Answers to queries on Vivad Se Vishwas Scheme

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The Union Honourable Finance Minister, Mrs Nirmala Sitharaman during her budget speech on February 1, 2020 (2020) 420 ITR 115 (St) (146) proposed to introduce a scheme at para 126 of the speech for settlement of disputes. Subsequently, the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) was introduced. The Scheme was extended from time to time and the last date for payment under the VSV Act, 2020 extended until October 31, 2021 by CBDT, vide Notification No. 75 of 2021 dated June 25, 2021 (2021) 435 ITR (St) 25. The said scheme has benefited the taxpayers to reduce the tax litigation. When the scheme was introduced the research team of the itatonline.org had anticipated that the taxpayers may require a number of clarifications. Itatonline.org had requested the panel of experts consisting of Dr. K. Shivaram Senior Advocate, CA Rajan Vora and CA Pradeep Kapasi to answer queries arising on Vivad Se Viswas Schme to assist the tax consultants and tax payers. The expert panel started answering the queries raised by the tax consultants on February 28, 2020 and till date the expert panel have answered more than 750 questions only on the Direct Tax Vivad Se Viswas Act, 2020. From May 15, 2021 on words the itatonline.org has introduced the new section on “Ask your questions” which answers questions regularly. It is proposed that this new panel will answer the questions pertaining to Direct Tax Vivad Se Viswas Act, 2020.
See also Vivad Se Vishwas Scheme: The Law, Procedure And Dilemma where a link to all necessary resources is given

This section is now closed. Please ask your questions at our new Q&A section
The answers given below are in response to queries asked by other people.
Query

FROM WHERE I GET FORM NO. 4 ?

WILL IT BE PROVIDED BY PCIT ONLINE ON FILLING PORTAL OR I HAVE TO SUBMIT IT ON MY OWN?

IF SUBMIT ON MY OWN, WHERE I FIND IT AND WHERE TO UPLOAD IT ?(UPLOADING STEPS)

THANKYOU
Answer The same should be available on the portal after the receipt of Form 3 from the Department. In case of any technical issue with the portal, it is advisable to contact your designated authority and seek clarification on the issue.   (read more)
Query

Hon high court rejected/dismissed reference on 30 November 2019 , the appellant has time of 90 days to file further appeal , can the appellant take benefit of Vivad to vishwas scheme?
Answer Albeit, section 2(1)(a)(ii) of VSVA is silent with respect to a deemed appeal arising from an order of the High Court on matters other than a Writ Petition. There is no logical reasoning as to why an Appeal or Reference as section 2(1)(a)(i) of VSVA includes an Appeal pending before a High Court to be… (read more)
Query

Can addition U/S 68 cash credit in form of unsecured loan made in assessment settled under Vivad to vishwas scheme, can appellant be able to credit ?to capital account of unpaid loan still appearing in balance sheet of appellant
Answer The CBDT Circular No 21/20 dt 4-12-2020 Q No 81 reads as under ;  In respect of some loan, addition was made U/S 68 of the Act. Appeal is pending beforeCIT(A) and the assessee is eligible for opting Vivad se Vlshwas. After making the payment of tax under Vivad se Vishwas, can the assessee make entries… (read more)
Query

I have received refund for an AY along with interest u/s 244A. Disputed tax computed under VSVS is Nil after adjustment of refund received. Do I need to refund the interest u/s 244A amount received earlier?
Answer The Act is silent on this issue; it can be assumed that the interest does not have to be refunded. As the collection only refers to disputed tax amount and waives interest. If the interest is wrongly granted the revenue may pass an order for refund of interest . (read more)
Query

Sirs, your goodselves replied for my earlier query that VSVS can be filed with Lodging No. and pray for withdrawal of the same and the Hon’ble Judges will pass orders on withdrawal.

Whether the Hon’ble High Court Judges will pass orders on SR No. / Lodging No. cases, when the cases are not numbered? Any lead case on this point as it is learnt that SR No. / Lodging No. cases are not treated as pending before the Hon’ble High Court and the same are treated as pending only on being numbered as Tax Cases.

I have also raised this query in my comment to your goodselves reply.

Kindly request your goodselves to clarify and advise.

Thanking you in anticipation.
Answer Please move a praecipe before the respective Court and express your urgency in the matter. Several High Courts and Supreme Court orders exists on the basis of lodging number. Your lawyer may be well aware of the procedure for filing a  praecipe  each High Court have  their own procedure .    (read more)
Query

Addition has been made in 2 years – AY 05-06 and AY 08-09 under section 2(22)e – deemed dividend tax. Assessee, holding majority stake in company had taken unsecured loans in these 2 years.

