Re: Can we opt for VsV where order for reassessment is not yet passed (however writ has been filed against validity of reassessment proceedings), but basis assessment in subsequent years it is possible to determine tax liability.

For AY 2005-06, assessee has discharged tax at the rate of 10%. Subsequently, reassessment notice was issued in AY 2005-06 basis survey in subsequent year (AY 2009-10). Further, objections were filed against the reassessment initiation. The AO rejected the objections against which assessee filed writ petition in High Court. Writ petition is pending as on 31 Jan 2020.

For AY 2009-10, income of the assessee was taxed as PE and income was attributed at 50%, thereby leading to an effective tax rate of 15%.

Considering the fact that reassessment was initiated basis AY 2009-10, can it be argued that it is possible to determine tax liability for AY 2005-06 at 15% (basis assessment carried out in AY 2009-10) and assessee is eligible to opt under the Scheme for differential 5% of the taxes.

Please refer Circular No 9 / 2020 dt 22-04 2002 ,  Q.12  .  If a writ has been filed against a notice issued under section 148 of the Act  and no assessment order has been passed consequent to that section 148 notice , will such case be eligible to file declaration under Vivad Se Viashwas ?

Ans: The assessee would not be eligible for Vivad Se Viashwas as there is no determination of income against the said notice .

 

Reason being once the assessment is  validly  reopened  the  Assessing Officer can assess any other income   which is not recorded in the reasons recorded under sub-section (2) of section 148 , as per explanation 3 to section 147 of the Act . Also refer CIT v. Best Wood Industry & Saw Mills ( 2011)  331 ITR 63 (FB) (Ker) (HC)

Accordingly the assessee may not be  eligible under  the  Vivad Se Viashwas  , Scheme .

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