As reported by Times Now, the Central Board of Direct Taxes (CBDT) issued a clarification on provisions of Direct Tax ‘Vivad se Vishwas’ Act, 2020. In a circular CBDT stated that with the purpose to cut down pending income tax litigation, generate timely revenue for the Government and aid taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be wasted on the long-drawn and vexatious litigation process, the Direct Tax ‘Vivad se Vishwas’ Act was enacted on 17th March 2020.
Subsequently, the Central Board of Direct Taxes granted leeway with regards to the time limit of 15 days advised in section 5 (1) of ‘Vivad se Vishwas’ for making payment of the amount payable, as determined in a certificate issued by the Designated Authority. In order to facilitate the taxpayers, the Board has issued clarifications in form of answers to frequently asked questions (FAQs) on issues related to eligibility, computation of amount payable, procedure and consequences under ‘Vivad se Vishwas’.
Q) Whether Miscellaneous Application (MA) pending as on 31 January 2020 will also be covered by the scheme? If the MA pending on 31’1 Jan 2020 is with regards to an appeal which was dismissed (before 31’1 Jan 2020), such MA is eligible?
A) Disputed tax will be calculated with reference to the appeal which was dismissed.
Q) Are cases, where the assessment was conducted under section 158BA (i.e. block assessment) of the 158(A) are covered under ‘Vivad se Vishwas’?
A) An appeal, writ or Special Leave Petition in respect of block assessment faces no blocks if the disputed tax does not cross the limit of five crore rupees for the said block assessment.
Q) Can ‘Vivad se Vishwas’ be availed in a case where proceedings are pending before the Income Tax Settlement Commission (ITSC) or where the writ has been filed against the order of ITSC?
Q) An appeal against assessment order is pending (or deadline to file an appeal against such order has not been crossed) on 31’1 Jan 2()20. The assessee has also filed an application for resolution of assessment order under the Mutual Agreement Procedure (MAP). Can Vivad se Vishwas be availed?
A) In a case where MAP resolution is pending or the assessee has not received MAP decision, the related appeal shall be eligible under ‘Vivad se Vishwas’. In such a case, the declarant will be required to take back both MAP application and appeal.
Q) If AAR has passed judgement in favour of the taxpayer and the Department has gone in writ or appeal before the High Court/Supreme Court and the total income of the taxpayer was quantifiable on the facts of the case before AAR, can the taxpayer apply for ‘Vivad se Vishwas’ scheme?
A) Yes, the taxpayer is eligible since the income is quantifiable. In such a case, since the issue is covered in favour of the taxpayer, only 50% of the disputed tax is payable.
Q) An appeal has been placed aside to CIT(A) I Dispute Resolution Panel (DRP) and was pending as on 31″Jan 2020? Is it eligible?
A) Yes. Such case can be settled under ‘Vivad se Vishwas’ and the issues, set aside, will be considered to be pending at the level of CIT(A) I DRP as on 31″ Jan 2020. However, all issues which were either pending in appeal (whether set aside or not) or in respect of which time to file an appeal has not expired on 31st Jan 2020 have to be settled.
It is worth noting that the provisions of ‘Vivad se Vishwas’ were revised by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to offer certain relaxations in view of the COVID-19 pandemic and also to further empower the Central Government to notify certain dates. Towards this end, the date for payment without additional amount under ‘Vivad se Vishwas’ was pushed back from 31st December 2020 to 31st March 2021. The last date for filing declaration under ‘Vivad se Vishwas’ was also notified as 31st December 2020.