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

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The answers given below are in response to queries asked by other people.
Query

An addition was made in respect of stock found during survey as the department did not rely on the evidence of a challan filed by the assessee, who had taken the stock on approval from the party. The department made addition considering the same to be assessee’s stock. Now the assessee is in an appeal before the CIT(A), appeal filed before 31.1.2020 and wants to go for VSV scheme. Once he pays the tax for the stocks found with him, can he capitalise the stocks in his books of account?
Answer The accounting entries will be independent and would not be saved by the scheme. It is fair to assume that the accounting entries by itself would not attract the income tax under the regular provisions of the Income Tax Act. However the liability to MAT u/s 115JB for that year would require to be contested… (read more)
Query

An addition was made in respect of stock found during survey as the department did not rely on the evidence of a challan filed by the assessee, who had taken the stock on approval from the party. The department made addition considering the same to be assessee’s stock. Now the assessee is in an appeal before the CIT(A), appeal filed before 31.1.2020 and wants to go for VSV scheme. Once he pays the tax for the stocks found with him, can he capitalise the stocks in his books of account?
Answer The accounting entries will be independent and would not be saved by the scheme. It is fair to assume that the accounting entries by itself would not attract the income tax under the regular provisions of the Income Tax Act. However the liability to MAT u/s 115JB for that year would require to be contested… (read more)
Query

An addition was made in respect of stock found during survey as the department did not rely on the evidence of a challan filed by the assessee, who had taken the stock on approval from the party. The department made addition considering the same to be assessee’s stock. Now the assessee is in an appeal before the CIT(A), appeal filed before 31.1.2020 and wants to go for VSV scheme. Once he pays the tax for the stocks found with him, can he capitalise the stocks in his books of account?
Answer (read more)
Query

Since the assessee appellant company had filed under VSVS Scheme and consequent upon receipt of Form 3 and the assessee paying the settled due amount is required to filed form no 4 under VSVS Scheme. One of the pre condition in submitting form 4 is that the pending appeal is to be withdrawn and a withdrawal proof is to be attached. Since the appeal was origin ally filed with CIT A 36 who in response to withdrawal application says that the appeal jurisdictions are now changed in view of the faceless appellant provisions applicable with effect from 1st October 2020. It is not known who is to be contacted for the purpose of such withdraw al as there is no facilities to contact national E Faceless appeal center. Now how to comply with the 15 days period time limitation required for filing form 4. Please help out urgently.
Answer CBDT vide Circular No. 18 of 2020 dated 28.10.2020 has clarified that where a declarant files a declaration under Vivad se Vishwas on or before 31st December 2020, the declarant shall make the payment without additional amount on or before 31st March 2021.    the 15-day period for making payment along with Form 4 has been removed. The Declarant… (read more)
Query

If an assessee has filed an appeal before the ITAT on certain issues and the department has also filed another appeal in respect of certain issues for the same assessment year and the assessee wants to go for the VSV scheme in respect of appeal filed by him but wants to contest the appeal filed by the department. Can the assessee go for VSV in respect of appeal filed by him and contest the appeal filed by the department in the ITAT. Both the appeals are separate appeals and not cross-objections.
Answer Yes, This has been clarified under FAQ 40 of CBDT Circular No. 9 of 2020 dated April 22, 2020 wherein it is answered that the assessee has the option to choose either of the appeal or both. (read more)
Query

in case of search the assessee is accepting reduction of loss/depreciation, so as per scheme 125% is reduced but while filing form 1& 2 under schedule D of the form under the head disputed income 100% of loss amount is to be entered or 125% of loss amount , as there is no separate coloumn for search case as there is in Schedule A .

Answer You may enter 125 % of the loss amount.  In case of difficulty , it is advisable to approach your designated authority under VSVA and discuss the issue.  (read more)
Query

whether penalty leived on 234E fees is fully waived off under scheme or 25% is to be paid?
Answer Section 2(1)(o) of the VSVA defines “tax arrear” as under; (o) “tax arrear” means,— (i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or (ii) disputed interest; or (iii) disputed penalty; or (iv) disputed fee, as determined under the provisions… (read more)
Query

If assessment order and penalty order has been passed and assessee wants to opt for vsvs. Should he fill single Form 1 for both tax and penalty.
Answer (read more)
Query

The appeals in respect of demand of the Assessee for various years are pending as on 31.01.2020. The Department had attached bank accounts of Assessee and recovered almost more than half of the total outstanding demand for all the years. However, the break up of the same is not known i.e. how much for each Assessment year.

The Department may have records of these, but due to several changes in jurisdiction in the past years, we may not be able to obtain the same from the Department and we may have to run from pillar to post.

While filing Form 1, how to input these amounts paid [recovered by attachments] since the Assessee does not have the details of BSR Code, Challan No., Date and details of amount paid [by attachment] for each assessment year?

Kindly advise.
Answer You please make an application to the AO and also under RTI to give the datils of adjustments . You can also make an application for inspection of records by paying prescribed fees.  In the form you may refer as refund due to the assessee.  If the assessee does not get any response the assessee… (read more)
Query

Appeal was filed before Hon’ble High Court much before 31.01.2020 and the same is in SR stage and returned for some defects to be rectified. Will the Assessee be required to rectify the mistakes and obtain the TCA number or shall apply for VSVS with SR number itself. The time, effort and cost for rectifying the defects will be saved if we can file declaration with SR No. itself.

Further, as per Section 4(3) of VSVS ACt, it is mandatory to file proof for withdrawal in case of appeals before High Court. Whether letter to Registry praying for withdrawal of appeal with SR No. will suffice.

Kindly clarify.
Answer  If the appeal is filed before the High Court , the assessee may be having lodging No .  On the basis of lodging no the assessee can make an application under VVS . After acceptance of the declaration , the asseesssee has to move an application before the High Court for withdrawal of appeal .… (read more)