If there is no demand pending against the assessee  the asseseee can request for adjustment of cash seized against VVS liability . One may refer the judgement in Sicom Ltd v. DCIT ( Bom) (HC) www.itatonline .org the court held that the burden is on the revenue to grant the refund . The honourbale court directed the Registrar of High Court to forward copy of order to the PCIT , and chairperson of CBDT . 

Yes. He can opt for VSVA. This has been clarified under Q. 22 vide CBDT Circular 7/2020 dated March 4, 2020 and also Circular No 9 of 2020 dt 22-04- 2020 also once again clarified that   the assessee will be eligible to avail the benefit of the Scheme .

As we understand, there is an assessee appeal against addition of 6 percent turnover and there is a departmental appeal on the addition of 4 percent of turnover.

The assessee is at liberty to settled the assessee’s appeal under VSVA or the Departmental appeal or both. The departmental appeal will be settled at 50 per cent of disputed tax amount.

The Assessee qualifies as an appellant as per section 2(a)(ii) of the VSVA. The question thereafter is whether it is a “disputed penalty” as defined sec. 2(1)(i) is a penalty. The definition of disputed penalty has two limbs;  

(i) such penalty is not levied or leviable in respect of disputed income or disputed tax, as the case may be;

         (ii) an appeal has been filed by the appellant in respect of such penalty;

The Assessee qualifies in limb (i) above, however not in limb(ii). It may be seen that the two limbs do not bear a conjunction. Hence one can read that both limbs are cumulative and have to be fulfilled and other may read to say that both limbs are exclusive and do not need to be fulfilled together.  In such a scenario, one in favour of the assessee should be taken, and hence it would be safe to conclude that in the present facts, the Assessee may be eligible for VsV. Though, Question no. 20 of the CBDT Circular No. 7/2020 dated March 4, 2020 buttresses this point, it would be worth mentioning that CBDT Circular is prior to the amendment to the Bill, and though the intention was to include such cases as well, it’s a blatant error in drafting the Act + the amendments.  One may also note the Circular No 9 of 2020 dt 22 -04 -2020,answer to question No  20.once again clarified that the though  there  is no disputed  tax  appeal for penalty is disputed the assessee will be eligible to avail the benefit. 

As we understand from your query, penalty proceedings are in abeyance with the Ld. AO and quantum stands accepted. Only the purchase price of the shares was disputed by the assessee, which was allowed by CIT(A). Settlement of interest under VSVA will have no implications on the penalty proceedings. 

Since no appeal was filed by department against purchase price of shares, hence the question of penalty does not arise.

As far as penalty on LTCG for shares is concerned, there is no immunity even if you go and file for VSV for the appeal pending before ITAT. Section 6 of the VSVA reads as under 

“6. Subject to the provisions of section 5, the designated authority shall not institute any proceeding in respect of an offence; or impose or levy any penalty; or charge any interest under the Income-tax Act in respect of tax arrear.”

Section 2(1)(o) of the VSVA defines “tax arrear” as under; 

(o) “tax arrear” means,—

(i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or

(ii) disputed interest; or

(iii) disputed penalty; or

(iv) disputed fee,

as determined under the provisions of the Income-tax Act.

Reading this sections together, it is clear that immunity is restricted to settlement of disputed issues only.   There are case laws when the returned income is accepted there cannot be penalty. We presume that the department may not initiate the penalty proceedings . In case penalty is levied it will be reasonable good case for appeal . 

We are unaware about what data did you insert while filing the Form and are unaware of kind of error are you facing. Can you be a bit more elaborate and run us through complete details and steps so that we can identify the issue.  You may try to contact the designated official , who will be able to help you . If it is general problem to all the assesses , it may require representation before Board .  

 The protection for carry forward of loss and set off in subsequent years runs from the Act and the Rules and not from the certificate/order in Form 3 or Form 5. However, if the certificate does mention the amounts, it would have been better. Hence you may write a letter to designated authority to clearly mention the amounts. But not having mention in the certificate would not allow AO to deny benefits in subsequent years, and you may challenge such action whenever the cause of action arises.

