAC infrastructure.

For taxpayers who received an adverse assessment order and need to respond, understanding the faceless appeal process is essential. Professional income tax notice response services can help draft strong grounds of appeal and manage the digital filing process.

Key Terms You Should Know

• NFAC (National Faceless Appeal Centre): Central hub that manages all faceless appeals. Located in Delhi. Receives Form 35, randomly allocates cases to CIT(A) units across the country, coordinates communication.
• CIT(A) - Commissioner of Income Tax (Appeals): First appellate authority. Under faceless scheme, CIT(A) is randomly assigned from a different jurisdiction than the Assessing Officer. Reviews facts, law, and evidence.
• Form 35 (Appeal Before CIT(A)): The official form filed on the e-filing portal to initiate an appeal. Contains appellant details, grounds of appeal, statement of facts, and prayer for relief.
• Form 36 (Appeal Before ITAT): The form for filing a second-level appeal before the Income Tax Appellate Tribunal against the CIT(A) order.
• DIN (Document Identification Number): Unique number assigned to every official communication. All faceless notices and orders must carry a DIN - orders without DIN are invalid.
• Assessment Unit / Review Unit / Verification Unit: Specialised units within the faceless ecosystem. Assessment Unit makes the draft order, Review Unit verifies in a different city, Verification Unit collects additional evidence.
• Section 246A / 250 (ITA 1961) → Corresponding ITA 2025: Section 246A lists orders appealable to CIT(A). Section 250 governs CIT(A) procedure. Under ITA 2025, these are renumbered but the substance is identical.

Who Can File a Faceless Appeal?

• Any taxpayer who has received an adverse assessment order under Section 143(3) (scrutiny assessment)
• Taxpayers who received a penalty order (for concealment, misreporting, late filing)
• Individuals or businesses who received a Section 143(1) intimation with demand that they disagree with
• Taxpayers who received a rectification order under Section 154 that creates a new demand
• Persons aggrieved by a TDS order - incorrect TDS demand or credit denial
• Any person who received an order of reassessment under Section 147/148 that they wish to challenge

For taxpayers dealing with assessment proceedings, explore income tax assessment services for end-to-end support from assessment response to appeal filing.

Legal Framework: Orders Appealable Before CIT(A)

Note: The 30-day deadline is strict. CIT(A) has discretion to condone delay if sufficient cause is shown, but condonation is not automatic. Applications for delay condonation must accompany the appeal with reasons for delay.

How to File a Faceless Appeal: Step-by-Step

1. Obtain the Assessment/Penalty Order. Download the order from the e-filing portal → e-Proceedings → View Notices/Orders. Verify the DIN (Document Identification Number) - orders without a valid DIN are invalid.
2. Pay the Appeal Fee. Appeal fee is payable through Challan 280 before filing Form 35. Fee structure: Rs 250 for assessed income up to Rs 2 lakh; Rs 500 for income between Rs 2-5 lakh; Rs 1,000 for income above Rs 5 lakh. Retain challan receipt - required in Form 35. Professional tax planning services can draft strong grounds of appeal and manage the entire filing process.
3. Log In to the E-Filing Portal and Select Form 35. Navigate to incometax.gov.in → e-File → Income Tax Forms → Select "Appeals (Form 35)." Choose the relevant Assessment Year.
4. Fill Part A: Appellant Information. Personal details (PAN, name, address), details of the order being appealed (date, DIN, section), Assessing Officer details, tax demand amount.
5. Fill Part B: Statement of Facts. Clearly state the factual background of the case. Include: what income was assessed, what the AO added, what documents were submitted, what the AO ignored or incorrectly interpreted. Keep it factual - no legal arguments here.
6. Fill Part C: Grounds of Appeal. State each ground of appeal separately and specifically. Reference the relevant section of the Income Tax Act that was violated. Cite applicable case laws (ITAT, High Court, Supreme Court). State the relief sought - deletion of addition, reduction of penalty, correction of TDS credit.
7. Upload Supporting Documents. Attach: copy of the assessment/penalty order, demand notice, statement of facts, grounds of appeal, any additional evidence. Each attachment max 5 MB. Total attachments max 50 MB. PDF or ZIP format only.
8. E-Verify and Submit. E-verify using Aadhaar OTP, net banking, or DSC. On successful submission, you receive an acknowledgement number. The appeal is assigned to NFAC for random allocation.

Documents Needed for Filing a Faceless Appeal

• Copy of the assessment order / penalty order / intimation being appealed
• Demand notice (challan/notice showing tax demand)
• Challan 280 receipt for appeal fee payment
• Statement of facts - factual narrative of the case
• Grounds of appeal - legal arguments with section references and case laws
• Copy of the original ITR filed for the relevant year
• Copy of submissions made during the assessment proceedings
• Any additional evidence not submitted during assessment (with application for admission as additional evidence)
• Power of attorney / authorisation letter if filed through a representative (CA, advocate)
• Computation of income showing the correct tax liability (appellant's version)

What Happens After You File the Appeal?

Common Mistakes to Avoid in Faceless Appeals

Mistake 1: Missing the 30-day deadline. The appeal must be filed within 30 days of receiving the assessment order. Delay condonation is at the discretion of CIT(A) and is not guaranteed. If you receive an adverse order, start preparing the appeal immediately - do not wait for the demand to be paid. For businesses dealing with assessment demands, income tax assessment services can initiate the appeal process within the statutory deadline.

