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Answers By Expert: CA Rajan Vora
Query

My client was required to file appeal in Feburary,2016 but appeal was filed in Feb.,2018 whetehr the same will be considered in the Vivad Se Vishwas Scheme if the client is willing to settle the dispute
Answer

Unless belated appeal file is not condoned, the same is not a valid appeal.  However, you may want to take benefit of decision of the Surpeme court in the case of CIT v. Shatrusailya Digvijaysingh Jadeja (2005)(277 ITR 435(SC) rendered in the context of similar provisions of KVSS, 1998 which states as under:

 

“…when a section contemplates pendency of an appeal, what is required for its application is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid or competent. Whether an appeal is valid or competent is a question entirely for the appellate Court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g., when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court”

 
Query

Quantum appeal pending before ITAT filed by Assessee against adverse order passed by CIT(A). Pursuant to order of CIT(A), penalty proceeding initiated u/s 271(1)(c) and levied. Assessee paid the penalty. No appeal filed against penalty order and time limit elapsed. On opting of VSV scheme for quantum appeal, whether penalty already paid will be refunded?
Answer

If Quantum is settled under VSV, penalty is waived under VSV whether or not the appeal has been filed against the penalty order.

Ideally penalty should be refunded of quantum is settled. However since no appeal is filed, there is no way where you can mention this while filing of the declaration. In such a scenario it is advisable to file an appeal along with condonation of delay and mention at the time of filing of declaration.  In case after settling the quantum  if penalty is not refunded , one may file writ petition before the High Court.  In Marigold Engineers P. Ltd v UOI ( 2004) 141 Taxman 4/ 101 CTR 103/ 274 CTR 17 (P&H( HC ) held that  the excess amount paid under Kar Vivad  Samadhan Scheme was directed to be refunded .     The issue requires to be taken before the Board for clarification . 
Query

Quantum Appeal is pending before ITAT. Meanwhile penalty u/s 271(1)(c) was levied by AO in respect of additions contested before ITAT and appeal against the same is also pending before CIT(A). Thereafter, AO passed order levying interest u/s 220 in respect of demand outstanding (Tax + Interest + Penalty). Waiver petition against the order levying interest u/s 220 is pending before Pr. CIT.

Now, while reporting in declaration in form 1 under VSV, whether the interest charged on disputed tax (Part F, Schedule-I, Column G) shall include interest u/s 220 along with int. u/s 234A/B/C?

Whether interest levied u/s 220 shall also be waived?
Answer

Yes.  The interest levied under section 220 shall also be waived 
Query

AO made addition U/s 68 of Rs. 57 crore in various assessment year. CIT(A) confirm the same. Before ITAT appellant took a plea that loan taken in initial years were repaid in subsequent years and out of cash received on such repayment it has taken fresh loans/ share capital. AO made addition in both the years without giving benefit of telescoping. Once such benefit given the addition will reduce to Rs. 17 crore. ITAT set aside the matter to AO to grant benefit of telescoping after verification of nexus, which is pending as of date. Now assessee wants to opt for VSVS. Whether he has to consider Rs. 57 crore as addition or 17 crore and what will be rate of tax, whether 100% of tax or 50% of tax? Kindly suggest.
Answer

Appeal effect of the ITAT order should be requested.  If the same is given before filing of declaration, then disputed tax can be computed on 17crs income.  Issue as to whether disputed tax can be modified based on appeal effect given after 31 January 2020 is subject to clarification from CBDT.  However, in our view, the same can be done – Refer Q25 and Q50 of the FAQ dt 4 March 2020.

 

If the appeal effect is not given, then disputed tax will have to computed considering entire 57crores (Refer Q7 of the FAQ dt 4 March 2020). 
Query

Completed case reopened by issuance of notice u/s.148 for non-inclusion of “X” Amount in Computation of Book Profit u/s.115JB. Assessment Order passed u/s.147 r.w.s. 143(3) on 03.12.2019 in respect of the same issue viz. inclusion of “X” Amount being Profit on sale of agricultural land for computation of Book Profit u/s.115JB. Against the said inclusion, Assessee filed an Appeal before the CIT(A) before the specified date viz. 31.01.2020. No Rectification Proceedings were initiated till the specified date viz. 31.01.2020. Rectification Order passed u/s.154 on 12.03.2020 enhancing the “X” Amount to “Y” Amount assigning the reason that “X” Amount was typographical error. If the assessee opts for VSVA, what would be the amount of “Tax Arrears”/”Disputed Tax”, the tax liability of X Amount or the tax liability determined after rectification u/s.154??
Answer

