Re: Revision order- S. 263 -Pendency of appeal before ITAT

Assessment order is set aside under section 263 due to revision order passed by CIT and consequential order is not passed by the AO. ITAT appeal has been filed against the CIT 263 order and is pending as on 31 January 2020. Whether scheme can be availed for settling issues in the following scenarios:

a) Where order u/s 263 has been passed by the CIT with specific directions –

b) CIT 263 order has been passed with general directions from CIT –

c) CIT 263 order has been passed with general directions from CIT and the consequential AO order has been passed on 15 February 2020 (ie before filing the declaration) –

(a)Where order u/s 263 has been passed by the CIT with specific directions  ?

Ans :It should be possible to avail VSV scheme for such order as ‘disputed tax’ can be determined.  There are many other situations stated in VSV or FAQ which are eligible to opt for VSV and for which workable manner of determination of disputed tax will be provided  For Eg: As per Q7 of the FAQ dt 4 March 2020, where assessment is set aside to Tax Authority for giving proper opportunity to the taxpayer or to carry out fresh examination with specific direction is covered and disputed tax shall be computed on the premise that such addition is made by Tax Authority – Here,  the appellant will be required to settle other issues, if any, which has not been set aside in assessment and in respect of which either appeal is pending or time to file appeal has not expired.  If such scenario is covered, then, 263 order with specific directions should be allowed to be settled.

b) CIT 263 order has been passed with general directions from CIT?Ans: In FAQ 7, it has been clarified that assessment set aside de-novo by CIT or appeallate authorities, cannot be settled under VSV.  Also, FAQ 3, it has been clarified that if AAR order has not determined income, than such matter cannot be settled under VSV.  Hence, 263 order passed with general direction (ie with direction to do de novo assessment) cannot be settled.   

c) CIT 263 order has been passed with general directions from CIT and the consequential AO order has been passed on 15 February 2020 (ie before filing the declaration) ?

Ans: 

• FAQ 7 allows relating back for the purposes of quantification ie where assessment is set aside with specific direction, disputed tax shall be computed on the premise that if such addition is to be repeated by Tax Authority.   
• Similar view is taken in FAQ 3 where AAR order has determined the total income of the appellant and AAR order is challenged before High Court, than such cases can be settled.  
• Accordingly, if ITAT appeal against the CIT 263 order is filed before 31 January 2020 and OGE is passed on 15 February 2020 (before filing the declaration), then the quantification should relate back and based on FAQ 7.  However, it should be clarified that such appeal can be elgible for settlement under VSV. 

 

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