How Faceless Assessment Drifted—and What Budget Must Fix

Sold as a trust reform, India’s faceless tax assessment has morphed into a mechanical, defensive system—raising urgent questions for CBDT and the Union Budget 2026 before flaws get hard-coded into the new Income-tax Act.

By P. SESH KUMAR

New Delhi, January 25, 2026 — India’s Faceless Assessment Scheme was sold as a once-in-a-generation trust reform: fewer rent-seeking touch points, more transparency, and a calmer, rules-based relationship between citizen and state. Yet the lived experience has begun to look like the opposite—more layers, more fragmentation, less time for application of mind, and a subtle incentive to make “defensive” additions that survive internal review rather than judicial scrutiny. Budget 2026 is in focus with hope that the last meaningful “design correction” window be not missed before the new Income-tax Act framework hard-codes today’s architecture.

While there is merit in the diagnosis of over-engineering and accountability diffusion, there is need for caution that simply abolishing “Technical” and “Review” units could replace one pathology with another-more discretion, more inconsistency, and a higher risk of arbitrary outcomes. The smarter fix is not to amputate oversight but to redesign it: make responsibility legible, expertise real (not nominal), time-lines rational, and natural justice measurable, auditable, and enforceable.

The Economic Times weighed the issue, landing its first punch where it hurts: faceless assessment was meant to be a face change in tax administration, not an assembly line that prints additions at speed. It traces the scheme’s political and administrative lineage—how “faceless” was articulated as a reform ambition in the 2017-era policy mood and then given statutory scaffolding through Section 144B (effective April 1, 2021) and a multi-unit structure routed through the National Faceless Assessment Centre (NFAC). The article’s core claim is elegantly simple: the architecture became so layered that responsibility got diluted, timelines got crushed, and discretion returned-not as a handshake across a table, but as a digital fiat buried in “system-generated” communications.

That critique is not merely aesthetic; it is institutional economics. When five hands touch one file—NFAC, AU, VU, TU, RU—each hand can later say, “I only played my part.” In a quasi-judicial function like assessment, that diffusion is toxic. Courts don’t punish “the process”; they ask, “Who applied their mind?” If the answer is “everyone and no one,” the system begins to breed exactly what the article calls “mechanical assessments.”

The narrative’s most pointed argument is its attack on “Technical Units” (TU) as an institutional contradiction. If Assessment Units (AU) are headed by Joint/Additional Commissioners and supported by trained officers, why should a parallel unit-staffed by broadly the same service, ranks, and training ecosystem-be presumed “more technical”?  This is a devastating question because it exposes a design habit India’s bureaucracy often falls into: when you don’t trust the primary decision-maker, you don’t invest in capability; you create an extra layer. That layer then becomes a fig leaf for accountability, not a source of expertise.

But the critique must go one step deeper than the ET piece does. “Technical” cannot be dismissed merely because the cadre is the same. A tax administration can absolutely justify specialist review-international taxation, transfer pricing, valuation, digital economy, treaty interpretation-if it is staffed and governed like a specialist function with transparent criteria, training, and performance metrics. The fatal flaw is not “technical review” as an idea; it is “technical review” as a posting label with no demonstrable competence differentiation, which the article argues is the current reality. � In other words, the scheme currently buys the appearance of expertise, not expertise itself.

The ET narrative similarly indicts “Review Units” (RU) for promoting revenue-protective behaviour—what every seasoned tax practitioner recognises as the “add now, defend later” instinct. Here, the author’s reasoning is credible: if the internal environment rewards “protection of revenue” over legal sustainability, then high-pitched assessments are not an accident-they are a rational strategy. And once that strategy becomes normal, appeals become the real assessment stage, meaning the taxpayer pays for the Department’s learning curve through years of uncertainty and litigation costs. This is how a trust reform quietly mutates into a compliance burden.

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Still, the article’s proposed surgical solution—abolish Technical and Review units and make the Assessment Unit fully responsible—needs a sterner interrogation. Accountability does improve when a single unit “owns” the outcome, but quality does not automatically improve when you remove checks. The Indian context is not Switzerland: heterogeneity of capacity across officers is real, training is uneven, and legal interpretation varies widely. In such a setting, removing structured review can increase arbitrariness, deepen inconsistency across similar fact patterns, and-ironically-invite the very discretion facelessness was designed to kill. The real enemy is not oversight; it is unintelligent oversight that is duplicative, late-stage, and incentivised to inflate.

