Government of India, Ministry
of Finance, Department of Revenue, Central Board of Direct Taxes vide Circular
No. 9/2020, F. No. IT(A)/1/2020-TPL, dated 22nd April, 2020 has
issued Clarifications on provisions of the Direct Tax Vivad se Vishwas
Act, 2020 and FAQ’s on Scope / Eligibility of Direct Tax Vivad Se Vishwas Act,
2020.
This act was announced to
provide for dispute resolution in respect of pending income tax litigation.
24 FAQ’S ON SCOPE / ELIGIBILITY
Q1. Which appeals are covered under the Vivad
se Vishwas ?
Answer: Appeals pending before the appellate forum [Commissioner
(Appeals), Income lax Appellate Tribunal (ITAT), High Court or Supreme Court],
and writ petitions pending before High Court (HC) or Supreme Court (SC) or
special leave petitions (SI,Ps) pending before SC as on the 31st day
of January, 2020 (specified date) are covered. Cases where the order has been
passed but the time limit for filing appeal under the Income-tax Act, 1961 (the
Act) against the order has not expired as on the specified date arc also
covered. Similarly, cases where objections filed by the assessee against draft
order are pending with Dispute Resolution Panel (DRP) or where DRP has given
the directions but the Assessing Officer (AO) has not yet passed the final
order on or before the specified date arc also covered. Cases where revision
application under section 264 of the Act is pending before the Principal
Commissioner or Commissioner are covered as well. Further, where a declarant
has initiated any proceeding or given any notice for arbitration, conciliation
or mediation as referred to in section 4 of the Bill is also covered.
Q2. If there is no appeal pending but the case is
pending in arbitration, will the taxpayer he eligible to apply under Vivad
se Vishwas? If yes what will he the disputed tax?
Answer: An assessee whose case is pending in arbitration is eligible
to apply for settlement under Vivad se Vishwas even if
no appeal is pending. In such case assessee should fill the relevant details
applicable in his case in the declaration form. The disputed tax in this case
would be the tax (including surcharge and cess) on the disputed income with
reference to which the arbitration has been filed.
Q3. Whether Vivad se Vishwas can he availed for
proceedings pending before Authority of Advance Ruling (AAR)? If a writ is
pending against order passed by AAR in a HC will that case he covered and how
disputed tax to he calculated?
Answer: Vivad se Vishwas is not available for disputes pending before
AAR. However, if the order passed by AAR has determined the total income of an
assessment year and writ against such order is pending in HC, the appellant
would he eligible to apply for the Vivad se Vishwas. The disputed tax in that
case shall he calculated as per the order of the AAR and accordingly, wherever
required, consequential order shall be passed by the AO. However, if the order
of AAR has not determined the total income, it would not be possible to
calculate disputed tax and hence such cases would not he covered. To
illustrate, if AAR has given a ruling that there exists Permanent Establishment
(PE) in India but the AO has not yet determined the amount to be attributed to
such PE, such cases cannot be covered since total income has not yet been
determined.
Q4. An appeal has been filed against the interest levied on
assessed tax; however., there is no dispute against the
amount of assessed tax. Can the benefit of the Vivad se Vishwas be
availed?
Answer: Declaration covering disputed interest (where there is no
dispute on tax corresponding to such interest) are eligible under Vivad se
Vishwas. It may be clarified that if there is a dispute on tax amount, and
a declaration is filed for the disputed tax, the full amount of interest levied
or leviable related to the disputed tax shall be waived.
Q5.
What if the disputed demand including interest has been paid by the
appellant while being in appeal?
appellant while being in appeal?
Answer:
Appeals in which
appellant has already paid the disputed demand either partly or fully are also
covered. If the amount of tax paid is more than amount payable under Vivad se Vishwas, the appellant will
be entitled to refund without interest under section 244A of the Act.
Q6. Can the benefit of the
Vivad se Vishwas be availed, if a search and seizure
action by the Income-tax Department has been initiated against a taxpayer?
Answer: Case where the tax arrears relate to an assessment made
under section 143(3) or section 144 or section I53A or section 153C of the Act
on the basis of search initiated under section 132 or section 132A of the Act
are excluded if the amount of disputed tax exceeds five crore rupees in that
assessment year.
