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
24 FAQ’S ON SCOPE / ELIGIBILITY OF DIRECT TAX VIVAD SE VISHWAS ACT, 2020
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?
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?
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?
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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