A STUDY OF ARTIFICIAL INTELLIGENCE IN TAX ADMINISTRATION WITH SPECIAL REFERENCE TO THE AUTOMATION OF THE ASSESSMENT UNDER FACELESS ASSESSMENT SCHEME AND PRIVACY CONCERNS

AUTHOR – ANILA KURIAN, STUDENT AT AMITY LAW SCHOOL, NOIDA

BEST CITATION – ANILA KURIAN, A STUDY OF ARTIFICIAL INTELLIGENCE IN TAX ADMINISTRATION WITH SPECIAL REFERENCE TO THE AUTOMATION OF THE ASSESSMENT UNDER FACELESS ASSESSMENT SCHEME AND PRIVACY CONCERNS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (4) OF 2026, PG. 1073-1084, APIS – 3920 – 0001 & ISSN – 2583-2344

ABSTRACT

The introduction of Artificial Intelligence (AI) in the Indian tax collection most notably in the Faceless Assessment Scheme in Sec 144B of the Income Tax Act, 1961 is the point of transformation in the fiscal governance. Although AI-enabled tools are a promise of increased efficiency, transparency, and reduction of corruption based on algorithmic scrutiny selection, automated processing, and faceless adjudication, they also pose new constitutional and statutory challenges in the area of procedural fairness, algorithmic accountability, and informational privacy that have never been seen previously.

The Article examines the data privacy policy implications of the digital tax surveillance system in India in the light of the proportionality standard that the Supreme Court unanimously upheld in Justice K.S. Puttaswamy (Retd.) v. Union of India (2017). It considers the sufficiency of the Information Technology Act, 2000 and Digital Personal Data Protection Act, 2023 in fully tackling algorithmic opacity, risks of data aggregation, function creep, and lack of an independent oversight mechanism to process tax data.