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

Many of my clients have been getting ITR Rectification notices u/s 154 for almost all the past 8-10 assessment years for which assessment orders u/s 143(1) had already been issued and refunds received. The standard wordings in such notices are:

Dear Madam/Sir,

Subject: Status of your ITR filed with CPC for PAN xxxxxxxxx, Assessment Year xxxxxx

Ref: – E-Filing Acknowledgement Number xxxxxxx Dated xxxxxx.

Your return for the above mentioned assessment year will henceforth be rectified by your Assessing Officer xxxxxxxxx. You are requested to contact your Jurisdictional assessing officer for any rectification related issues.You may also log on to https://incometaxindiaefiling.gov.in and click on “Know your Jurisdictional AO” under”SERVICES” menu for further details.

Upon analysis, I find that these notices are being issued only for those assessees who have certain ongoing taxation disputes in various forums.

I don’t know if this is the case only with my clients, or is happening to other assesses as well across India. Be that as it may, what is the objective of these notices? Is it not pressure tactics / harassment of assessees and furthermore, goes against the stated objectives of the government of promoting faceless assessments and no physical face to face interactions with the Income Tax Officers, presumably to reduce harassment and corruption?
Answer

The matters are selected on the basis of computer system . Eg . in most of the charitable trusts  deductions for application of income is not granted.  As per law, a rectification can be made within 4 years from the end of the assessment year in which order was passed. However, the error has to apparent from record.   Debatable issues cannot be rectified as held by the Supreme Court in T.S.Balaram , ITO v. Volkart Bros (1971) 82 ITR 50 (SC) . 

Each case will have to be decided on merits, with their respective set of facts. However, all assessments will have to done through the portal and calling an assesssee or its representative to meet the taxman defeats the purpose of faceless assessment.
Query

IN A CASE WHERE TRIBUNAL HAS PASSED AN ORDER AFTER 31/01/2020 CONFIRMING LEVY OF PENALTY UNDER SECTION 271B OF THE ACT, AND TIME FOR FILING APPEAL BEFORE THE HIGH COURT HAS NOT YET EXPIRED, CAN THE ASSESSEE AVAIL THE BENEFIT OF VsV SCHEME.
THANKS
Answer

 As  per the scheme , there has to be pendency of appeal as on 31 –1 2020 , then only one can avail the benefit of the scheme . On the facts it is difficult to avail the benefit of the scheme.  One may consider , filing an Miscellaneous  application . In case the Tribunal allows the miscellaneous application of the assessee and appeal is restored  it relates back the date of filing of appeal . In such circumstances the assessee may avail the benefit of the VVS .
Query

In case assessee opts not to pay tax opted as income tax order relates to reduction of losses due to disallowance . Assessment order passed by ld AO u/s 143(3), wherein brought and carry forward lossess as per Income Tax Authority are not mentioned ,as required how these figures would be filled in S.no. D and E of Schedule D Annexure D of Form 1 of VSV .can VsV Form be uploaded by keeping these column blank ? Or is it mandatory?
Answer

Circular No 9 /2020 dt  22-04 -2020 .In response  to Q  . No  53   the CBDT  clarified that  they will prescribe the manner of calculation of loss and computation, however till date  no clarification is issued. We have to wait for clarification to be issued by the CBDT . 

 
Query

As per Question 22 of latest circular, in case, only notice for initiation of prosecution has been issued, Assessee can opt for VsV Scheme. Issue is regarding the amount of tax to be paid in this scenario?
Answer

Yes. Where only notice for initiation of prosecution has been issued without prosecution being instituted, the assessee is eligible to file declaration under Vivad se Vishwas.
Query

Sir,
Thank you for reply to my query dt. 27.04.2020, but my query was not about amount of Tax arrears to be filled but name of authority passing the order, dt. of order and section of passing the order.
I am giving facts of the case –
The AO passed order U/s 143(3) read with sec. 147 on 2.11.2017, CIT(A) dismissed appeal by order dt. 17.08.2018, appeal effect order U/s 250 passed by AO on 26.09.2018. Now I want to clarify whether in column 2 of part B of declaration form 1 – section 143(3) is to be mentioned or Sec. 250, and in next column 143(3) read with section 147 is to be mentioned or 143(3) read with sec.250. Then in column (3) name of authority is to be mentioned as AO or CIT(A). Then in column 4 date of assessment order 02.11.2017 is to be mentioned or date of appeal order by CIT(A) 17.08.2018 or date of order U/s 250 giving appeal effect dt.26.09.2018 by AO. is to be mentioned.
Answer

We are of the opinion that the designated authority may be in a position to clarify the issue. There are number of practical difficulties are faced by the assesses while filing the declaration. In due course of time , the issues will be sorted by the CBDT as number of representations are made by the various professional organisations.
Query

