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Answers By Expert: Dr. K. Shivaram (Sr. Advocate)
Query

We would like to have your expert opinion on quarry regarding opting” Vivad Se Vishwas Scheme, 2020” in the matter of our one of the client. The facts are as under:
1. Assessment Year : 2007-08
2. Assessment Proceedings U/S 143(3) r.w.s 147 of the Act was completed by the Assessing Officer
3. An addition of Rs. 3,54,64,845/- was made
4. Aggrieved by the Assessment Order appeal before the CIT(Appeals) was made
5. CIT(Appeals) vide order dated 22.02.2019 granted relief of Rs. 3,36,91,602/-
6. Revised taxable Income Rs. 21,33,833/-
7. Net Demand of Rs. 8,24,150/- was raised by the Assessing Officer vide his order dated 28.11.2019 (Order giving the effect to CIT(Appeals) order – After adjusting prepaid tax
Gross Tax Liability Rs. 10,65,828/- Less: Prepaid Tax Rs. 2,45,575/-
8. Aggrieved by the CIT(Appeals) Order second appeal before ITAT was filed on 09.12.2019
9. Department also filed appeal against CIT Orders before ITAT
10. We have opted for Vivad Se Vishwas Scheme, 2020
11. Form No.1 & Form No.2 were accordingly filed on 20.03.2020
12. On the basis of Demand raised by the Assessing Officer as per order dated 28.11.2019 (order giving the effect of CIT(Appeals) Order) Rs. 4,20,473/- payable by the our client
13. On 06.05.2020 Appropriate Authority issued Form No.3 Rs. 60,90,768/- is payable under DTVSV, 2020
As the Assesses appeal is pending we have had opted Schedule-4 of the Form No.1 of DTVSV,2020. We would like to have your expert opinion what we will be correct amount payable under DTVSV,2020. For your ease and ready reference extract of Form No.1,2 & 3 of DTVSV,2020 are enclosed.
Answer

As we understand, there are two appeals pending before the Hon’ble ITAT viz. Assessee appeal and Departmental Appeal.

To settle the assessee appeal under VSVA, only the tax on disputed quantum needs to be paid. Interest will be waived off.

If the assessee wishes to settle the Departmental appeal, 50 per cent of the tax on disputed needs to be paid, once again interest will be waived off.
Query

On case of Application filed under Vivad Se Vishwash Scheme before 24/03/2020. The DO i..e principal CIT has also uploaded Form No.3 on 04/05/2020 and in the said form it is mentioned that

“The declarant is hereby directed to make the payment of sum payable, if any, as per Balance amount payable / refundable after adjusting amount already paid above within Fifteen days from the date of receipt of this certificate.”

In case of non-payment of amount payable within the said period, the declaration under Form-1 shall be treated as void and shall be deemed never to have been made.”

However the payment date under VSVS 2020 has been extended to 31/12/2020. I have quaries in this regards as follows:

1) Whether the Form No.3 uploaded by Department during lockdown and compeling to make payment in 15 days which is also falle in lockdown situation is legaly vailid.

2) Whether in such case applicant has to make payment in 15 days or it will be automatically extended to 31/12/2020 even though there is no amendment in Sec.5 of VSVS 2020.

3) If payment is not made within 15 days, as mentioned in form no.3 is the declaration under Form-1 shall be treated as void and shall be deemed never to have been made. In that case can i re apply the same application online.

4) what is procedure for withdrawal of Application
Answer

Vide Economic package the Hon’ble Finance Minister has extended the last date for beneficial payment under VSVA to December 31, 2020. The same is the outer date to availing the Scheme and making payment under it. However, once, an assessee has made a payment, he is bound by VSVA and Rules framed therein.

Yes, the assessee will have to make payment within 15 days of issuance of Form 3.

However, in your case since an application is made on March 24, 2020, it may be possible to take shelter of the decision of the Hon’ble Supreme Court in the case of In re: Cognizance for extension of limitation Suo Motu Writ Petition (Civil) No(s) 3 of 2020 dated March 23, 2020  www.itatonline .org thereby extending the period of limitations under all laws until further orders.