AO has passed order in 2014 making addition under section 154 in both years levying penalty and interest. Assessee has repaid the loans in the same year these were obtained from the company. Presently case is waiting hearing before CIT(A). Meanwhile Assessee has passed away and is being represented by legal heir who is now a majority shareholder of the company.

Question is if under VSVT scheme if legal heir of assessee wishes to settle both cases by paying tax amount how is the loan account which was at the heart of the matter treated? If we are accepting the amount received by assessee was indeed deemed dividend and book the same under income from other sources, can the loan amount be considered to be receivable again from company as deemed dividend? Company is willing to give undertaking that said amount was indeed deemed dividend and is payable to assessee.

Briefly after accepting the said amount as deemed dividend and paying tax on it, is it still considered loan amount? Can the legal heir file a fresh return of income showing the said deemed dividend as income from other sources, pay tax under VSVT and claim the said deemed dividend from the company?
Answer If the assessee desires to settle the issue , the assessee has to pay the tax  on the disputed amount pending in the appeal . Once the tax payment is made the interest and penalty will be waived .  Under the scheme there is no provision for filing  a revised return by legal heirs .… (read more)
Query

Due to change of name and conversion of Private Limited Company into Public Limited company it’s PAN was changed. Assessment in the New Name and new PAN was completed and appeal is pending before CIT(A). Based on 26AS Best Judgment Assessment in the Old Name and Old PAN was completed. In the Assesssment Order AO has written both names of the Company, however PAN written is older one. We have filed appeal against this Order U/s. 144 in the New Name and under New PAN. Whether and How we can settle both disputes under DTVSV Scheme? In New PAN there are Two Appeals while in the Old PAN there is no pending appeal. Two separate Demands are standinig against both PAN.

Thanking you all in anticipation,
Answer You can make an application to the Assessing officer to pass an addendum to the order  by incorporating correct PAN  . Once addendum is passed  the assessee can avail the benefit of the scheme . if the assessing officer is not passing the order one can approach the designated authority (read more)
Query

TDS DEFAULT U/S 201(1) / 201(1A)

TDS DEFAULT U/S 201(1) – RS 125988/-.
INTEREST PAYABLE U/S 201(1A) – RS 181873/-.

Assessee has to Rs 45468/- ( 25% of Interest amount only) whether this treatment is correct as per FAQ 32 of VSV scheme

Answer FAQ 32, pertains to consequential relief to the deductor when the assessee settles his appeal under VSVA  however  as per our understanding the assessee may have to pay only 25% of interest  .   (read more)
Query

This is a case of bogus purchases. Brief facts of the case are as under:

1) In year 1, the AO disallowed capital bogus purchases and the depreciation thereon. Thereafter, in appeal before the ITAT, the ITAT set aside the matter back to the AO for fresh adjudication (as additional evidence was filed before ITAT).

2) In year 2, the AO once again disallowed the depreciation portion in respect of the capital assets which were disallowed in year 1. The CIT(A) in year 2, deleted the said addition as on that particular date when the CIT(A) order was passed, the AO has not passed any order for year 1 as per the directions of the ITAT.

The assessee is opting for VSV scheme in year 1 wherein the matter in dispute relates to addition on account of capital assets and depreciation thereon (set aside matter)

The assessee is opting for VSV scheme in year 2 as well, however, in year 2, the disputes are in respect of other matters before the ITAT (i.e. the depreciation portion which is already deleted by the CIT(A) is not in dispute)

Based on the facts stated above, our questions/queries are as under:

1. Do we need to pay tax under the VSV scheme on the depreciation disallowance for year 2? Please note that the said depreciation for year 2 is not in dispute presently and the assessee will be paying tax on the depreciation under the VSV scheme in year 1.

2. As the assessee will be paying tax under VSV scheme in year 1 in respect of depreciation disallowance, whether the same will have any impact on the assessee’s position in year 2.

3. For year 2, can we write a letter to the AO to give effect to order of CIT(A) in respect of deletion of depreciation which has arisen on account of bogus purchases in year 1?
Answer As we understand, in case of year 1, the case is pending before the AO and no order is passed; therefore, no appeal exists on the specified date. Therefore, Year 1 is not eligible for VSVA. Year 2 is pending before the ITAT on the specified date i.e. January 31, 2020, the same is eligible… (read more)
Query

The notice date under 274 is 20/11/2019, but the penalty order came on 6/2/20. This is under appeal. Is this eligible of VSVS?
Answer Unfortunately, not. There is no appeal pending on the specified date i.e. January 31, 2020. Accordingly the assessee is not eligible under the scheme (read more)