Respected sir
The addition has been made under section 68 as alleged fake loans
The said loan has been fully repaid and interest has also been paid on the said loan and TDS is also deducted
If the assessee buys peace under vivad se vishwas scheme
Can he capitalize the alleged fake loan which is already repaid by crediting this in p&l or by any other way because the income can be taxed only once
Will there be any implications w.r.t benami law and gst
And what are the other issues which should be brought into consideration before entering into the scheme
There is also a favourable ruling of the in other case jurisdictional itat where the the creditor co. Is treated as genuine and loan from it as genuine loan
Aren’t subordinate authorities bound by decision of itat
Answer

Each case has to be decided on facts . If  the facts are identical the CIT (A) is bound to follow the order of the ITAT .  As  per the scheme there is no provision of capitalisation. The issue is taken up before the CBDT , we hope some clarification may be expected . If the amount is settled there will not be any implications under Benami Act or GST.  

 
Query

Assessee filed an CIT appeal against the order u/s 143 of the Act. The case has not yet heard. Subsequently notice u/s 263 of the Act is issued by the CIT and as on 31.1.2020, order u/s 263 has not yet been issued. In Feb 2020, order u/s 263 is issued to revert the case back to A.O on certain issues without quantifying any demand. In such case, whether assessee can go under VSV. If yes, what would be the demand payable.
Answer

As we understand, there is an appeal pending before the CIT(A) . The same can be settled under VSVA as the order under section 263 of the Income tax Act, 1961 is for certain specific issues not being the ones under appeal. It may be desirable for the assessee  to file an appeal before the Tribunal against the revision order.
Query

Whether section 3 of prohibition of Benami property transaction act,1988 is prospective or retrospective?
Answer

The Benami Transactions (Prohibition) Act, 1988 (BTP Act) as the name suggests was enacted in the year 1988. Subsequently, after nearly three decades, Benami Transactions (Prohibition) Amendment Act, 2016 was enacted on November 1, 2016 amending the Act of 1988 via an insertion.

However, Section 1 (3) BTP Act was not suitably amended which has resulted in much confusion.

Section 1(3) is usefully extracted as under:

“(3) The provisions of sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988.”

There are diverging views from different Hon’ble High Courts on the subject matter of retrospectivity of the 2016 provisions

The Hon’ble High Court of Rajasthan in the case of Niharika Jain & Ors. v Union of India S.B. Civil Writ Petition No. 2915/2019 dated July 12, 2019 held that the 2016 Benami Amendment cannot be applied retrospectively.

Pursuant thereto, the Hon’ble High Court of Chhattisgarh in the case of Tulsiram vs. ACIT Writ Petition (C) No. 3819 of 2019 dated November 15, 2019 wherein the contention of the Petitioner with respect to retrospective effect relying upon the above decision of the Hon’ble High Court of Rajasthan was dismissed.

Further, the Hon’ble Calcutta High Court in the case of M/S. Ganpati Dealcom Pvt. Ltd vs Union of India & Anr WP No. 687 of 2017 dated December 12, 2019 held that the 2016 amendment is a new legislation and in order to have retrospectivity it should have been specifically provided therein that it was intended to cover contraventions at an earlier point of time and that express provision was not there.

A SLP against the order of the Hon’ble Calcutta High Court has been filed before the Hon’ble Supreme Court and the matter is pending . 

 
Query

1.In case of appeal pending before ITAT whether in declaration form 1 part B “Details of order by which tax arrears determined” – in column 3 & 4 of this point whether the details is to be filed for order passed by AO U/s 143(3) or 250(Appeal effect) or appeal order passed by CIT(A).

2. In case of appeal filed before ITAT no ack.or reference no. is given, the Registrar simply returns one copy of covering letter of documents filed with form 36 by putting the seal/signature and date, so how the colomn of reference no. ack. no. is to be filled in column 7 of this part.
Answer

The tax arrears  to be given as per the effect of the order passed u/s 250 of the Act.. If the effect is pending one may have  to work the tax effect after considering the effect given by the CIT (A)  

 
Query

Addition u/s 14A was made in Original Assessment Order us 143(3) say for Rs. 50 Lakhs.

Subsequently same addition of Rs. 50.00 Lakhs was repeated in Assessment Order u/s 143(3) r.w. 153(3).

As per the present scheme addition for multiple orders for the same assessment year can be offered under the Scheme.

As per Q 19 of Clarification dated 22.04.2020 if multiple orders are being settled disputed tax will aggregate amount of tax in both the appeals i.e Rs. 1.00 Crores instead of addition of Rs. 50.00 Lakhs in both the order for same ground.

This will lead to double taxation of same addition for the same ground for the same assessment year.
Answer

If first order is pending in appeal and the said order is settled, the second order may not survive . The designated authority may not charge once again on addition of Rs 50 crores. One may write to the Board for further clarification