Answers to queries on Vivad Se Vishwas Scheme

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
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

An order was passed by the AO u/s 154 for rectification of the assessment order passed u/s 143(3) for the withdrawal of an allowance which in the opinion of the AO was apparently not allowable. The assessee has filed an appeal by the specified date against the order of rectification stating that the assessment order did not suffer from any mistake. The appeal is pending for disposal by the Commissioner(Appeals). The assessee’s declaration under the scheme is rejected by the authorities as not maintainable as no appeal was filed by the assessee against the withdrawal of allowance on merits.
Answer It is not in dispute that an order of rectification was passed and such an order had the effect of determining the total income at a figure higher than the assessed income.  It is also a fact that the tax payable increased due to such an order and such tax  is well within the meaning of the… (read more)
Query

An order is passed by the authorities in pursuance of a declaration filed by the assessee under the scheme to settle a dispute in appeal before the Commissioner(Appeals) demanding that the assessee inter alia pays tax on the income for which a notice of enhancement was issued by the Commissioner(Appeals) as per the Proviso to s. 2(j). It is the case of the assessee that no such notice is received by him by the specified date.
Answer Clause (j) o f s. 2 defines the term ‘disputed tax’ . The proviso to the clause has the effect of expanding the scope of the disputed tax . It states that the disputed tax shall be increased by the amount of tax pertaining to the  issues for which notice of enhancement has been issued u/s… (read more)
Query

An assessee has filed a writ petition in the high court under Article 226/ 227 of the Constitution of India for quashing the order passed by the Settlement Commission. Pending the disposal of the writ, the assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in the writ by accepting the order of the Settlement Commission on payment of disputed tax without interest . Please advise.
Answer The case of the assessee apparently satisfies the requirements of he being an appellate whose has filed a writ  that is pending before the high court on a specified date and in respect of which the tax is determined to be payable under an order passed by the Settlement Commission which is an Income tax Authority… (read more)
Query

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Tribunal for A.Y. 2013-14 by the Income tax Department in respect of the relief given in appeal by the Commissioner(Appeals) against addition made to the total income by the AO on the ground that the assessee had interest income from foreign sources as was informed by a foreign Government to the Government of India under the Exchange Information Agreement between the two Governments. The authorities have rejected the declaration by invoking the provisions of clause(iv) of sub-section(a) of s.9 .
Answer Clause(iv) of s.9(a) prohibits an assessee to file a declaration for settlement of a dispute in relation to an assessment made on the basis of information received form a foreign government as per the agreement made u/s 90 and 90A of the Act. Admittedly, the addition was made on the basis of the information received… (read more)
Query

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Commissioner(Appeals) for A.Y. 2017-18 in respect of the addition made to the total income, under the Income tax Act, on the ground that the assessee owned an undisclosed asset located in a foreign country, outside India. An identical addition is also made under the provisions of the Black Money Act which is separately contested in an appeal under the BMA. The assessee seeks to settle the dispute under ITA by opting under VSVt and as a consequence thereof desires to persuade the appellate authority under the BMA that income once taxed can not be doubly taxed. The authorities have rejected the declaration by invoking the provisions of clause(iii) of sub-section(a) of s.9 .
Answer There is a doubt that the assessee qualifies to file a declaration u/s 4 under the scheme for settlement of the disputed tax which has arisen on account of an assessment under the Income tax Act in relation to an undisclosed asset located outside India. Ordinarily, such an  addition should have been made under the BMA… (read more)
Query

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Tribunal for A.Y. 2017-18 in respect of the addition made to the total income on the ground that the assessee was required to recognise the profit of the project in progress by following the percentage completion method prescribed by the ICDS 3 & 4 . The declaration has been accepted by the authorities and the appeal stands withdrawn as per s. 4(2)(3)(5) and s.7. The assessee has now sought relief for the adjustment in the year of completion of project A.Y. 2020-21 on account of the prior recognition of the profit .
Answer This is yet another case of an unintended hardship which is more pronounced in cases where the assessee has opted for settlement under the scheme. The scheme does not provide for any consequential relief in an assessment year different than the year of settlement even where such relief  is consequential and denial of such relief results… (read more)
Query

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the tribunal for A.Y. 2011-12 in respect of the addition made to the value of the closing stock u/s145A and also for disallowance of expenditure on th ground that the said expenditure pertained to the subsequent year. The declaration has been accepted by the authorities and the appeal stands withdrawn as per s. 4(2)(3)(5) and s.7. The assessee has now sought relief for the deduction for the subsequent A.Y. 2012-13 on account of the increase in the value of the opening stock and the expenditure disallowed for that year consequent to the addition made and accepted for the preceding previous year A.Y. 2011-12.
Answer This is an unintended hardship which is more pronounced in cases where the assessee has opted for settlement under the scheme  which does not provide for any consequential relief in an assessment year different than the year of settlement even where such relief  is consequential and denial of such relief results in a sure double taxation. Had… (read more)
Query

Whether a declaration is possible under the scheme, in a case where an appeal is filed and is pending on the specified date, against an order of assessment passed u/s 143(3) r.w.s 147 where the reopening and the consequent reassessment are made on the basis of a search action u/s 132 in the case of a firm where the assessee is a partner?
Answer Section 9(a), vide clause (i), prohibits an assessee from claiming benefit of the scheme in relation to an assessment year for which an assessment has been made on the basis of a search initiated u/s 132/132A of the Act and the amount of disputed tax exceeds Rs. 5 crore. Admittedly no search has taken place… (read more)
Query

Whether a declaration filed u/s 4 be rejected on the ground that the appeal filed against the assessment order was held to be filed before the CIT(A) who had no jurisdiction over the assessee and also that the Form Number 35 was signed by a person not authorised u/s 140 of the Act?
Answer Once again a deserving case that would call for some help and assistance from the authorities for overcoming the jurisdictional issue. The strictest possible view is to permit the benefit of the scheme only to those persons who have a valid appeal pending on the specified date. An appeal filed with the non-jurisdictional CIT(A) maybe… (read more)
Query

Can a declaration be filed under the scheme in a case where the writ petition is filed in the High Court under Article 227, against the notice issued u/s 148, for contesting the validity of reopening?
Answer Again, a deserving case that would be denied the benefit of settlement under the scheme on the ground that there is no ‘tax dispute’ and ‘tax arrears’ though the person could be said to be an appeal and whose petition is pending before an appellate forum. The courts have numerous such petitions  pending before them  and it… (read more)