| Query | An appeal for A.Y. 2011-12 is filed by OBC Ltd, a listed company, in time before the CIT(A) against the order of AO making an addition on account of unexplained cash credits u/s 68 and for the disallowance of purchases from unregistered dealers. The assessee has filed a declaration u/s 4 to settle the dispute in appeal under the scheme. He has been advised to capitalise the additional income comprised in the scheme by passing the accounting entries in the financial year 2020-2021. You are required to advise him on the consequences of the declaration and of the accounting entries. |
| Answer | A declaration u/s 4 is certainly maintainable and the dispute in appeal would stand settled on passing of the order and the payment of disputed tax under the scheme. Such an order will be final in all respects. However the issues that may arise for A.Y 2021-22 out of the accounting entries will be independent and… (read more) |
Answers to queries on Vivad Se Vishwas Scheme
| Query | Whether a declaration u/s 4 can be filed by a person who has filed an appeal against the order u/s 263 for revision by the Commissioner directing the AO to make specific disallowance/addition? |
| Answer | Section 3 authorises the declarant to file a declaration u/s 4 in respect of tax arrears where an appeal is otherwise filed in time and is pending as on 31st March 2020. In the given case an appeal before the tribunal, against the order u/s 263, is filed in time and is pending before it on… (read more) |
| Query | Consider a case where appeals pertaining to ACo being an amalgamating company are proposed to be settled under VSV by amalgamated company. In relation thereto clarification may be required as to in whose name and PAN declaration is to be filed, who could be signatory to sign the declaration, payment of disputed tax is made in whose name, how credit for prepaid taxes of amalgamating company be considered while computing disputed tax, etc.? |
| Answer | Declaration is to be filed by Amalgamated company with its PAN. as a successor to amalgamating entity. Declaration to be signed by MD/ Director of amalgamated entity. Payment to be made in name of amalgamated entity as a successor to amalgamating entity. Sec 159 of the IT Act will be applicable. The said issues may be clarified… (read more) |
| Query | In cases of reduction in loss where taxpayer settles the dispute by payment of notional tax with a right to carry forward full loss as claimed. However, assessment records may continue to reflect the reduced losses as per the assessment order. |
| Answer | We understand that CBDT will issue administrative instruction to field officers to pass rectification order to rectify the assessment records based on the settlement under VSV. However, no such instructions are in place yet. Further, to get over difficulty of limitation period under section 154, it is likely to be clarified that such rectification order will be… (read more) |
| Query | It is understood that any taxes paid under ITA whether by way of advance tax or TDS or regular assessment tax etc. are reflected in Form 26AS of the taxpayer for the given year. The said form is considered by the tax authority as proof of payment. Therefore, if such form is not updated on real time basis reflecting all the payments for any reason, it will create hurdle or delay in reconciling computation of disputed tax with payment already made by the taxpayer. What is the procedure to resolve such issues? |
| Answer | It may be pointed out to CBDT/ Department that necessary measures may be taken to strengthen the system so that Form 26AS is updated on real time basis. (read more) |
| Query | Whether declaration once filed can be withdrawn / revised for any valid reason? It cannot be revised. |
| Answer | We understand that the said issue is likely to be clarified in coming FAQs. Ideally, taxpayer having already filed declaration, may be allowed to withdraw the same before DA passes an order. (read more) |
| Query | Whether Authorised Representative (AR) can file declaration under VSV on behalf of the taxpayer? |
| Answer | As per the Rules, the declaration can be filed by person authorised to sign the return of income of the taxpayer as per section 140. (read more) |
| Query | What is the time limit for DA to pass an order (post receipt of intimation of payment made by taxpayer and proof of withdrawal of appeal wherever applicable)? |
| Answer | The time limit has not been prescribed. It is understood that CBDT will issue administrative instruction to DA to pass orders as soon as possible/within reasonable time. (read more) |
| Query | What is the time limit for granting refund due under VSV to declarant? Whether such refund can be adjusted against outstanding demands under ITA? |
| Answer | The time limit has not been prescribed under the Act/ Rules. CBDT may issue necessary directions to CIT’s for timely grant of refund. Further, this aspect may be prescribed in Rules. If any outstanding demand is existing, then it is likely that refund due under VSV can be adjusted against such outstanding demand after giving notice to… (read more) |
| Query | Whether taxpayer will be permitted to file second declaration where first declaration gets disqualified due to any reason-say, non-payment of disputed tax under s. 5(2) due to financial difficulty? |
| Answer | We believe, taxpayer should be eligible to file declaration again. This issue though has not been clarified earlier, is likely to be clarified in coming FAQs. (read more) |