Scrutiny and Faceless Notices: Responding to Your Assessing Officer Through e-Proceedings

You filed your return months ago, the refund landed, and then on a quiet evening an email arrives: a notice under Section 143(2) is now visible on the e-Filing portal. Since the faceless assessment scheme took effect on 1 April 2021, the first contact from your Assessing Officer (AO) almost never comes by post. Under the e-Proceedings facility, every notice, intimation and letter issued by an income tax authority is served electronically, and your reply must travel back the same way. This Q&A walks through what to do, the statutory clock you are racing, and what a wrong move can cost in rupees.

The Scenario

Consider Mr Arjun Rao, a salaried product manager who filed his AY 2026-27 return on 28 July 2025 declaring a gross salary of Rs 18,00,000 under the new tax regime. In March 2026 he receives a notice under Section 143(2), flagged on the portal dashboard under "e-Proceedings". The reason: the Annual Information Statement (AIS) shows interest and short-term capital gains of roughly Rs 3,00,000 that never appeared in his return. The notice gives him 15 days to respond and lists a documents request the AO wants uploaded.

Arjun's instinct is to wait until he can visit a chartered accountant in person. That instinct is expensive. The faceless framework has no counter to walk up to, no officer to telephone, and a hard due date after which the Submit Response button is switched off. Before reconciling his AIS against his Form 26AS, Arjun needs to understand that responding online is not optional courtesy: it is the only channel the law now recognises for a scrutiny proceeding.

Statutory Answer

The notice itself is issued under Section 143(2) of the Income-tax Act, 1961, which empowers the AO to scrutinise a return where there is reason to examine it. Crucially, this notice must be served within three months from the end of the financial year in which the return is furnished (substituted by the Finance Act, 2021, effective 1 April 2021). For Arjun's return filed in July 2025 (FY 2025-26), the outer limit is 30 June 2026, so a March 2026 notice is well within time and cannot be challenged on limitation alone, per the bare text on indiacode.nic.in.

The procedure that follows is governed by Section 144B, the faceless assessment mechanism inserted by the Finance Act, 2021. Under Section 144B, the assessment is conducted by the National Faceless Assessment Centre (NFAC) with no physical interface between the taxpayer and any officer, and all communication is exchanged electronically. Alongside, the AO may issue a Section 142(1) notice calling for accounts, documents or written information; failure to comply with a 142(1) notice is itself an offence that can attract penalty under Section 272A of Rs 10,000 per default.

Two consequences of silence are written into the statute. First, Section 144 allows a "best judgement assessment" if the taxpayer does not respond, meaning the AO estimates the income and the burden then shifts entirely to you to dislodge that estimate. Second, Section 270A levies a penalty of 50% of the tax on under-reported income, rising to 200% where the under-reporting amounts to misreporting. The right to be heard before any addition is preserved by the show-cause and draft-order steps inside Section 144B, but that right is forfeited the moment the response window lapses.

On the mechanics, the Income Tax Department's e-Proceedings FAQ on incometax.gov.in is explicit: any registered user, or an Authorised Representative acting for them, can view and submit responses to notices, intimations and letters entirely online on the e-Filing portal. Notices issued by the Assessing Officer are made available under e-Proceedings. Only one Authorised Representative can be active at a time for a proceeding, and a response cannot be edited once submitted, so accuracy on the first attempt matters. The Submit Response button is disabled if the response due date has lapsed or the proceeding is closed or blocked by the income tax authority.

Worked Resolution

Suppose Arjun cannot explain the Rs 3,00,000 surfaced in his AIS and the AO sustains it as an addition. The arithmetic below shows why a timely, well-documented response is worth real money. All figures use the FY 2025-26 new-regime slabs and the Rs 75,000 standard deduction.

His returned position: gross salary Rs 18,00,000 minus the Rs 75,000 standard deduction gives taxable income of Rs 17,25,000.

Because his income exceeds Rs 12,00,000, the Section 87A rebate of Rs 60,000 does not apply. Now add the Rs 3,00,000, taking assessed income to Rs 20,25,000:

The additional tax is Rs 2,14,500 minus Rs 1,50,800, or Rs 63,700. On top of that, Section 234B charges simple interest at 1% per month on the shortfall in advance tax, and Section 270A can add a penalty of 50% of the tax on the under-reported Rs 3,00,000 — roughly Rs 31,850 — taking the avoidable cost towards Rs 1,00,000 before interest. You can model the slab impact yourself on the income tax calculator and pressure-test the regime choice on old vs new regime; for the gains component, the capital gains calculator shows the 12.5% long-term and 20% short-term equity rates that apply from 23 July 2024.

The defensive play is straightforward. If Arjun can show the Rs 3,00,000 was already taxed at source or is a duplicate AIS entry, he uploads the bank statements, broker reports and a reconciliation note inside the e-Proceedings window, and the addition collapses to nil. This is the same logic as responding to a 143(1) adjustment, which we covered in our guide to Intimation u/s 143(1)(a).

FAQ

How many days do I get to respond to a Section 143(2) notice?

The deadline is stated on the notice itself, commonly 15 days from the date of issue, though the AO may set a different period. The e-Proceedings facility on incometax.gov.in disables the Submit Response button once that due date lapses, so treat the printed date as final. If you genuinely need more time, file an adjournment request through the same proceeding before the deadline rather than after it.

Can my chartered accountant respond on my behalf?

Yes. The e-Proceedings FAQ confirms an Authorised Representative can view and submit responses for you, but only one Authorised Representative can be active at a time for a given proceeding. You add them under the "Authorise Another Person" or My CA function on the portal; you remain legally responsible for the contents, since a submitted response cannot be edited afterwards.

What happens if I simply ignore the notice?

Section 144 permits a best judgement assessment, where the AO estimates your income without your input, and Section 272A can impose Rs 10,000 for ignoring a Section 142(1) requisition. You then carry the burden of overturning that estimate in appeal under Section 246A before the Commissioner (Appeals), a process far costlier than a timely upload.

Is a faceless notice genuine, or could it be a scam?

A real scrutiny notice will always be visible after you log in to incometax.gov.in under e-Proceedings or Pending Actions, and will carry a Document Identification Number (DIN). Since 1 October 2019, any communication without a valid DIN is treated as never issued, so verify the DIN on the portal before acting on any email or message.

Does responding online stop interest and penalty from running?

No. Section 234B interest at 1% per month accrues on any advance-tax shortfall regardless of the proceeding, and it stops only when the tax is paid. A strong response can eliminate the addition and therefore the Section 270A penalty, but it does not pause statutory interest, which is why paying self-assessment tax on any conceded amount early limits the damage.

Which records should I keep ready before the proceeding opens?

Reconcile your ITR line by line against Form 26AS and the AIS, then keep bank statements, Form 16, broker capital-gains statements and proof of any exempt receipts in PDF form. The portal accepts uploads up to the limits shown on the response screen, and a single consolidated reconciliation note dated to the relevant financial year speeds up closure.

Can I revise my return instead of contesting the addition?

Only if the revision window is open. For AY 2026-27, a revised return under Section 139(5) can be filed up to 31 December 2026 or before the assessment is completed, whichever is earlier. Once a Section 143(2) proceeding is under way, revision rarely helps, and the correct route is a complete response inside e-Proceedings.