1. Tax Talks: Pros and cons of using emails for matters related to I-T

Tax Talks: Pros and cons of using emails for matters related to I-T

In order to improve services, the Central Board of Direct Taxes will be using email for correspondence with taxpayers for notice on scrutiny and getting responses from them.

By: | Published: November 10, 2015 12:08 AM

In order to improve services, the Central Board of Direct Taxes will be using email for correspondence with taxpayers for notice on scrutiny and getting responses from them. To start with, it will be on a pilot basis in five cities — Delhi, Mumbai, Bengaluru, Ahmedabad and Chennai.

In the current age of technology, information is exchanged efficiently using the internet. The recent initiative of the government to launch a pilot project to conduct scrutiny assessments through email was met with a resounding cheer.

Under the pilot project, the income tax department will conduct scrutiny assessments wherein information will be exchanged between the assessing officer and the taxpayer entirely on email. This will obviate the need for taxpayers to personally meet the tax officer. It is expected that the project will be implemented on a pan-India basis from the next financial year.

As the information will be exchanged over the email, it will throw up a number of issues which should be kept in mind by taxpayers and the authorities alike.

Ideally, tax authorities should send out emails to taxpayers using their official email address with the domain ‘@incometax.gov.in’. However, the tax authorities send emails from various service providers, including gmail.com and yahoo.com. The taxpayer has no way of knowing whether the email received by him is an ‘official email’ or from an impersonator. The information sought over the emails will necessarily be sensitive and may include copies of bank statements, credit card statements, etc. amongst other personal information. This raises the possibility of online fraud where perpetrators may masquerade as tax officers seeking out information for fraudulent purposes over the email. Such frauds, also known as phishing, are quite common resulting in great losses.

E-notice

Taxpayers not used to checking their emails regularly will be at risk. Missing the e-notice will result in non-compliance, which may invite punitive action from the tax authorities. The authorities will also be required to maintain complete secrecy of the information as such information will end up in the individual computers and email accounts of assessing officers that can be accessed remotely.

Validation and authenticity of data provided electronically will remain a challenge. In order to be absolutely sure, the tax authorities insist on inspecting the original documentation. This will not be possible under a completely paperless, e-environment. Digitised information is susceptible to manipulation and mitigating this risk will be of utmost importance. It is likely that the tax authorities will require the taxpayer to attend a personal hearing at least once before the assessment is completed to authenticate the information so supplied.

The manner in which the information provided by taxpayers will be stored by the assessing officer for retrieval in the future is not yet clear. Maintaining digital copies on a central server is highly desirable but will lead to additional workload for the officer to upload the data onto a central server. On the other hand, printing the entire information for record-keeping purposes will defeat the objective of the proposed e-environment.

Given that this is only a pilot project involving only 500 taxpayers in five cities, it is possible that when this initiative is implemented on a pan-India basis, emails will be avoided and all notices, responses, etc. will be made through the online portal of the tax authorities. Using an online portal will inspire substantially greater confidence in taxpayers eliminating a number of issues that can arise using email.

The writer is partner, Nangia & Co

Tags: Income Tax
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