The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 inserted Section 135À in the Income-tax Act, 1961 (IT Act) w.e.f. 1 November 2020 to provide for faceless collection of information. As per this section, the Central Government is empowered to make a Scheme for the purpose of collecting information of taxpayers by the Tax officer. In line with faceless assessment, the purpose of the scheme will be to impart greater efficiency, transparency and accountability by
- Eliminating the interface between the tax authorities and the taxpayer or any other person through technologically feasible modes;
- Utilising resources optimally through economies of scale and functional specialisation;
- Introducing a team-based exercise of powers, including to call for, or collect, or process, or utilize the information with dynamic jurisdiction.
In this regard, the Central Board of Direct Taxes (CBDT) has recently notified1 the e-Verification Scheme, 2021 (The Scheme).
We at, BDO in India, have analysed and summarised the aforesaid notification and provided our comments on its impact hereunder:
Applicability of the Scheme
The Scheme shall cover:
- calling for information under section 133 of the IT Act;
- collecting certain information under section 133B of the IT Act;
- calling for information by prescribed authority under section 133C of the IT Act;
- exercise of power to inspect register of companies under section 134 of the IT Act;
- exercise of power of Tax Officer under section 135 of the IT Act.
Further, the Scheme applies to processing or utilisation of the information which is:
- In possession of the Principal Director General of Income tax (PDGIT) (Systems) or Director General of Income tax (DGIT) (Systems), as the case may be; or
- Made available to them by-
- DGIT (Intelligence and Criminal Investigation),
- Commissioner of Income tax (CIT) in charge of the Centralised Processing Centre (CPC) for processing of
- tax returns,
- statement of tax deducted at source,
- any other authority, body or person.
Procedure to collect and verify information
- The CIT (e-Verification) shall collect the aforementioned information in accordance with the procedure laid by the PDGIT (Systems) or DGIT (Systems), as the case may be.
- The PDGIT (Systems)/ DGIT (Systems), shall make available the aforementioned information to the CIT (e-Verification)-
- Which was uploaded to the registered account or sent on the registered mobile number of the taxpayer and not accepted by him/not responded within 90 days;
- In respect of which no registered email account/ mobile number is on record.
- The CIT (e-Verification) shall process the information made available for initial e-verification through an automated issuance of communication to the source from where the information is received. The PDGIT (Systems)/ DGIT (Systems) shall enable such automated communication.
- In case of information mismatch after such initial e-verification, it shall be run through a risk management strategy (laid down by the CBDT) and the no or low risk information requiring no further action shall be closed.
- The remaining information shall be transferred electronically to the Prescribed Authority by the PDGIT (Systems)/ DGIT (Systems) through automated allocation system (random allocation process) for further verification based on which a preliminary verification report shall be sent to CIT (e-Verification).
- The Prescribed Authority shall issue a notice to a person requiring him to furnish necessary information/documents for such verification on or before the date specified in the notice/extended by the Prescribed Authority.
- The DGIT (Systems) in consultation with DGIT (Intelligence and Criminal Investigation) shall specify the procedure, format and standards for furnishing response to the notice. It may further specify a machine-readable structured format for furnishing the information or documents.
- The CIT (e-Verification) shall match the preliminary information report with the information in tax return of respective taxpayer (in case electronic tax return is available) and prepare a final verification report.
- Any low risk information in the final verification report shall be eliminated and the remaining information shall be processed as below:
- If the information pertains to a pending scrutiny assessment, it shall be shared electronically to the Faceless Assessment Officer or Jurisdictional Assessing Officer, as the case may be;
- In any other case, it shall be utilized for further necessary action in accordance with the provisions of the IT Act.
No Personal Appearance
- No person is required to appear personally or through authorized representative before the Prescribed Authority in connection with any proceedings.
- However, in exceptional cases, where personal appearance is requested by such person, the Prescribed Authority may allow personal appearance through video conferencing or video telephony.
Electronic mode of communication
All the communication shall be exclusively in the electronic mode amongst the authorities and to the extent technologically feasible with any person or their authorized representative.
Authentication of electronic record
- CIT (e-Verification) or the Prescribed Authority, as the case may be, by affixing its digital signature.
- The person or their authorized representative shall digitally authenticate the electronic record in case he is required to digitally sign his return of income. In other cases, such person is required to communicate through his registered email address.
Power to specify procedures and processes
- DGIT (Intelligence and Criminal Investigation) shall, with approval of CBDT, specify procedures and processes for effective implementation and functioning of the Scheme, on:
- Standard Operating Procedure and techniques of verification to be followed, by the prescribed authorities while verifying information;
- Managing administration functions such as receipt, scanning, data entry, storage and retrieval of information and documents in a centralized manner;
- Grievance redressal mechanism for handling grievances under the Director of Income-tax (Intelligence and Criminal Investigation).
- DGIT (Systems) shall, with approval of the CBDT, specify procedures and processes for effective implementation and functioning of the Scheme, on:-
- Mode and format for issue of acknowledgement of the response furnished by the addressee2;
- Provision of web portal facility including login facility, tracking status of verification, display of relevant details and facility of download;
- Call centre to ask queries and provide support services, including outbound calls and inbound calls seeking information/ clarification.
While the Scheme for faceless assessment, faceless penalty and faceless appeal was notified, the Scheme for faceless verification of information was pending. This Scheme is in line with the Government of India’s objective to have minimum government, maximum governance. Now, the details submitted in response to notice under section 133, section 133B, section 133C, section 134 and section 135 of the IT Act will be verified in a faceless manner.
1Notification no. 137 of 2021, dated 13 December 2021.
2Addressee, as defined in section 2(1)(b) of the Information Technology Act, 2000 means a person who is intended by the originator to receive the electronic record but does not include any intermediary.