Faceless Inquiry or Valuation Scheme, 2022

Central Board of Direct Taxes (CBDT) vide Notification No. 19/2022 in S.O. 1468(E) dated 30th March 2022 notified Faceless Inquiry or Valuation Scheme, 2022 to introduce the Artificial Intelligence for Assessment Proceedings under

section 142 of the Income Tax Act, 1961. In this article, we will look at the scheme in detail. Know more about the e-Assessment of Income Escaping Assessment Scheme, 2022

Faceless Inquiry or Valuation Scheme, 2022

The Faceless Inquiry or Valuation Scheme, 2022, covers the following:

Issuance of notice under section 142(1) of the Income Tax Act
Inquiring be before assessment under section 142(2) of the Income Tax Act;
Directing the assessee to have his accounts audited under section 142(2) of the Income Tax Act
Valuation Officer estimating the value of any asset, property, or investment under section 142A of the Income Tax Act

As per the scheme, making inquiries before assessment, directing the assessee to get his accounts audited, and estimating the value of any asset, property, or investment by a Valuation Officer as per the Income Tax Act, shall be in a faceless manner, through automated allocation. “Automated allocation” means an algorithm for randomized allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, to optimize the use of resources.

Section 142B of the Income Tax Act

Section 142B of the Income Tax Act empowers CBDT to notify a Scheme for the following:

issuing notice under section 142(1), or
inquiring about assessment under section 142(2), or
directing the assessee to get his accounts audited under section 142(2A), or

estimating the value of any asset, property, or investment by a Valuation Officer under section 142A to impart greater efficiency, transparency, and accountability by— (i) eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible; (ii) optimizing utilization of the resources through economies of scale and functional specialization; (iii) introducing a team-based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases, with dynamic jurisdiction. Further, section 142B provides that no direction shall be issued after the 31st day of March 2022. The official notification about the CBDT Faceless Inquiry or Valuation Scheme, 2022 is attached here for reference:

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Frequently Asked Questions

Common questions about Faceless Inquiry and Valuation Scheme.

The Faceless Inquiry or Valuation Scheme, 2022 is a scheme notified by the Central Board of Direct Taxes (CBDT) to introduce the use of Artificial Intelligence for assessment proceedings under section 142 of the Income Tax Act, 1961. It covers the issuance of notices, inquiries before assessment, directing the assessee to get accounts audited, and valuation of assets, properties, or investments by a Valuation Officer, all in a faceless manner through automated allocation.

"Automated allocation" refers to an algorithm for randomized allocation of cases, using suitable technological tools, including artificial intelligence and machine learning, to optimize the utilization of resources. It aims to eliminate the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible.

The primary purpose of the Faceless Inquiry or Valuation Scheme, 2022 is to impart greater efficiency, transparency, and accountability in the assessment proceedings by eliminating the interface between the income-tax authority and the assessee, optimizing resource utilization through economies of scale and functional specialization, and introducing a team-based exercise of powers and performance of functions.

The Faceless Inquiry or Valuation Scheme, 2022 covers the provisions related to issuance of notice under section 142(1) of the Income Tax Act, inquiring before assessment under section 142(2), directing the assessee to get accounts audited under section 142(2A), and valuation of assets, properties, or investments by a Valuation Officer under section 142A.

The cases will be allocated through an automated algorithm for randomized allocation, using suitable technological tools, including artificial intelligence and machine learning, to optimize resource utilization. This process aims to eliminate the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible.

Section 142B of the Income Tax Act empowers the Central Board of Direct Taxes (CBDT) to notify a scheme for issuing notices, inquiring before assessment, directing account audits, and valuations by a Valuation Officer. It aims to introduce greater efficiency, transparency, and accountability through the elimination of interfaces, resource optimization, and team-based exercise of powers.

The Faceless Inquiry or Valuation Scheme, 2022 was notified by the Central Board of Direct Taxes (CBDT) vide Notification No. 19/2022 in S.O. 1468(E) dated 30th March 2022.

The key benefits of the Faceless Inquiry or Valuation Scheme, 2022 include greater efficiency, transparency, and accountability in assessment proceedings, elimination of interfaces between authorities and assessees, optimized resource utilization through economies of scale and functional specialization, and a team-based exercise of powers and functions.

Artificial Intelligence plays a crucial role in the Faceless Inquiry or Valuation Scheme, 2022 by enabling the automated allocation of cases through randomized algorithms. It also assists in optimizing resource utilization and introducing a team-based exercise of powers and functions.

Yes, the Faceless Inquiry or Valuation Scheme, 2022 can be modified or updated in the future by the Central Board of Direct Taxes (CBDT) through subsequent notifications or amendments to the Income Tax Act, 1961. However, as per section 142B, no direction can be issued after the 31st day of March 2022.