Thank you very much for very good gesture shown by you. The purpose is to share the knowledge , and if it benefits at lease few professionals we will be very happy . Thank you once again.  

As per Section 2(2) of VsV Act, the words and expressions used in VsV Act and not defined but defined in the Income-tax Act shall have the meanings respectively assigned to them as per Income-tax Act. 

The term “Undisclosed income” is not defined in VsV Act.  However, Section 271AAA, 271AAB defined undisclosed income as under; 

(a) "undisclosed income" means—

(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has—

(A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or

(B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or

(ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted;

In the present case share capital must have been reflected in the books of accounts. Section 68 talks about unexplained credits in the books of accounts, which cannot to equated to undisclosed income. Hence your case may be eligible for the VsV Scheme. 

Just a point to ponder that the exclusion as mentioned in 9(a)(iii) is contrary to Black Money Act. Because such undisclosed income has to be taxed under the Black Money Act and not under Income Tax Act. The irony is that VsV only deals with tax arrears under Income -tax Act. 

Answer 2 : Prosecution 

As rightly pointed out Section 9(a)(ii) and 9(c) uses the word ‘instituted’ where as section 9(d) uses the word ‘initiated’. It may be noted that in the VSV Bill Section 9(c) and 9(d) were combined wherein it used the word ‘instituted’. The Circular no. 7 of 2020 dt. 4^th March, 2020 created a confusion at FAQ no. 22.  The revised circular no.9 of 2020 dt. 22 April, 2020 tried to resolve the issue. The FAQ and the answer reads as under; 

“Faq. 22 : In the case of an assessee prosecution has been instituted and is pending in court. Is assessee eligible for the Vivad se Vishwas? Further, where the prosecution has not been instituted but the notice has been issued, whether the assessee is eligible for Vivad se Vishwas? 

Ans. :  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. However, where the prosecution has been instituted with respect to an assessment year, the assessee is not eligible to file declaration for that assessment year under Vivad se Vishwas, unless the prosecution is compounded before filing the declaration.”

It is clear that the words ‘instituted’ and ‘initiated’ have been used differently, and cases where prosecution is instituted is out of preview of VSV. Initiation is of the process for prosecution. The AO cannot himself prosecute a person and he has to institute a criminal complaint with the Magistrate. Hence till the time a Tax Authority files a criminal complaint, a tax arrear can be considered under VSV and not thereafter.   

Though it appears to be a sheer drafting error while separating 9(d), to harmoniously interpret the sections of the Act, it can be said that section 9(d) talks about offences under Indian Penal Code and initiation in such cases can only start with filing of criminal complaint. 

There is no rule is prescribed for  pronouncement of Order  by CIT (A).You may have to verify when the order is communicated to your assesseee. Though the order is passed on 29 -1- 2020  and not communicated to the assessee ,  it may be presumed to be pending as on 31 -1 2020.   Accordingly the querist may avail the benefit of the scheme . It is desirable to file an appeal before the ITAT.   In  Jagmohan Gurbakshish Singh v DCIT ( Chad)(Trib), www.itatonline.org Universal Print O Paxk v.ITO ( Chad)(Trib), www.itatonline.org the Tribunal held that  The limitation period for filing a Rectification Application has to be computed from the date of “communication” of the order and not from the date of passing the order. The fact that the order was pronounced in open court is not relevant because the parties will not be aware of the mistakes therein until after perusal of the order.

It seems that  your appeal was pending as 31 -1-2020 , however the CIT (A) delivered the judgment on 8 -2-20 . It is desirable to file an  appeal before the ITAT. Thereafter  you may opt for the scheme .  There is no clarity on the issue , Once  we say appeal was pending on 31 -1-2020, we may have to consider the tax in dispute as on 31-1-2020. It may be desirable to get  clarification for CBDT .