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

Before the introduction of S.153A ,the search assessment was made u/s158 BC of the Act.The tax leviable on the undisclosed income was at60% . There are many cases pending in dispute on such BLOCK ASSESSMENT.
There is a clear discremination under the VSV sheme as the tax rate under the new regime is 305 plus 25% of tax as penalty or 50% thereof if Department is the litigant.
While the search cases are the same under the scheme the assessment falling under the old regime are treated harshly as against assessment under the new regime.
This discrimination should be removed by bringing the assessment under the old scheme on par with assement under the new regime by requiring payment of tax and the related penalty at the same rate to encourage assessees to avail the scheme,
Answer

Yes . Your interpretation is right . However the legislature  are  having the power to frame the legislation . One can refer the judgements in  All India Federation of  Tax Practioners v .UOI ( 1998) 231 ITR 24 (SC) . All India Federation of tax Prcationers v UOI ( 1997) 228 ITR 68 (Bom) bIn Amit Hemendra Jhaveri v. UOI (2015) 281 CTR 245 / 64 taxmann.com 28 (2016) 380 ITR 60 (Bom.)(HC) the Court held that   provision denying benefit to persons who had acquired income or property illegally or were under prosecution  and the denial of benefit had nexus with the objective of scheme , classification is not violative of Article 14 and  S.  95 is  valid. In  R.K. Garg v. UOI (1982) 133 ITR 239 (SC) Honourable Supreme Court dealt with the constitutional validity of the provisions of the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 the Court held that .  when Parliament adopts a particular mode or method for unearthing unaccounted or black money and considers it to be efficacious, it would not be permissible for Court while exercising jurisdiction under article 226 of the Constitution to substitute its own decision in place of policy decision taken by Parliament by enacting Scheme .

 

            

This issue  was also raised At  a meeting held on  6-4-2020 by the ITAT , with the Chairman CBDT a specific request was made  reconsider the discrimination .      

    
Query

As per 2nd Proviso to Section 3 of VSVA “Provided further that in a case where an appeal is filed before the Commissioner (Appeals) or objections is filed before the Dispute Resolution Panel by the appellant on any issue on which he has already got a decision in his favour from the Income Tax Appellate Tribunal (where the decision on such issue is not reversed by the High Court or the Supreme Court) or the High Court (where the decision on such issue is not reversed by the Supreme Court), the amount payable shall be one-half of the amount in the Table above calculated on such issue, in such manner as may be prescribed”
The assessee is not given shelter of a Supreme Court judgement or jurisdictional High Court judgement, which is not of the assessee but having identical facts. Please provide further clarity.
Answer

Yes. On plain reading of the proviso, it seems to be ultra vires the Constitution.  One may also refer Q. No 28 and answers given by the CBDT .The decision of the Honourable Supreme Court is binding on all courts , Tribunals and tax authorities across the country as per the provisions of Article 141 of the Constitution of India . One may refer CWT v Aluminium Corporation of India Ltd ( 1972 ) 85 ITR 167 (SC) . There is no express provision in the Constitution like Article 141 , in respect of the High Courts . High Courts has the power of superintendence over the Tribunals and authorities under Article 227 of the Constitution .  In East India Commercial Co Ltd v Collector of customs AIR 1962 SC 1893 observed that “ we therefore , hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence  and they cannot ignore it “  . Similar view is expressed by the Honourable Supreme Court in Baradakant  Mishra v. Bhimsen Dixit  AIR 1972 SC 2466 . 

Accordingly in an appropriate case it can be challenged before High Court  The  above issue was raised by the professionals  when the All India video Conference meeting was held on 6-4 -2020 which was organised by the ITAT . We can expect some clarification in the next set of Questions and answers by the CBDT .
Query

1. The assessee is before CIT(A) against certain additions U/s. 68 say 10 Lakhs as on 31.01.2020.
There is a mistake in calculating 10 Lakhs ; hence petition U/s. 154 is filed and the same is pending today.
Now the AO rectify the mistake and the addition is restricted to 6 Lakhs only.
The assessee will file Declaration under VsVS for 6 Lakhs ?