Thus, if there are 7 assessments of an assessee relating to
search & seizure, out of which in 4 assessments, disputed tax is five crore
rupees or less in each year and in remaining 3 assessments, disputed tax is
more than five crore rupees in each year, declaration can be filed for 4
assessments where disputed tax is five crore rupees or less in each year.
Q7. If assessment has been set aside for giving
proper opportunity to an assessee on the additions carried out by the AO.
Can lie avail the Vivad se Vishwas with respect to such additions?
Answer: If an appellate authority has set aside an order (except
where assessment is cancelled with a direction that assessment is to be framed
de novo) to the file of the AO for giving proper opportunity or to carry out
fresh examination of the issue with specific direction, the assessee would be
eligible to avail Vivad se Vishwas. however, the appellant shall
also be required to settle other issues, if
any, which have not been set aside in that assessment, and in
respect of which either appeal is pending or time to file appeal has not
expired. In such a case disputed tax shall be the tax (including surcharge and
cess) which would have been payable had the addition in respect of which the order
was set aside by the appellate authority was to be repeated by the AO.
In such cases while filling the declaration in Form No 1, the
declarant can indicate in the appropriate schedule that with respect to the
set-aside issues the appeal is pending with the Commissioner (Appeals).
Q8. Imagine a case where an appellant
desires to settle concealment penalty appeal pending before CIT
(A), while continuing to litigate quantum appeal that has travelled
to higher appellate forum. Considering these are two independent
and different appeals, whether appellant can settle one to
exclusion of others? If yes, whether settlement of
penalty appeal will have any impact on quantum appeal?
Answer: 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 covering 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.
Q9. Is there any necessity that to qualify under
the Vivad se Vishwas, the appellant should have tax demand in arrears as on the
date of filing declaration?
Answer: Vivad se Vishwas can be availed by the appellant
irrespective of whether the tax arrears have been paid either partly or fully
or are outstanding.
Q10. Whether 234E and 234F appeals are covered?
Answer: If appeal has been filed against imposition of fees under
sections 234E or 234F of the Act, the appellant would be eligible to file
declaration for disputed fee and amount payable under Vivad se
Vishwas shall be 25% or 30% of the disputed fee, as the case may be.
If the fee imposed wider section 234E or 234F pertains to a year
in which there is disputed tax, the settlement of disputed tax will not settle
the disputed fee. If assessce wants to settle disputed fee, he will need to
settle it separately by paying 25% or 30% of the disputed fee, as the case may
be.
Q11. In case where disputed tax contains
qualifying tax arrears as also non-qualifying tax arrears (such as, tax arrears
relating to assessment made in respect of undisclosed foreign income):
(i) Whether assessee is eligible to the Vivad se Vishwas
itself?
(ii) If eligible, whether
quantification of disputed tax can exclude/ignore
non-qualifying tax arrears?
Answer: If the tax arrears include tax on issues that are
excluded from the Vivad se Vishwas, such
cases are not eligible to File declaration under Vivad se
Vishwas. There is no provision under Vivad se Vishwas to
settle part of a pending dispute in relation to an appeal or writ or SIT for an
assessment year. For one pending appeal, all the issues are required to be
settled and if any one of the issues makes the declaration invalid, no
declaration can be filed.
Q12. 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
Vishwas?
Answer: The assessee would not be eligible for Vivad se
Vishwas as there is no determination of income against the said
notice.
Q13. With respect to interest under section 234A,
234B or 234C, there is no appeal but the assessee has filed waiver application
before the competent authority which is pending as on 31
Jan 2020? Will such cases be covered under Vivad se Vishwas?
Answer: No, such cases are not covered. Waiver applications are not
appeal within the meaning of Vivad se Vishwas.
Q14. Whether assessee can avail
of the Vivad se Vishwas for some of the
issues and not accept other issues?
Answer: Refer to answer to question no 11. Picking and choosing issues
for settlement of an appeal is not allowed. With respect to one order, the
appellant must chose to settle all issues and then only he would be eligible to
file declaration.
Q15. Will delay in deposit of TDS/TCS
he also covered under Vivad se Vish was?
