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Answers By Expert: CA Rajan Vora
Query

SEARCH U/S 132 TAKEN PLACE AND BLOCK ASSESSMENT FOR A. Y. 2003-04 TO A. Y. 2009-10 COMPLETED. A. Y. 2002-03 HAS BEEN REOPENED BY ISSUING NOTICE U/S 148. ORDER U/S 143(3) RWS 147 PASED. WHETHER ADDITIONAL 25 % TAX TO BE PAID UNDER THE SCHEME THOUGH THE ORDER PASSED U/S 143(3) RWS 147 OF THE ACT.
Answer

The search and block assessment made is for AY 2003-04 to AY 2009-10 whereas the reopening proceedings are for AY 2002-03 which is an independent appeal for the year which is not covered under search/block assessment. Therefore, if the appeal is pending for AY 2002-03 against the reopening proceedings, the same can be independently settled by paying the disputed tax demand (i.e. without paying additional 25%). Accordingly, only the disputed tax amount will have to be paid.  

 
Query

Sir, the appeal was pending before CIT(A) as on specified date i.e. 31-01-2020. However, the CIT(A) has passed an order on 15-02-2020 deciding the appeal against the assessee. Whether in such cases, the assessee is eligible for the benefit VsVS against such decided appeal on the ground that it was pending as on specified dated i.e. 31-01-2020?
Answer

As clarified by Q1 of FAQ dt 4 March 2020, since appeal was pending as on 31 January 2020, taxpayer is eligible for VSV settlement irrespective of CIT(A) order passed later on.  However, one may wish to consider whether in a case where CIT(A) order passed post 31 Jan 2020 has given some relief, then whether the quantification should relate back and disputed tax should be consequently reduced.  In our view, the same can be possible basis Q25 and Q50 of the FAQ dt 4 March 2020.  However, the same needs to be specifically clarified by the CBDT.  
Query

We have won the search case u/s 132 at ITAT forum,now IT deptt preferred appeal in Delhi High court
In above matter Addition made on Substantive basis in Company A disputed tax demand exceeding 5 crore say 7 crore ,hence not eligible for Scheme

Whereas in above AO made addition in B & C each 3.5 crore on Protective basis

Can we go in scheme on protective basis ,ignoring the substantive basis ?
Answer

It is recommended not to go for VSV. However, even if opted for VSV the same will not be eligible for set off against addition made on substantive basis in Company A. 
Query

I submitted my appeal with CIT (A) 28.01.2020 for Ay 2017-18
In my case addition made by the Ao on two grounds but I appealed only for one ground.
My query is that whether I can go for request to CIT to allow me to submit additional ground of appeal. If yes, than what procedure should I adopt so that both ground can cover-up under VSVS.
Answer

Since the CIT(A) is pending as on 31 January 2020, the same is eligible for VSV settlement. However, only one ground out of two were taken in appeal filed on 28 January 2020.

In this case, the taxpayer can take a chance by filing additional ground before the CIT(A). Taxpayer should follow-up with the CIT(A) for admission of the additional ground.  There can be 3 scenarios which are discussed hereunder:

 

CIT(A) admits additional ground 

In this case, the VSV application can be filed on both the ground of appeal.

 

CIT(A) does not admit additional ground

In this case, the VSV application can be filed only on ground of appeal taken in the CIT(A) filed on 28 January 2020.

 

CIT(A) does not take any decision whether to admit or not admit additional ground 

In this case, the taxpayer should file VSV application considering both the grounds of appeals. If the DA computes disputed tax on the basis of both the ground of appeal, then VSV settlement can be done.  If the DA computes disputed tax based on 1 ground of appeal filed in the CIT(A) on 28 January 2020, then the taxpayer may decide whether to go for VSV route or normal CIT(A) route.
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 by CBDT in coming FAQs.  

 
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.
Also, what is the mechanism to upgrade the assessment records with eligible amount of loss so as to avoid possible mis-match in subsequent year where loss is to be setoff? Similar issue may also arise in case of reduction in MAT / AMT credit as well.
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 passed under VSV and not under Income-tax Act.
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.  

 
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.

 
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.
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.