IT Department notifies e-verification scheme

The Central Board of Direct Taxes (CBDT) has notified e-verification scheme for calling, collecting and authentication of certain information. Experts feel that such a mechanism will empower the tax department while bringing more efficiency, transparency and accountability.

The scheme covers calling for information, collecting certain information and exercise of power to inspect registers of companies. It applies to processing or utilisation of the information. It prescribes that Commissioner of Income Tax (e-verification) will collect the specified information as per the procedure. It also talked about random allocation or transfer of the information as per the process to be devised by the Principal Director General – Income Tax (Systems) or Director General of Income Tax (Systems) and to be approved by CBDT.

The scheme says the notices are to be issued, served, and responded to electronically and personal appearance will be in exceptional cases through virtual mode. It prescribes that all the communication will be exclusively in the electronic mode amongst the authorites and to the extent technologically feasible with any person or their authorised representative too.

It provides for digital authentication of electronic record by CIT (e-verification) or the prescribed authority; any person or his authorised representative will also digitally authenticate the electronic record where he is required to digitally sign his return of income and, where not so required, by communicating through his registered e-mail address.

Om Rajpurohit, Director (Corporate & International Tax) with AMRG & Associates said that through this scheme, the government has empowered the tax department to gather more information from taxpayers and reconcile it with information received from other agencies within a period of 90 days. If there is any discrepancy between the amount accepted by the assessee and the amount reported after such first e-verification, the information may be passed to Intelligence and Criminal Investigation if it is determined to be of no or low risk.

Bringing transparency

“The intention is to bring more transparency within the tax agencies and streamline the process of uncovering serious tax evasion or money stashed abroad,” he said. However, he also said that options to represent via personal hearing has been limited to exceptional circumstances and to the degree technologically practicable, which may be unfair to the taxpayer because reconciliation of information by personal hearing would be a better choice.

Neeraj Agarwala, Partner with Nangia Andersen India feels this notification is in line with the general principle of the government to ensure greater efficiency, transparency and accountability by eliminating the interface between the income tax authority and the assessee or also relying on technology for optimising utilisation of resources. The tax department has now brought digital verification of data online.

“We need to understand that verification is different from assessment. Under verification, the information called by the tax office is based on a report for mismatch of data. It is clear from this notification, that the department will now be relying on technical algorithms to flag mismatch in data and initiating inquiries only in case of high-risk transactions,” he said.

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