Answer: The disputed tax includes tax related to tax deducted at
source (TDS) and tax collection at source (TCS) which are disputed and pending
in appeal. however, if there is no dispute related to TDS or TCS and there is
delay in depositing such TDS/TCS, then the dispute pending in appeal related to
interest levied due to such delay will be covered under Vivad se
Vishwas.
Q16. Are cases pending before DRP covered?
What if the assessee has not filed objections with
DRP and the AO has not yet passed the final order?
Answer: Yes, a person who has filed his objections before the DRP
under section 1440 of the Act and the DRP has not issued any direction on or
before the specified date as well as a person in whose case the DRY has
issued directions but the AO has not passed the final assessment order on or
before the specified date, is eligible under Vivad se Vishwas.
It is further clarified that there could be a situation where
the AO has passed a draft assessment order before the specified date. Assessee
decides not to file objection with the DRP and is waiting for final order to be
passed by the AO against which he can file appeal with Commissioner (Appeals).
In this situation even if the final assessment order is not passed on or before
the specified date, the assessee would be considered as the appellant and would
be eligible to settle his dispute under Vivad se Vishwas. Disputed
tax in such case would be computed based on the draft order. In the declaration
in Form No 1, the declarant in this situation should indicate in the
appropriate schedule that time to file objection with DR I’ has not expired.
Q17. If CIT (Appeals) has given an enhancement
notice, can the appellant avail the Vivad se Vishwas after including
proposed enhanced income in the total assessed income?
Answer: The amendment proposed in the Vivad se Vishwas allows
the declaration even in cases where CIT (Appeals) has issued enhancement notice
on or before 31″ January, 2020. However, the disputed tax in such cases shall
be increased by the amount of tax pertaining to issues for which notice of
enhancement has been issued.
Q18. Are disputes
relating to wealth tax,
security transaction tax,
commodity transaction tax and equalisation levy covered?
commodity transaction tax and equalisation levy covered?
Answer: No. Only disputes relating to
income-tax are covered.
Q19. The assessment order under section 143(3) of
the Act was passed in the case of an assessee for the assessment year
2015-16. The said assessment order is pending with 1TAT. Subsequently another
order under section 147/143(3) was passed for the same assessment year and that
is pending with CIT (Appeals)? Could both or one of the orders be settled under
Vivad se Vishwas?
Answer: The appellant in this case has an option to settle either of
the two appeals or both appeals for the same assessment year. I f he decides to
settle both appeals then he has to file only one declaration in Form No 1. The
disputed tax in this case would he the aggregate amount of disputed tax in both
appeals.
Q20. In a case there is no disputed tax.
However, there is appeal for disputed penalty which has been disposed of
by CIT (Appeals) on 1st January 2020. Time to file appeal in
ITAT against the order of Commissioner (Appeals) is still available
but the appeal has not yet been filed. Will such case he eligible to avail
the benefit?
Answer: Yes, the appellant in this case would also be eligible to
avail the benefit of Vivad se Vishwas. In this case, the terms
of availing Vivad se Vishwas in case of disputed
penalty/interest/fee are similar to terms in ease of disputed tax. Thus, if the
time to file appeal has not expired as on specified date, the appellant is
eligible to avail benefit of Vivad se Vishwas. In this case the declarant
should indicate in the declaration Form No 1, in the appropriate schedule, that
time limit to file appeal in ITAT has not expired.
Q21. In a case ITAT has quashed the assessment
order based on lack of jurisdiction by the AO. The department has filed an
appeal in IIC which is pending. Is the assessee
eligible to settle this dispute under Vivad se Vishwas and if yes
how disputed tax be calculated as there is no assessment order?
Answer: The assessee in this case is eligible to settle the department
appeal in TIC. The amount payable shall be calculated at half rate of 100%,
110%, 125% or 135%, as the case may be, on the disputed tax that would be
restored if the department was to win the appeal in HC
Q22. 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?
Answer: 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.
Q23. If the due date of filing
appeal is after 31.1.2020 the appeal has not been filed, will such: case
be eligible for Vii’ad se Vishwas?
Answer: Yes
Q24. If appeal is filed before High
Court and is pending for admission as on 31.1.2020, whether the
case is eligible for Vivad se Vishwas?
Answer : Yes
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