The sharpest and most actionable portion of the ET narrative is actually the point about time compression and natural justice. Even if statutory limitation periods remain formally unchanged, routing through multiple units can shrink the “thinking time” available to the Assessing Unit and the “response time” practically available to the taxpayer. The consequence is predictable: hearings become ritual, replies become attachments nobody reads, and the assessment order becomes a stitched compilation of templates, extracts, and protective additions. In a faceless environment, natural justice must be engineered like a product requirement: response windows must be meaningful; video hearings must be granted where credibility and nuance matter; and orders must demonstrate application of mind, not just compliance with workflow.

At one level, nothing compels India to wait for Budget 2026. A very large part of what is going wrong with faceless assessment today can, in theory, be corrected tomorrow morning by the Central Board of Direct Taxes (CBDT) through binding instructions, standard operating procedures, workflow redesigns and enforceable service standards. These are not deep questions of legislative competence; they are questions of administrative courage.

But the reason reform keeps getting postponed to “the next Budget” lies in a subtle but decisive distinction between what is legally possible and what is institutionally defensible.

Let us start with the statutory architecture. Faceless assessment is no longer a purely executive experiment. Section 144B of the Income-tax Act hard-wires the existence of multiple units-Assessment Units, Verification Units, Technical Units and Review Units-and prescribes a scheme-based workflow routed through the National Faceless Assessment Centre. That matters because once Parliament has explicitly recognised a particular structure, the executive’s room to radically reconfigure it through instructions shrinks. CBDT can regulate how these units function, but it becomes awkward-borderline vulnerable in court-to ask whether CBDT can effectively neutralise or bypass a unit that the statute itself contemplates.

That is why the article—and many insiders—keep returning to Budget 2026. Not because procedures must wait, but because legislative amendment gives political and legal cover for redesign. A small textual tweak that converts “shall be assigned to such units as may be specified” into a more flexible, enabling formulation instantly frees the administration to experiment without fear of judicial pushback. In tax law, form matters almost as much as intent.

That said, it would be a serious mistake to assume that CBDT is helpless until then. In fact, most of the pain taxpayers experience today has very little to do with the black-letter wording of Section 144B and everything to do with how discretion is exercised inside that framework.

Let us take timelines. The Act does not mandate that show-cause notices be issued at the eleventh hour or that replies be demanded within absurdly short windows. These are choices made through internal workflow configuration. CBDT can, by instruction alone, mandate minimum response periods, require reasoned rejection of adjournment requests, and prescribe circumstances where video hearings are mandatory rather than optional. None of this needs Parliament’s blessing.

Let us take accountability. The statute does not prohibit attribution of responsibility. It does not say that assessment orders must be authorless, faceless in the literal sense of anonymity. CBDT can require every order to disclose which unit proposed which addition, how review comments were dealt with, and where final responsibility lies. Courts would, if anything, welcome such transparency; it strengthens natural justice rather than diluting it.

Let us now take “defensive additions.” Nothing in the Act compels Review Units to behave like revenue insurance desks. That incentive structure is entirely internal-driven by appraisal systems, audit fears, and an institutional belief that an addition struck down by a court is less damaging than one never made. CBDT can recalibrate this overnight by issuing binding guidance that sustainability, not quantum, is the performance metric-and by backing officers when legally sound decisions reduce assessed income.

Even Technical Units sit in a grey zone. While their existence is statutorily acknowledged, the Act is silent on eligibility, competence benchmarks, specialisation criteria or the nature of their opinions. CBDT could, without touching the statute, transform them from generic parallel desks into true centres of expertise-or, just as legitimately, restrict their role to narrowly defined categories like international tax, transfer pricing or valuation.

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So why does the system keep pointing to Budget 2026?

Because administrative instructions, however binding on paper, are fragile in practice. They can be withdrawn quietly, diluted informally, or ignored under pressure. A statutory amendment, even a modest one, sends a signal that the political executive owns the redesign and will defend it. It also insulates officers from the fear that tomorrow’s vigilance inquiry or audit objection will ask, “Why did you not route this through every possible unit?” Law is not just a rulebook; it is a shield.

