Faceless Assessment and How to Respond to an Income Tax Notice: A 2026 Guide for Hyderabad Taxpayers

Published on: 14 April 2026 at 9:32 PM IST

Faceless assessment notice: what Hyderabad clients should know

Before we dig in: faceless assessment notice is the thread running through this guide. Keep it in mind as each section unfolds.

A faceless assessment notice from the Income Tax Department looks intimidating, but it follows a predictable path.

The faceless assessment scheme has quietly changed the way every taxpayer in India deals with the Income Tax Department. The old system of visiting a ward office in Basheer Bagh with a folder of documents. Meeting the assessing officer in person was replaced by an online process where the officer. In addition, the taxpayer never meet. This makes the process fairer. Moreover. It also makes the written reply you upload through the portal the only chance you have to defend yourself. At Sunshine Accountancy and Co. Furthermore, we represent Hyderabad taxpayers in faceless proceedings every week. The quality of that written reply almost always decides the outcome.

How the Faceless Scheme Actually Works

In addition, the National Faceless Assessment Centre in Delhi is the single point of contact with every taxpayer. Cases are allocated through an automated system to Assessment Units, Verification Units, Technical Units. Review Units spread across the country. Also, you never know which city your case was assigned to. The officer never knows your identity beyond a case number. Every communication is issued through the e-filing portal and every response is uploaded through the same portal. However, the scheme covers regular assessments under section 143(3), reassessments under sections 147 and 148. Rectifications under section 154.

The Notices You Are Most Likely to Receive

Moreover, a section 143(1) intimation is the automated processing result of your return. Usually arrives within a few weeks of filing. It highlights mismatches with Form 26AS, the Annual Information Statement, and the Taxpayer Information Summary. Therefore, a section 143(2) notice signals that your case was picked up for scrutiny assessment and opens the faceless process. A section 142(1) notice asks for information or books of account, often issued before 143(2). As a result, a section 148 notice relates to reassessment of income that the department believes has escaped assessment. A section 133(6) notice seeks information about a third party, such as a client, vendor, or family member.

First Thirty Minutes After Receiving a Notice

Furthermore, take a deep breath. Log in to the e-filing portal and open the e-Proceedings tab. For example, read the notice carefully and note the section, the assessment year, the due date. The specific questions asked. Screenshot the notice and save a PDF copy. On top of that, do not reply immediately. Most notices are not an accusation but a request for clarification. Most importantly, a hasty reply with the wrong attachments can do more harm than no reply at all.

Building the Reply

The reply should follow the structure of the notice. Address each query on its own page and attach the supporting document as a separate PDF. Importantly, reconcile the figures in your return with the AIS, Form 26AS, and your bank statements. If there is a mismatch, explain it in plain language with a working. Consequently, if there is no mismatch, say so and demonstrate it with a one page schedule. Always sign and date the reply as a letter to the Assessment Unit. Include your PAN and the DIN of the notice at the top.

Common Issues We Help Resolve

Also, unexplained cash deposits during the demonetisation window, large property purchases that do not match the declared income, bank interest or rental income appearing in the AIS that was not included in the return. TDS credit that the deductor has not filed on time, sale of mutual funds or equity that the department has matched through the Statement of Financial Transactions,. Capital gains on the sale of a residence where the section 54 exemption was not correctly computed. In short, each of these has a specific documentary cure. A well drafted reply with the right reconciliation usually closes the issue at the Assessment Unit stage.

Hearing Rights Under the Faceless Scheme

You can request a video hearing if the Assessment Unit proposes an adverse order. The hearing is conducted through the e-Proceedings module itself. Meanwhile, use this right when the issue is fact specific. The department has misread a document, or when a court precedent needs to be explained. Be concise, stick to the point. Besides. Submit a written summary of the oral arguments immediately after the hearing so that nothing is lost in translation.

If the Order Goes Against You

However, an adverse order is not the end of the road. You can file an appeal before the Commissioner of Income Tax Appeals through the Faceless Appeal Centre. Similarly, the appeal file within thirty days of the date of the order. Further appeals lie with the Income Tax Appellate Tribunal and, on questions of law, with the Telangana High Court. Likewise, each stage has its own timelines, fees, and drafting discipline. A well argued appeal at the first stage often changes the result, so do not delay.

Why Timely Replies Matter

Therefore, failure to respond or a late response can lead to a best judgement assessment under section 144 where the Assessment Unit is free to estimate your income based on the material available. Penalties can be levied under sections 270A and 271AAC for under reporting and misreporting. In addition, and in serious cases prosecution can be initiated under section 276C. A simple diary system that tracks every notice, its due date. The draft reply stage usually prevents these outcomes.

Records You Should Keep Ready All Year

As a result, bank statements of every account held during the financial year, share trading and demat statements with realised gain or loss. Mutual fund statement from each AMC, capital gains statement for any property sold, loan sanction letters. Interest certificates, donation receipts, insurance premium receipts, and a clean ledger of your business income and expenses. Moreover, keeping these ready in a shared folder saves weeks of scrambling when a notice arrives.

Need Help with This

Sunshine Accountancy and Co. has supported Indian businesses since 1994 with accounting, bookkeeping, GST, income tax, payroll, and audit work. Furthermore, call +91 9676313137 or write to hello@sunshineaccountancy.com if you have received a notice and would like a calm. Structured response prepared and uploaded on your behalf.

Related Reading

For the most up-to-date rules on faceless assessment notice, see the Income Tax Department portal. Sunshine Accountancy and Co. helps Hyderabad clients with faceless assessment notice end to end — paperwork, filings, and follow-ups.

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