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

Whether section 3 of prohibition of Benami property transaction act,1988 is prospective or retrospective?
Answer The Benami Transactions (Prohibition) Act, 1988 (BTP Act) as the name suggests was enacted in the year 1988. Subsequently, after nearly three decades, Benami Transactions (Prohibition) Amendment Act, 2016 was enacted on November 1, 2016 amending the Act of 1988 via an insertion. However, Section 1 (3) BTP Act was not suitably amended which has resulted… (read more)
Query

1.In case of appeal pending before ITAT whether in declaration form 1 part B “Details of order by which tax arrears determined” – in column 3 & 4 of this point whether the details is to be filed for order passed by AO U/s 143(3) or 250(Appeal effect) or appeal order passed by CIT(A).

2. In case of appeal filed before ITAT no ack.or reference no. is given, the Registrar simply returns one copy of covering letter of documents filed with form 36 by putting the seal/signature and date, so how the colomn of reference no. ack. no. is to be filled in column 7 of this part.
Answer The tax arrears  to be given as per the effect of the order passed u/s 250 of the Act.. If the effect is pending one may have  to work the tax effect after considering the effect given by the CIT (A)     (read more)
Query

Addition u/s 14A was made in Original Assessment Order us 143(3) say for Rs. 50 Lakhs.

Subsequently same addition of Rs. 50.00 Lakhs was repeated in Assessment Order u/s 143(3) r.w. 153(3).

As per the present scheme addition for multiple orders for the same assessment year can be offered under the Scheme.

As per Q 19 of Clarification dated 22.04.2020 if multiple orders are being settled disputed tax will aggregate amount of tax in both the appeals i.e Rs. 1.00 Crores instead of addition of Rs. 50.00 Lakhs in both the order for same ground.

This will lead to double taxation of same addition for the same ground for the same assessment year.
Answer If first order is pending in appeal and the said order is settled, the second order may not survive . The designated authority may not charge once again on addition of Rs 50 crores. One may write to the Board for further clarification (read more)
Query

Addition on certain ground u/s 14A was made in Original Assessment Order us 143(3) say for Rs. 50 Lakhs.

Subsequently addition of Rs. 50.00 Lakhs was again made on the same ground in Assessment Order u/s 143(3) r.w. 153(3).

As per the present scheme addition for multiple orders for the same assessment year can be offered under the Scheme.

As per Q 19 of Clarification dated 22.04.2020 if multiple orders are being settled disputed tax will aggregate amount of tax in both the appeals i.e Rs. 1.00 Crores instead of addition of Rs. 50.00 Lakhs in both the order for same ground.

This will lead to double taxation of same addition for the same ground for the same assessment year.
Answer According to us only one declaration to be filed . The assessee may have to pay tax only on Rs 50 lakhs .  If revenue insists for payment of tax on Rs 1 crores , it may lead to double taxation . One may challenge the said computation by filing Writ petition before High Court.    (read more)
Query

In my client case for A.Y. 2014-15, ITAT has granted relief against the addition made by A.O. on account of exemtion from Capital Gain claimed earned on Penny Stock.
Thereafter, I.Tax deaprtment filed MA against the decision of ITAT. The same is pending till date.

In the next A.Y. 2015-16, the identical exemption on Capital Gain claimed by assess was disallowed by A.O. and confirmrd by CIT(A).

The assessee has opted payment of tax for A.Y. 2015-16 under Vivad Se Vishwas Scheme.

He is interested to pay tax under Vivad Se Vishwas Scheme on A.Y. 2014-15 to avoid any disallownce by ITAT later on by restoring the appeal of A.Y. 2014-15,and reversing the decision, though its chances are very remote.

Kindly give your considered view, who the interest of assessee can be protected in the worst scenario.
Ca P K gupta

Answer Yes, as we understand, it can be assumed that the miscellaneous application will be considered to be an extension of the appeal as a departmental appeal. The same can be settled accordingly under VSVA. Representation is made before the CBDT to clarify whether Pendency of Miscellaneous before the ITAT is covered or not . We… (read more)
Query

Whether by virtue of provisions of clause 5(3) of the VSV Bill, once application made is accepted and taxes paid thereon, whether the Assessee would be eligible for immunity from other laws (Benami, etc.)
Answer As we understand, none of the mater(s) covered under an order of section 5 of VSVA shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any… (read more)
Query

Order of ITAT passed on dated 30.10.2019. Assessee did not file writ to High Court. Time Limit expired on 04.04.2020 (i.e. after 31.01.2020). Now after entering this information in PART-B, Schedule No. VI of SCHEDULE-A is not being enabled for editing. Therefore Net amount payable by appellant cannot be calculated in PART- C,D,E & F. How to resolve the issue?
Answer The assessee has a deemed appeal pending as on the specified date. Therefore, eligible under VSVA. Practical issues regarding filling of form need to be resolved by contacting your respective designated authority. (read more)
Query

CIT(A) refused to condone delay in filing of appeal against penalty order. Assesse filed appeal against the CIT(A) order wit the ITAT.

In the mean time can assessee take the benefit of the scheme.
Answer There is no clarity on condonation of delay. Our suggestion will  be make an early hearing of the appeal before the ITAT . If the assessee is able to explain the condonation of delay , The Tribunal will condone the delay hence the assessee can avail the benefit of the Scheme.  One may refer the following case… (read more)
Query

Please clarify that reply to question no. 22 in last line it has been clarified that “assessee covered under prosecution is not eligible to file unless prosecution is compounded before filing the declaration.” For compounding assessee has to pay Tax, Interest, penalty relating to offence, further undertakes to pay compounding charges, withdraw the appeals . Is it mean that the assessee had first to pay compounding fee equal to 125/150 percent of tax sought to be evaded, compounding charges then only he can go for VSV. Then what benefit such assessee gets from this scheme.
Further what will be the effect on right of compounding in future as compounding is one time feature.
Answer Under the Scheme of Income tax, Quantum proceedings, penalty proceedings and prosecution proceedings are separate. Compounding charges are with respect to settlement of the prosecution proceedings and to avoid imprisonment; this has no bearing on the quantum proceedings. What the last lines means is that, where an assessee has compounded the matter i.e. although a… (read more)
Query

Penalties have been levied on my client u/s 271A for not maintaining books of accounts u/s 44AA & also u/s 271B for not getting the said books of accounts audited u/s 44AB for the same assessment year. These proceedings have been initiated under separate notices issued under separate sections and as such are two different penalty proceedings. I wish to settle Penalty u/s 271A but continue to contest penalty u/s 271B. Is it possible to do so without impacting or influencing the outcome of the future proceedings u/s 271B due to acceptance and settlement of penalty u/s 271A.
Answer As we understand, there are two separate penalty appeals. As per explanation to Section 5 of VSVA, a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition… (read more)