As per Q 25 and Q 50 of FAQs, rectified amount is to be considered, therefore, even though rectified post 31 January 2020, revised amount to be considered. 
Query

In AY 11-12 and 12-13 two additions were made by AO u/s 43(5) Rs. 3Cr and u/s 40(a)(ia) -Rs.50L. Both additions deleted by CIT(A). In Deptt. appeal the Tribunal vide order dated 18.01.2020 restored the issue to AO on 1st issue i.e. 43(5) and on 2nd issue confirmed the deletion u/s 40(a)(ia) of Rs.50L.
Deptt. has option to file appeal on 2nd issue but it is below tax effect.
What is the status of 2nd Issue
(a) VsV on 1st issue 100% of tax.
(b) on 2nd issue –
(1) No tax as issue already settled?
(2) 50% as Deptt has appeal option open?
(3) 100% as the entire addition is to be considered?
Thanks
Answer

With regard to the 2nd issue, since time limit is available with the Department to file the appeal, 50% to be paid if opted for VSV Scheme. 
Query

WHETHER THE ASSESSMENT DONE U/SEC 143 (3) FOR THE YEAR OF SEARCH BE CALLED ‘SEARCH ASSESSMENT’ WHEREBY IT IS LIABLE FOR PAyment @125% of the tax ?
Answer

Yes 
Query

An assessee has preferred appeals against additions made under Section 153A. The assessments were made in March, 2015. The assessee subsequently has made payments under Tax on Regular assessments on various dates for ( 6 +1 ) assessment years. Now the assessee decides to opt for VSV. For some of the assessment years, the assessee has made excess payments than the amount payable under VSV. For some of the assessments years, the assessee has to pay the balance amount. Is there any provision that excess payments made for some years can be adjusted against the liability? The AO is of the opinion that since Form 3 is separately given for each assessment year, adjustment of excess payments of one year against the liability of another year is not possible. If that being the legal position, in the instant case the assessee is subjected to enormous financial strain. It is requested that the Panel throws more light on this.
Answer

There is no clarification available in amended Act/ FAQ regarding adjustment of refund of year 1 of VSV with demand for year 2 of VSV (assumed year 1 and 2 for sake of understanding)

 

  • It is represented before the CBDT that flexibility should be allowed to allow single application for multiple assessment years or where separate declarations are filed, allow adjustment of refund against demand under VSV.

 

  • Though, we understand that Department’s prima facie view is that netting off of refund against demand will not be allowed.  However, this should be reconsidered.
Query

The Honorable ITAT has allowed the appeal for statistical purpose and issued the order during August 2019. The AO has issued the giving effect order on 28.02.2020. The order of AO omitted to consider certail allowable deductions. The AO did not rectify the order . The assessee made appeal with Honorable CIT. The assessee prefers to go for the Vivad se Vishwas Scheme, provided the deductions omitted by AO is given effect. Kindly advise whether the case is eligible for the scheme and how to go about.
Answer
  • There is no specific clarification in the scheme or the FAQs. However, the order of ITAT was passed in August 2019 and as on the specified date i.e. 31 January 2020, there is no pending appeal or disputed demand for which the scheme can be opted for. The OGE is passed on 28.02.2020 against which appeal is filed to CIT. However, the same is after cut-off date and ideally the case would not be eligible for VSV scheme. Whether OGE passed on 28 February 2020 relates back to 31 January needs to be clarified by the CBDT.
Query

Assessee in appeal before CIT(A) for quantum. Penalty imposed under 271AAB for both sub clause (a)and (c) of sub section(1) and this appeal is also pending before CIT(A).
The issue in respect of penalty under clause (a) which is on surrendered income and disclosed in the return not pending in quantum appeal before CIT(A).
Whether under VSVS the assessee would be required to pay 125% for the settlement of quantum and penalty under clause (c) of section 271AAB(1) and 25% for penalty penalty under clause (a) of section 271AAB(1).
Answer

In the present case, appeal is pending before CIT(A) for quantum as well as penalty. Penalty is levied under 2 sub clauses i.e. (a) and (C) of section 271AAB(1) of the Act. Therefore once the quantum appeal is settled, the penalty under clause (c) of section 271AAB(1) will automatically be waived off. Therefore, the penalty under clause (a) will have to be separately settled and the same can be done by paying 25% of the penalty demand as there is no consequent addition made under the quantum proceedings.