Mistake 2: Filing vague or generic grounds of appeal. Grounds like "the assessment order is wrong" or "the addition is unjustified" are too broad. Each ground must specify: which addition is being challenged, which section of the Act applies, what evidence supports the appellant's position, and what relief is sought. CIT(A) addresses each ground separately - poorly drafted grounds may be dismissed.

Mistake 3: Not requesting a personal hearing when the case is complex. The faceless scheme allows video conferencing hearings. For cases involving large additions, complex factual disputes, or legal interpretation, requesting a hearing gives the appellant an opportunity to explain the position directly. The right to personal hearing is statutory - submit the request through the portal.

Mistake 4: Not paying the disputed tax demand before filing. While filing an appeal does not automatically stay the demand, paying at least 20% of the disputed demand (as per CBDT guidelines) may prevent coercive recovery action during the appeal. If the demand is large, apply for a stay of demand separately.

Mistake 5: Ignoring the DIN on the assessment order. Every faceless assessment order must carry a valid DIN. Orders without DIN are invalid and can be challenged. Verify the DIN against the CBDT DIN database before responding. This is a jurisdictional defect that multiple High Courts have upheld as a ground for quashing orders.

Penalties and Consequences

Filing an appeal does not stop the demand. The AO can initiate recovery proceedings - bank attachment, salary attachment, or property attachment - even while the appeal is pending. To prevent this:

• Apply for stay of demand before CIT(A) - request suspension of recovery during appeal pendency
• Pay 20% of the disputed demand as per CBDT Office Memorandum - this typically prevents coercive recovery
• If the demand is based on a clear mistake (e.g., TDS credit not given), apply for rectification under Section 154 simultaneously - this may resolve the demand without waiting for the appeal

The appeal fee (Rs 250 to Rs 1,000) is non-refundable regardless of the outcome. Interest under Section 234A/234B/234C continues to accrue on the unpaid demand during the appeal period. If the appeal is decided in the taxpayer's favour, interest is refunded with the demand.

How Faceless Appeals Connect With the New Framework

The Income Tax Act, 2025 (effective 1 April 2026) continues the faceless appeal scheme without substantive changes. Section 130 provides the overarching power for faceless jurisdiction. The NFAC infrastructure, e-filing portal, and Form 35 process remain identical. Section numbers for appealable orders are renumbered - but the substance of each provision is preserved.

For appeals against orders passed under the ITA 1961 (all orders for AY 2026-27 and prior years), the old Act section numbers apply. For appeals against orders passed under the ITA 2025 (from Tax Year 2026-27 onwards), the new Act section numbers apply. The appeal process itself - Form 35, NFAC allocation, video conferencing, electronic orders - is common to both.

Budget 2026 also allows filing ITR-U during open reassessment proceedings with 10% additional tax - potentially resolving the dispute before appeal. This reduces the need for formal appeal in cases where the taxpayer acknowledges additional income. For accurate TDS return filing that avoids TDS-related appeal triggers, ensure quarterly returns are filed correctly with matching PAN details.

Appeal Hierarchy: Complete Reference

Note: The Department has monetary limits for filing appeals: Rs 50 lakh for ITAT and Rs 1 crore for High Court. Below these limits, the Department generally does not appeal favourable CIT(A) orders - making a well-drafted first appeal critical.

Cases Excluded From Faceless Scheme

• Search and seizure cases under Section 132 / 132A (Section 247/248 of ITA 2025)
• International taxation and transfer pricing matters
• Cases under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015
• Cases involving serious fraud or major tax evasion as notified by CBDT
• Sensitive matters specifically excluded by CBDT notification

These cases continue to be assessed and appealed with the jurisdictional AO and jurisdictional CIT(A) through physical proceedings.

Key Takeaways

Faceless appeals are the default for all first-level income tax appeals before CIT(A). Filed via Form 35 on the e-filing portal within 30 days of the assessment/penalty order. The process is fully digital - no physical meetings, anonymous CIT(A) allocation through NFAC.

The Income Tax Act, 2025 continues the faceless scheme under Section 130 (faceless jurisdiction) without substantive changes. NFAC infrastructure and Form 35 process remain identical for both old Act and new Act orders.

Strong grounds of appeal with specific legal arguments, section references, and case laws are critical because there is no physical hearing by default. Video conferencing hearing can be requested for complex cases.

Filing an appeal does not stay the demand. Pay 20% of disputed demand to prevent coercive recovery. Apply for stay of demand before CIT(A). Simultaneously apply for Section 154 rectification if the demand is based on a clear computational error.

The Department has monetary limits for further appeals: Rs 50 lakh for ITAT and Rs 1 crore for High Court. A well-drafted first appeal before CIT(A) is the most effective dispute resolution strategy.

Need Help with Income Tax Appeals?

Filing a faceless appeal requires precise legal drafting, accurate factual narration, and strategic ground formulation. Since there is no physical hearing by default, your written submission must do all the heavy lifting. A professional CA or tax advocate can draft strong grounds of appeal, cite relevant case laws, and manage the digital filing process.

Explore our income tax return filing and assessment response services for end-to-end appeal support.

For queries, reach out at +91 945 945 6700 or WhatsApp us directly.