2. The appeal is pending before CIT(A) as on 31.01.2020 against
2 following additions say
First Addition 3 Lakhs
Second Addition 5 Lakhs.
THE CIT(A) passes appellate order now deleting addition of Rs.5 Lakhs.
The declaration are to be filed for 3 Lakhs only ?

3. There is an addition of Rs.5 Lakhs U/s. 69 for the A Year 2013-14 and set off of losses are not allowed.
Assessee has filed petition U/s. 154 as per the Board Circular that such set off is allowable upto A Y 2016-17.
Now the rectificatory order is passed U/s. 154 allowing set-off of losses and cancelling the demand but penalty proceedings are pending. Hence, assessee can file declaration under VsVS for set off of losses so that the issue is settled.
4. The AO has given appeal effect U/s. 251/254 for the issues deleted by the appellate authorities but no effect is given for the issues setaside for verification. Assessee has filed petition u/s. 154 and the same is pending. Can assessee file declaration under VsVS accepting the additions pending for adjudication.
Thanking you
CA Shyam Poddar
9437052422/9583052422
Answer

First case: Yes, assessee can  file declaration for only 6 lakhs under VSVA.  Please refer Circular no 9 of 2020 dt. 22-04 -2020  Q. No 50. The CBDT clarified that the AO will pass the rectification order . 

Second case: Yes, assessee will file declaration for only 3 lakhs. Provided, there is no departmental appeal. (since the numbers provided are for assumption purposes, implications of pecuniary jurisdiction on departmental appeals have cannot be considered)

Third case: The assessee can avail the benefit of the Scheme and get immunity from imposition of penalty, provided there is an appeal or deemed appeal pending on the specified date.

Fourth case: From what we understand from your query, matter has been set aside by the ITAT to the AO. There is no appeal pending on the specified date. However, the assessee can avail the benefit of the scheme if the assessee has a deemed appeal as per section 2 (1)(a) (ii) of VSVA.

 
Query

O is a company and subsidiary of PSU It is implementing a project and recently started production. It claimed the amortisation of lease premium over he lease period on time basis amounting to about 20 crores pertaining to current AY 2017-18. The AO disallowed the claim and the loss is reduced in assessment. Penalty proceedings are initiated for mis-statement/ understatement of income. The company is in appeal before CIT(A).
Now the revenue authorities are pressurising the co to make a declaration under the scheme and pay tax and penalty as provided under the scheme. The appeal is pending before the CIT(A).
Should the co opt for the scheme? I strongly feel that the company has good chance of success in appeal. Your considered opinion is sought.
Answer

 From our understanding of your query, there is an quantum appeal pending before CIT(A) & penalty proceedings are only initiated. All particulars are provided in the return of income .Loss was reduced due to change of opinion . The assessee has a fair chance of succeeding in appeal before ITAT in respect  of penalty matter. It may be desirable to contest in appeal . One may refer    CIT .v. Indusind  Bank Ltd ( 2014) 369 ITR 682/ (2015) 231 Taxman 690  (Bom.)(HC)  held that 

The assessee entered into lease transactions. The AO disallowed the claim of depreciation on the ground that the lease transactions were not genuine and levied the penalty. Appellate authorities found that there was no concealment of particulars of income nor furnishing of inaccurate particulars of income, accordingly deleted the penalty. On appeal by revenue dismissing the appeal the Court held that all materials were before the revenue hence deletion of penalty by the Tribunal was held to be justified.

 
Query

As per FM press conference on 24.03.2020 read with The Taxation And Other Laws (Relaxation of Certain Provisions) Ordinance,2020 (No. 2 of 2020) with regard to Vivad Se Vishwas, no additional 10% if disputed tax is paid by 30.06.2020. But Form No 3 has not been amended that still contains that tax is to be paid within fifteen days. This Form ought to be amended in as much as within 15 days or by 30.06.2020 which expires later. In the absence of such amendment in Form 3, nobody would like to upload Form 1 and Form 2 before 15.06.2020. Kindly clarify, whether my interpretation is correct.
Answer

Answer: Yes, as per the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020, the last date for beneficial payment under the VSVA has been extended from March 31, 2020 to June 30, 2020. 

