CBDT rolls out scheme for e-verification of taxpayer information

The e-Verification Scheme, 2021 notified on Monday covers faceless information collection from assessees and its verification. The scheme is notified under a provision in the Income Tax Act, 135A, that proposes faceless information gathering aimed at imparting efficiency, transparency and accountability by eliminating the interface between the income-tax authority and the assessee. It also seeks to optimise the use of the department’s resources.

Under the scheme, information will be collected including in cases where the register of companies is to be inspected in a faceless way to the extent technologically feasible.

The e-verification will cover information that is either in the procession of designated tax officials or which is handed down to them by other official arms including the Director-General of Income-tax (Intelligence and Criminal Investigation).

“The government has now empowered the tax office to gather more information from the taxpayers and reconcile it with information received from other specified agencies. In case there is any mismatch between the amount reported by the taxpayer and the amount reported after such first e-verification, the information could be passed for the intelligence and criminal investigation,” said Rajat Mohan- senior partner with AMRG & Associates, an accounting firm.

Digital verification of data online is an attempt to create more accountability, according to Neeraj Agarwala, partner at Nangia Andersen India, a consultancy.

“We need to understand that verification is different from assessment. Under verification, the information sought 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,” said Agarwala.

“Also this notification has given a window wherein in exceptional cases the assessee can request for a personal hearing over video conferencing depending on technology limitations. We will need to wait and watch how this regulation is actually implemented,” said Agarwala.