In the interest of good compliance, it is still advisable to make the payment within 15 days. 

Since the assessee has failed to do so, the application stands void ab initio. Therefore, the question of withdrawing the same does not arise.

 

 
Query

Dear Experts,

In one of the cases, after filing the return for AY 2018-19, the assessee came to know that he has filed the return showing reduced income in business as compared to actual income (The turnover was also shown lesser than actual). The return was filed using ITR 4 Sugam declaring income U/s 44AD. The return was duly processed by CPC.

Now the assessee wants to declare his true income by filing a revise return but he is not able to do so as the time limit for filing revise return already expired.

So should he file a rectification online by increasing the Turnover and net profit ( Deemed Profit U/s 44AD) to Actual ?

As per my understanding if there is change in income rectification should not filed but revise return.

Please guide.
Answer

As we understand, the last date to revise the ITR would be March 31, 2019. Therefore, there is no provision to revise the return filed. The assessee can file rectification application and pay the tax rightfully due to the State . As per article 265 of the Constitution of India  provides that  “ no tax be levied or collected except by the authority of law” .  In case the intimation is  passed the assessee can also explore the possibility of making application u/s   264 of the Act .Commissioner can direct the AO to assesss the correct the correct income as per law .If there is delay in filing the application the commissioner has the power to condone the delay in the interest of justice .  In case the application u/s 264 is rejected  , the assessee ca approach High Court by filing writ petition against the order of revision u/s 264 of the Act .

 

 
Query

That there was assessment of Asstt Year 2008-09. The original asstt order was passed on 14th Nov 2010. The CIT(A)vide order dt 2nd May 2011 allowed the appeal. The Deptt preferred appeal before the ITAT. The ITAT remand the matter to the AO. The AO made assessement on 21st Mar 2016.The assessee preferred the appeal before the CIT(A). The CIT(A) partly allowed the appeal. The assessee filed the appeal before the ITAT. Now the appeal is pending before the ITAT. Please guide me whether all the details of all the orders has to be filled in Form No.1.

Answer

Not required .Only the relevant details  in respect of the appeal pending before the ITAT is required to be filed . Designated authority cannot reject on the ground that all details are not filed . If any information is required the designated authority will issue the show cause notice to file the required details .
Query

We are filing DTVSV under vivad se vishwas scheme regarding appeal filed against the penalth imposed by ITO. in Sch D what is to be mentioned under Disputed income?

Answer

As we understand, the assessee wishes to settle penalty dispute Schedule D is In case the appellant opts not to pay tax on additions having effect of reducing loss/depreciation or MAT credit carried forward then the relevant column of the following schedule is to be filled up. By a plain reading of the title of Schedule D it pertains to tax on additions i.e. quantum in dispute and not penalty, however, it is advisable to approach the designated authority for further clarification.

 
Query

Hi,

What will be the treatment of refund earlier granted as per intimation u/s 143(1)(a) in VsV Act, 2020?

Also, whether the interest levied under section 234D will also be waived if the assessee opt for VsV Scheme.
Answer

Please refer S. 234D (2) which says that where as a result of an order u/s 154  or 155 or 250 or 254 or 260 or  262  or 263 or 264 etc is passed the amount of refund granted under Sub section 143(1) is held to be correctly allowed , either in whole or in part as the case may be then interest chargeable , if any ,under section sub -section (1) shall be reduced accordingly. Accordingly once the issue is settled under VSVSchme , the AO has to pass consequential order reducing the interest .   

 
Query

Please Advice

In Form 4 of Vivad se Vishwas there is a requirement of mandatory attachment regarding proof of withdrawal of appeal. The appeal relates to Income Tax Appellate Tribunal and as per Vivad se Vishwas Act appeal pending before Income Tax Appellate Tribunal are deemed to be withdrawn from the date Certificate in Form 3 is received.