According to Form 3 i.e. Certificate issued by the department, payment has to be made within 15 days of days of issuance of certificate. 

Your suggestion, provides a cushion for declarants under the VSVA, as early declarants get more time to arrange for funds. However, in absence of any such clarification, it would not be appropriate to assume so.  We hope some clarification is expected from the Board . 
Query

while filling the form, any column which is not applicable, if, 0 or NIL is filled, error pops up and hence not allowing to file the Form.
Answer

There are various technical issues in the forms and the government is working to improve on these online facilities and to remove technical glitches. However we are making a representation to bring out these issues so that they can be considered and be taken care of.  Hence request of you can be little more specific on the issue that you are facing.  
Query

The assessee order u/s 147 rw143(3) for Ay 2012-13 was passed in Dec 19 and demand of Rs 82 lacwith interest( 72 Lac with out Interest created Further refund for Ay 2017-18 has been determined in Jan 20 for 72 Lacs

Assessee has another disputed demand pending for Ay 2016-17 order passed in Dec 18

The assessee wants to go for scheme for Ay 2012-13 and get refund adjusted with this demand and applied the same online in CPC and a application was given to AO in first week of March No confirmation of adjustment
of refund

Is refund can be adjusted only with demand created first or with any demand

whether first demand should be adjusted only then we can apply or we can apply and ask again the AO to adjust with refund Please guide
Answer

There are no specific guidelines for sequence of adjustment of refunds. However as a matter of practice the department follows FIFO basis and hence generally refunds are adjusted against demanded created first. 

It would be advisable to get the refunds adjusted first and then apply for VsV. 

 
Query

1. The CIT(A) has given part relief in an appeal. The department is in appeal for that portion before ITAT, however the assessee has not preferred appeal for against the issues decided against him.

2. The AO has levied penalty on the total additions and against which the assessee is in appeal before CIT(A).

3. Now the assessee wishes the settle the quantum in the scheme by paying 50% of the tax on the disputed additions.

Query:

As per the scheme and FAQ 8, it is important to note that

“If both quantum appeal covering disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form giving details of both disputed tax appeal and penalty appeal. However, he would be required to pay relevant percentage of disputed tax only. Further, it would not be possible for the appellant to apply for settlement of penalty appeal only when the appeal on disputed tax related to such penalty is still pending.”

As per FAQ 38, it is important to note that

“Under Vivad se Vishwas, interest and penalty will be waived only in respect of the issue which is disputed in appeal and for which declaration is filed. Hence, for the undisputed issue, the tax, interest and penalty shall be payable”.

Query:

In the above circumstances the assessee is being put in a jeopardy, which will cause undue hardship as the assessee will have to now pay the penalty on issues decided against the assessee for which he is not in appeal.

Please enlighten us on the violation of Article 14 in the above case as well sir.

I would be more than obliged.
Answer

You may settle the department appeal by paying 50%. There would be no penalty on those issues. On the issues which have been decided against you and accepted, you can settle my paying 25 % of penalty. There is no violation of Article 14 in these cases, as it applies to all the taxpayer or say a class of taxpayers.  
Query

Appeal against penalty order as filed with CIT(A) after delay of 10 days. CIT(A) dismiss condonation of delay. We are at appeal in ITAT against the order of CIT(A)for condonation of delay. whether we can opt for VSV Scheme against the penalty order passed by the AO.
Answer

The assessee should approach the  Honourable Tribunal to  condonation of delay. If the delay is condoned the assesee  can avail the benefit of the VSVA.  The assessee can make an application to the Honourable Vice -President of the respective Zone or before the  senior member of the Bench to fix the matter out of turn hearing only to decide the condonation of delay . The Tribunal may condone the delay and set aside the matter to  CIT (A) to decide the matter on merits . Once the matter is set aside the appeal relate back to the date of filing of an appeal . The assessee can avail the benefit  of the  VSVA scheme  . In Mumbai one can make on line application to hear the matter out of turn to consider the application on condonation of delay .   

 
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 .