Vivad Se Vishwas Scheme 2020 | Direct Tax Dispute Resolution Scheme

Brief about the scheme.

The Vivad Se Vishwas Scheme 2020 is a direct tax dispute resolution scheme announced in Union Budget 2020. This scheme is introduced to put an end to the long list of disputed income taxes cases pending in the appeal at any appellate forum. This scheme is applicable for all those assessees, whose cases are pending at any appellate forum as on 31st January, 2020. This scheme allows the assessee to pay only the tax portion in the disputed cases and allow waiver of interest and penalty on such disputed tax. Moreover, in cases of disputes related to penalties where there is no dispute related to tax or where the disputed penalty is not related to tax, disputes related to interest and fee, the assessee is required to deposit 25% of such disputed penalty.

Salient features of the scheme.

•  All income tax disputes which are pending in any forum as on 31^stJanuary, 2020.

• Once amount payable is paid and declaration is accepted, no matter covered by the declaration shall be reopened and such matters shall be final. Further, no proceedings shall be instituted in respect of an offence, or no penalty shall be imposed, or interest shall be charged in respect of tax arrears.
• The benefit of the scheme shall not be applicable in the following cases:

1. Tax arrears in relation to an Assessment Year (‘AY’) in respect of which assessment is made under Section 153A or 153C of the Income-tax Act 1961 (‘the Act’);
2. Tax arrears in relation to an AY for which prosecution has been instituted before filing of declaration;
3. Tax arrears in relation to undisclosed income from source outside India or undisclosed asset outside India;
4. Tax arrears in relation to assessment/ reassessment made on basis of information received under agreement referred to in Section 90 or 90A of the Act;
5. Tax arrears in relation to an appeal pending before CIT(A), wherein a notice for enhancement of income has been issued by the CIT(A) under Section 251 of the Act.

• The taxpayer is required to withdraw the appeal pending before the appellate forum and is required to file a proof of such withdrawal along with the declaration.
• Taxpayer to deposit amount determined in the certificate received within 15 days from the date of filing declaration within 15 days from receipt of order. After the receipt of payment intimation, the authority shall pass an order.

Question and Answers

Q.1 Who are going to be benefitted from this scheme?

Ans. Every person who has filed appeal in respect of any tax, interest, penalty or fee and such appeal is pending in any forum as on 31^st January, 2020, however following persons are not eligible for this scheme:-

• Tax arrears in relation to an Assessment Year (‘AY’) in respect of which assessment is made under Section 153A or 153C of the Income-tax Act 1961 (‘the Act’);
• Tax arrears in relation to an AY for which prosecution has been instituted before filing of declaration;
• Tax arrears in relation to undisclosed income from source outside India or undisclosed asset outside India;
• Tax arrears in relation to assessment/ reassessment made on basis of information received under agreement referred to in Section 90 or 90A of the Act;
• Tax arrears in relation to an appeal pending before CIT(A), wherein a notice for enhancement of income has been issued by the CIT(A) under Section 251 of the Act.
• Against any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to some conditions
• Against any person in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition of Benami Property Transactions Act, 1988 or for the purpose of enforcement of any civil liability has been instituted or such person has been convicted of any such offence punishable under any of those Acts.
• Against any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.

Q.2 What if the appeal is decided or dismissed after 31^st January, 2020?.

Ans. The person is still eligible for the scheme as the cut off date is 31^st January, 2020.

Q.3 What if there is no disputed tax as there was loss reduced due to some additions/ disallowances?.

Ans. In respect of those cases where the loss is reduced or loss is converted to income, then disputed addition/ disallowance/ or difference shall be deemed to be the total income and tax payable thereon shall be disputed tax.

Q.4 What if there is no appeal against tax is pending as on 31^st January, 2020 and only appeal is pending against penalty u/s 271(1)(c)?.

Ans. In this case there is no disputed tax but there is disputed penalty, so the assessee may avail the benefit of scheme by paying 25%/30% of such penalty.

Q.5 Whether an assessee can pursue an appeal once an order is passed under scheme?

Ans. No appeal can be proceeded or decided in respect of which order has been passed under this scheme.

Q 6. Where the appeal is filed and pending against tax and also against penalty u/s 271(1)(c) on disputed income,  what will happen in respect of appeal pending against 271(1)(c)?

Ans. Any penalty in relation of disputed tax whether charged or not shall be waived once 100%/110% of the disputed tax is paid.

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