Form 3 Certificate received from CIT on 21.05.2020. Now the System is asking to submit Form 4 but there is no proof of withdrawal of appeal to attach.

Sub section 2 of Sec 4 of Vivad se Vishwas Act, 2020 —upon filing of declaration any appeal pending before the Income Tax Appellate Tribunal or Commissioner (Appeals), in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrear shall be deemed to have been withdrawn from the date on which certificate under sub-section (1) of section 5 is issued by the designated authority.
Answer

Yes, your understanding is correct. For matters before the ITAT & CIT(A) there is no requirement to submit a proof of withdrawal. It is only after getting certificate from the designated authority , the assessee has to intimate to the CIT(A), if the appeal is pending before CIT (A) . If the appeal is pending before the ITAT the assessee has to intimate to the  Registrar of ITAT giving details of ITA No and Bench . The Tribunal will pass the consequential order .
Query

An issue in appeal was decided in favor of assessee in A. Y. 2010-11 by CIT(A) appeal. The same issue is pending before CIT(A) in appeal for A.Y.2012-13.Wheather assessee shall be eligible for tax rate of 50% of the applicable tax rate under VSV?

Answer

No, As per second proviso to section 3 of VSVA, to avail the benefit of 50 per cent of disputed tax, the issue should be covered by an order of ITAT or higher forum.

 
Query

A.O. had made addition of Rs. 1.68 correction on protective basis in A. Y. 2015-16 and on substantive basis in A. Y. 2014-15 in the case of a company. Can assessee offer protective addition to tax in A. Y. 2015-16 so that substantive addition in A. Y. 2014-15 shall be deleted? The clarification issued by CBDT is that if substantive addition is offered to tax in VSV then protective addition shall be deleted. Here the case is vise versa.

Answer

Considering the intention of the legislature ,  if the assessee against whom  the order is passed protectively , and the appeal is pending as on 31-01 -2020,  the assessee can avail the benefit of  Vivad se Vishwas Scheme. The order against  whom the substantial addition is made have to be deleted . One may  have file rectification  application or may point out in appeal proceedings . Normally the appeal relating to substantial addition and protective addition are  always heard together . If the appeals are not fixed together the assessee may have to make an application to fix the appeals together at the time of withdrawal of appeal . Representation is made to the CBDT to clarify the issue on protective assessment .We are expecting clarification from the CBDT . 
Query

Dear Sir

I filed the DTVSV application during first week of May 2020 and sent the acknowledgement to assessing Officer and copy of the acknowledgement also sent to CIT(A) by mail on 25/05/2020.
Today I received the enhancement notice from the CIT(A) asking to file the reply on or before 05/06/2020.

I request you clarify whether CIT(A) has any Jurisdiction over the enhancement after filing the DTSV application

Thanking you
S.Gurumurthi
Answer

Please refer  Circular of CBDT Circular No 9 dt  22-04 2020   https://itatonline.org/info/wp-content/uploads/2020/04/CBDT-Circular-9-Vivad-Vishwas.pdf   which reads as under   dt Q.no 17  If CIT (Appeals) has given (an  enhancement notice, can  the   appellant avail the Vivad se Vishwas after  including proposed  enhanced income in the total assessed income ?

Ans : The amendment proposed In the Vivad se Vishwas  allows the declaration even in cases where CIT (Appeals) has issued enhancement notice on or before 31" January, 2020. However, the disputed tax in such cases shall be increased by the amount of tax pertaining to issues for which notice of enhancement has been issued. 

According to us  issue of enhancement notice is after filing the declaration  and  also intimating  is illegal and against the spirit of the scheme .   The assessee should write to the CIT (A) to with draw the enhancement notice . In case enhancement notice is not withdrawn the assessee can write to the Chairman CBDT to take necessary remedial action. If there is no response from the CIT (A) or CBDT , the assessee can file writ before the High Court praying for quash the enhancement notice .