Re: Is Interest U/s 234D to be added for VIVAD SE VISWAS scheme

Sir,

Assesment for a/y 2011-12 was made u/s 143(3) w.r.s. 147 and the tax arrears were computed. in these arrears the amount of Tax was 269289 and interest u/s 234a, b, c and d were added. I have filed appeal with the CIT appeals which is pending. In the Vivad se Vishwas cheme, I have applied and my liability for the amount of Tax 269289 but the department has issued form-3 in which they have added interest u/s 234D also and have calculated amount payable at Rs 393980 (269289 + 124691 intt 234D)
I have read the act and I seek clarification – whether interest u/s 234d is to be added to the disputed tax and amount payable under the scheme would be disputed tax + interest u/s 234d ??

Please refer S. 234D (2) which reads  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 . Once the amount is settled the interest will be waived and other consequences will follow as per the law . Please read Section 7 of the Direct Tax Vivad Se Vishwas Act , 2020 Explanation , excess amount  shall not be entitle to interest on such excess amount under section 244A of the  Act . In case the assessee has received excess refund with interest  the levy of interest may be justified .

 

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