There is also a sequencing logic at play. The government is already working toward a new Income-tax Act framework. In such a transition moment, it is institutionally easier to say: “We are not patching an old system; we are correcting design flaws before they fossilise.” That narrative is harder to sell through a mid-year circular, however well drafted.

But here is the uncomfortable truth: if CBDT genuinely believes faceless assessment has “lost its way,” then waiting for Budget 2026 becomes an excuse, not a necessity. Procedural justice delayed is procedural injustice continued. The longer flawed workflows operate, the more they normalise bad behaviour-both among officers and taxpayers.

The intellectually honest position, therefore, is this. Immediate relief must come through CBDT instructions—on timelines, hearings, accountability, review discipline and performance metrics—because taxpayers cannot be told to suffer until the next Finance Bill. At the same time, Budget 2026 should be used to clean up the statute so that these improvements are not reversible, cosmetic or dependent on the mood of the day.

In other words, this is not an either–or choice. CBDT should fix what it can fix now, and Parliament should fix what only Parliament ought to fix later. Waiting passively for the Budget would be an admission that the problem is not law but will. And that, more than any drafting defect, is what has really haunted the faceless assessment experiment.

Budget 2026, therefore, should not treat faceless assessment as a tech project awaiting minor UI changes. The scheme is governance design-allocating power, assigning responsibility, and creating incentives. The ET author is right that a legislative transition moment is the best time to fix design defects before they fossilise.  But the fix should be framed around four “trust outcomes,” not around the number of units.

First, Budget 2026 must make accountability legible. Whether or not Technical/Review units remain, the taxpayer must be able to see-within the order itself-who decided what and why. Faceless cannot mean authorless. A digitally signed “decision responsibility map” embedded in every order-AU reasoning, TU inputs (if any), RU observations (if any), and how the AU accepted or rejected them-would instantly reduce the culture of anonymous additions.

Second, competence must become auditable. If Technical Units exist, they must not be populated by “same rank, same training, different chair.” They should be staffed through a transparent accreditation system: domain tests, mandatory certifications, and continuous training hours tied to postings. If that is administratively hard, then the honest answer is: don’t pretend to have “technical” capability through nomenclature-build it or stop branding it.

Third, natural justice must be converted from a slogan into a measurable service standard. The faceless portal can track everything; that is its superpower. So use it to measure fairness: average response time granted, rate of hearing requests accepted, percentage of orders that discuss taxpayer submissions point-by-point, and reversal rates by issue-type (not as officer-shaming, but as systemic feedback). If the system sees that a certain class of additions is routinely struck down, the workflow should trigger mandatory pre-addition review on that class, not encourage more of the same.

Fourth, the scheme must adopt a risk-based triage so that routine, low-risk cases don’t get the same heavy machinery as complex, high-stakes cases. A faceless “factory” that treats a small salaried taxpayer query and a multi-jurisdictional structuring issue with the same multi-unit routing is not fairness; it is waste that creates delay and anger.

In short, the ET piece is correct in its central moral: faceless assessment must return to its founding promise-trust-building. But trust will not return merely by deleting two boxes in an organisational chart. Trust returns when the system makes three guarantees and keeps them: decisions will be reasoned, timelines will be humane, and responsibility will be visible. Budget 2026 should use the new-law transition not to “expand compliance burden,” but to encode these guarantees into the operating design-so that faceless becomes what it was meant to be: not a wall between the citizen and the state, but a glass window.

Faceless Assessment as a Justice-delivery Pipeline

Budget 2026 should treat faceless assessment as a justice-delivery pipeline and redesign it around accountable authorship, competence-by-credential (not by posting), measurable natural justice, and risk-based triage. Technical and Review functions should either be rebuilt as genuine specialist capacity with clear eligibility criteria and transparent outputs, or replaced with a leaner, earlier-stage peer review that improves legal sustainability rather than inflating additions. Above all, the system must stop rewarding “defensive” assessments and start rewarding durable, well-reasoned orders-because nothing destroys voluntary compliance faster than the feeling that the process is engineered to add first and listen later.

(This is an opinion piece. Views expressed are author’s own)

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