The Income Tax Department has taken up 68,000 cases on a pilot basis for e-verification of tax returns for the fiscal year 2019-20 based on risk management parameters set by the department. According to the Principal Chief Commissioner of Income Tax, S K Gupta, in 56% of these cases, or 35,000 cases, taxpayers have already responded to the notice or filed updated tax returns satisfactorily. However, no response has been received in the remaining 33,000 cases, and taxpayers have time until March 31, 2023, to file updated returns for the income earned in 2019-20.
Gupta stressed that if taxpayers file updated income tax returns, there is less chance that their case will be picked up for scrutiny or re-assessment. The risk parameters for picking returns for e-verification will be set every year, Gupta added, without disclosing the criteria for selection of an income tax return for e-verification.
The cases selected for e-verification were based on a mismatch between the tax return filed and the data received from sources regarding deposits. The selection process is computer-driven. If taxpayers do not respond to the e-verification notices, the likelihood of their case being selected for scrutiny is high, Gupta warned.
Gupta urged taxpayers to view their Annual Information Statements regularly and to give feedback to the department if they see any mismatch. The e-verification scheme is a non-intrusive way to nudge taxpayers to file updated returns in case of mismatch. It is transparent, without any human interface, encourages voluntary compliance and could help reduce litigation, he said.
The Central Board of Direct Taxes has a timeline of 90 days for completing a particular case under e-verification, but complicated cases could take longer. The e-verification scheme was notified on December 13, 2021, and the pilot was launched in September 2022.
