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Vivad se Vishwas Scheme De-coded – Case Study on Disputed Tax

Q.1 During an assessment u/s 143, demand of Rs 20,000 has been raised which comprises of disputed tax of Rs 15,000 and interest on such disputed Rs 5,000. What amount of tax is required to be paid under VSV Scheme 2020?

Ans.1 Declarant has to pay 100% of disputed tax amount before 31st March 2020 i.e. Rs 15,000. After 31st March, the declarant is required to pay 110% of the disputed tax amount (restricted to total demand amount) i.e. Rs 16,500/-

Q.2 What if in the above case, the declarant has already paid Rs 18,000 tax for demand before opting for VSV 2020, if he opted for VSV on or before 31st March 2020?

Ans.2 Since declarant is opting for a scheme on or before 31st March 2020, he/she is required to pay 100% of disputed tax amount i.e. Rs 15,000. So after opting for VSV 2020, he/she will be eligible for a refund of Rs 3,000 additionally paid without any refund.

Q.3 What if the demand in question no. 1 pertains to search & seizure cases.

Ans.3 Declarant has to pay 125% of disputed tax amount before 31st March 2020 i.e. Rs 18,750. After 31st March, the declarant is required to pay 135% of the disputed tax amount (restricted to total demand amount) i.e. Rs 20,250/- but since original demand is for Rs 20,000, he/she is required to pay maximum Rs 20,000/-

Q.4 Suppose, demand in question no. 1 pertains to an issue for which assessee has already got a favour from ITAT for similar issues in preceding years?

Ans.4 In this case, the amount needs to be paid shall be 50% of the amount as the case may be.

Q.5 Suppose demand has been raised for two issues involving tax amount of Rs 15,000 and 10,000 respectively. The assessee has preferred an appeal before CIT(A) who had to confirm both the additions. The assessee then filed the appeal to ITAT. ITAT confirms the first addition while setting aside the order for giving a proper opportunity to the assessee for the second issue? What will be the disputed tax in this case?

Ans.5 Assessee can avail the Vivad se Vishwas Scheme and file the declaration covering both the additions. In this case, the disputed tax would be the sum of Rs 15,000 and Rs 10,000/-

In such cases, while filling the declaration form, the appellant can indicate that with respect to the set-aside issues the appeal is pending with the Commissioner (Appeals).

Q.6 In a case where disputed tax contains qualifying tax arrears as also non-qualifying tax arrears, whether the assessee is eligible to the Vivad se Vishwas itself?

Ans.6 If the tax arrears include the tax on issues that are excluded from the Vivad se Vishwas, such cases are not eligible to file a 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 SLP 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.

Q.7 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?

Ans.7 The amendment proposed in the Vivad se Vishwas allows the declaration even in cases where CIT (Appeals) has issued enhancement notice on or before 31st 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.

Q.8 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 ITAT. 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?

Ans.8 The appellant, in this case, has an option to settle either of the two appeals or both appeals for the same assessment year. If he decides to settle both appeals then he has to file only one declaration form. The disputed tax, in this case, would be the aggregate amount of disputed tax in both appeals.

(Disclaimer: This content is meant for our clients or professional friends only for stimulating discussion on the subject matter not to frame any commercial opinion. All efforts are made to compile correctly with no guarantee of extreme accuracy)

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