Scheme under section 142B

## Report on the Faceless Inquiry or Valuation Scheme, 2022 **1. Executive Summary:** This report analyzes the Faceless Inquiry or Valuation Scheme, 2022, as notified by the Ministry of Finance (Department of Revenue) and the Central Board of Direct Taxes (CBDT). This new scheme aims to conduct specific income tax-related processes—issuing notices, making inquiries before assessment, directing audits, and estimating asset values—in a faceless manner through automated allocation. The scheme leverages technology like artificial intelligence and machine learning for randomized case allocation and takes effect from the date of its publication in the Official Gazette. Its core purpose is to implement faceless processes as provided in section 144B of the Income-tax Act, 1961. **2. Introduction:** This report provides an overview of the Faceless Inquiry or Valuation Scheme, 2022, based solely on the information contained within the provided official notification. The purpose is to inform affected parties about the scheme's core objectives, key provisions, implementation aspects, and expected outcomes, as inferred directly from the document. **3. Policy Overview:** * This is a **New Policy**. * **Core Objective(s):** The core objective of the Faceless Inquiry or Valuation Scheme, 2022 is to conduct the following processes in a faceless manner through automated allocation: * Issuing notice under subsection 1 of section 142 of the Income-tax Act, 1961. * Making inquiry before assessment under subsection 2 of section 142 of the Income-tax Act, 1961. * Directing the assessee to get his accounts audited under subsection 2A of section 142 of the Income-tax Act, 1961. * Estimating the value of any asset, property, or investment by a Valuation Officer under section 142A of the Income-tax Act, 1961. **4. Background and Rationale:** As a new policy, the Faceless Inquiry or Valuation Scheme, 2022, likely addresses concerns related to efficiency, transparency, and potential biases in traditional assessment and inquiry processes. The emphasis on faceless procedures and automated allocation suggests an intent to reduce direct interactions between tax officers and assessees, promoting impartiality and streamlining the assessment process. The use of technology like artificial intelligence and machine learning further supports the goal of optimized resource utilization in the assessment process. **5. Key Provisions / Changes:** As a New Policy, the main components and rules are: * **Short Title and Commencement:** The scheme is named "Faceless Inquiry or Valuation Scheme, 2022" and comes into force from the date of its publication in the Official Gazette. * **Definitions:** * "Act" means the Income-tax Act, 1961 (43 of 1961). * "Automated allocation" means an algorithm for randomized allocation of cases, using technological tools like AI and machine learning, to optimize resource use. * **Scope:** The following actions shall be conducted in a faceless manner through automated allocation, in accordance with and to the extent provided in section 144B of the Act: * Issuing notices under section 142(1). * Making inquiries before assessment under section 142(2). * Directing audits under section 142(2A). * Estimating asset values by a Valuation Officer under section 142A. **6. Target Audience and Stakeholders:** Based on the text, the primary target audience and stakeholders include: * Assessees (taxpayers) subject to income tax inquiries, assessments, or valuation of assets. * Valuation Officers involved in estimating the value of assets, properties, or investments. * The Central Board of Direct Taxes (CBDT) and the Ministry of Finance (Department of Revenue) responsible for administering and implementing the scheme. * Tax professionals and consultants advising assessees. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) and the Ministry of Finance (Department of Revenue) are responsible for implementing the scheme. * **Timelines and Procedures:** The scheme comes into force from the date of its publication in the Official Gazette. The procedures for faceless assessment and automated allocation are to be implemented in accordance with section 144B of the Income-tax Act, 1961. The automated allocation utilizes algorithms incorporating AI and machine learning for random case assignments. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of the Faceless Inquiry or Valuation Scheme, 2022, based on the policy's stated provisions are: * Increased efficiency and transparency in income tax inquiry, assessment, and valuation processes. * Reduced direct interaction between tax officers and assessees, potentially mitigating bias. * Optimized resource utilization through automated case allocation. * Enhanced compliance through standardized and faceless procedures. **9. Conclusion:** The Faceless Inquiry or Valuation Scheme, 2022, represents a significant shift towards leveraging technology and automation in the income tax administration. By implementing faceless procedures and utilizing automated allocation, the scheme aims to enhance efficiency, transparency, and impartiality in the assessment and inquiry processes. This initiative is an important step in modernizing the tax system and fostering a more streamlined and equitable environment for assessees.

Key Entities Referenced