CBI Charges Income Tax Officials and Chartered Accountants for Faceless Scheme Breach

CBI Takes Action Against Income Tax Officials and Chartered Accountants for Sabotaging Faceless Scheme

In a noteworthy development, the Central Bureau of Investigation (CBI) has initiated a case against nine individuals, including a Deputy Commissioner and two Inspectors from the Income Tax Department, alongside five Chartered Accountants and others. They are charged with undermining the newly implemented ‘Faceless Scheme of Assessment’ launched by the Government of India. This initiative aims to eliminate direct interactions between taxpayers and tax officials to ensure impartial tax assessments.

Allegations Against the Accused

The accused are alleged to have disclosed sensitive information, including the identities of assessing and appellate officers, to taxpayers, thereby seeking financial gains. According to reports, the CBI carried out searches at 18 locations across major cities such as Delhi, Mumbai, Bengaluru, and Kottayam. These searches led to the recovery of significant documents and electronic evidence pertaining to the case, which is currently under investigation.

Background on the Faceless Scheme of Assessment

The ‘Faceless Scheme of Assessment’ is part of the Government of India's broader reforms aimed at modernizing Direct Tax administration for the benefit of taxpayers and the economy. Key features of the scheme include:

• No Human Interface: Designed to prevent direct contact between taxpayers and tax officials.
• Anonymity of Officers: Taxpayers are unaware of the identities of assessing and appellate officers.

However, a group of Chartered Accountants allegedly collaborated with certain Income Tax officials in a criminal conspiracy to breach this system. Reports suggest they clandestinely disclosed the names of assessing and appellate officers to taxpayers. Additionally, they reportedly misused sensitive income tax data regarding ongoing assessments or appeal cases and substantial refund claims to approach relevant assessees or their Chartered Accountants for monetary benefits.

This unauthorized dissemination of information enabled taxpayers to physically contact assessing and appellate officers, thereby undermining the integrity of the ‘Faceless Scheme of Assessment’.

CBI Searches and Ongoing Investigation

On 06.02.2025, the CBI executed searches at 18 locations, including Delhi, Mumbai, Thane, West Champaran (Bihar), Bengaluru, and Kottayam (Kerala). During these operations, various incriminating documents, evidence of potential financial impropriety, and digital electronic evidence were seized.

The investigation is still in progress, and further developments are anticipated as the CBI continues its efforts to address this breach of trust within the tax assessment framework.