VIVAD SE VISHWAS : A CONSONANCE STEP

1. INTRODUCTION: The scheme has been introduced by the finance act, 2020 & accordingly the said act received the assent of the president on the 17th march, 2020 as act no. 3 of 2020.

2. ELIGIBILITY: The following cases may be eligible for this scheme:

  • A Person whose appeal/ writ petition/ special leave petition (SLP) is pending either filed by himself or the income-tax authority before an appellate forum on a specified date;
  • In case, order has been passed by A.O. or CIT (A) or ITAT in an Appeal or by HC in case of a Writ petition on or before the specified date & the time for filing an appeal against these mentioned orders has not expired on that date;
  • No direction has been issued by DRP against objections filed U/s. 144C of The Income Tax Act,1961 on or before the specified date ;  OR   In case where direction has issued by DRP U/s. 144C(5) & A.O. has not passed any order U/s. 144C(13) on or before the specified date; AND

A revision application is pending U/s. 264 on specified date.

3. PROCESS: A declarant has to file a declaration to designated authority on or before the last date with the payment U/s.3 as below:

Sr. No. Nature of amount Amount payable On or before 31.03.2020 Amount payable on or after 01.04.2020 but before the last date.
1 Where the tax arrear includes disputed tax, interest & penalty levied Amount of tax disputed Aggregate of tax disputed+10% of tax disputed. Exception: where the 10% of disputed tax is more than the aggregate amount of interest & penalty then the excess amount shall be ignored.
2 Where the tax arrear related to disputed tax, interest & penalty decided in assessment on the basis of search U/s. 132 or 132A of The I. T. Act,1961 Aggregate of tax disputed+25% of tax disputed. Exception: where the 25% of disputed tax is more than the aggregate amount of interest & penalty then the excess amount shall be ignored. Aggregate of tax disputed+35% of tax disputed. Exception: where the 35% of disputed tax is more than the aggregate amount of interest & penalty then the excess amount shall be ignored.
3 Where the tax arrear related to disputed Interest/ Penalty/ Fees 25% of disputed Interest/ Penalty/ Fees 30% of disputed Interest/ Penalty/ Fees

♦ Where an appeal or writ petition or SLP is filed by INCOME TAX AUTHORITY before the appellate authority the amount payable shall be reduced by 50% of the mentioned amount in table.

♦  Where the appeal is filed before CIT(A) or objection is filed before DRP by the Appellant (Assessee) on an issue on which he got a decision in his favour by ITAT (Not reversed by HC & SC), the amount shall be reduced by 50% of the mentioned amount in table.

♦  Where the appeal is filed by Appellant (Assessee) before ITAT on which he got a decision in his favour by HC (Not reversed by SC) ,the amount shall be reduced by 50% of the mentioned amount in table.

4. MANNER OF APPLICATION:

The declaration by filed by declarant(Assessee) in FORM-1 which contains the main information such as:

Part A – General information and information related to eligibility; Part B – Information related to dispute;

Part C – Information related to tax arrears; Part D – Information related to amount payable;

Part E – Information related to payments against tax arrears; AND Part F – Net amount payable/refundable by the appellant Upon filing the declaration, any appeal pending before CIT(A), ITAT for disputed tax/ interest/ penalty /fees shall be deemed to be withdrawn from the date on which certificate issued U/s. 5(1) of the Act in FORM-3.

Where the declarant has filed any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of tax arrear he shall withdraw such appeal or writ petition with the leave of the Court wherever required after issuance of certificate U/s. 5(1) in FORM-3 and furnish proof of such withdrawal alongwith the intimation of payment to the designated authority U/s. 5(2) in FORM-4.

Where the declarant has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India whether for protection of investment or otherwise, he shall withdraw the claim, if any, in such proceedings or notice after issuance of certificate U/s. 5(1) in FORM-3 and furnish proof of such withdrawal alongwith the intimation of payment to the designated authority U/s. 5(2) in FORM-4.

The declarant shall also furnish an Undertaking in FORM-2 waiving his right .

The declaration shall be presumed never to have been made (treated as No application has been filed) if:

√ Any material particular is filed false;

√ Declarant violates any of its conditions; &

√ Declarant acts against the undertaking given by him.

♦ In such case, all the proceedings which was withdrawn shall be deemed to be revived against the declarant.

  • In respect of any matter of tax arrear mentioned in declaration for which order has been made U/s. 5(1) in FORM-3 shall not be considered by any Appellate forum/ Arbitrator / Conciliator/ Mediator.

5. MANNER OF PAYMENT:

Within 15 days from the receipt of declaration, the Designated Authority determine the amount payable by declarant by an order & grant a certificate containing amount of tax arrear & sum payable in FORM-3.

The declarant shall pay the amount described in certificate within 15 days from its receipt & intimate the details in FORM-4.

Every order passed U/s. 5(1) shall be conclusive & no matter covered by this certificate shall be re-opened in any proceedings under the I. T. Act or any other law which is time being in force.

EXPLANATION: A DECLARATION IN FORM-1 SHALL NOT AMOUNT TO CONCEALMENT OF TAX & IT SHALL NOT BE LAWFUL (CAN NOT BE USED AS AN EVIDENCE) IN ANY APPEAL/ WRIT PETITION / SLP.

6. IMPORTANT CONSIDERATIONS:

  • The designated authority shall not initiate any proceedings in case of an offence.
  • The designated authority shall not impose any penalty or charge interest in respect of tax arrear in the IT Act,1961.
  • The amount paid in pursuant to the declaration U/s. 4 shall not be refunded in any circumstances.

EXPLANATION: WHERE THE DECLARANT PAYS ANY AMOUNT OF TAX ARREAR BEFORE FILING DECLARATION IN EXCESS OF AMOUNT SPECIFIED U/s.3 SHALL BE REFUNDED BUT INTEREST ON SUCH AMOUNT SHALL NOT BE ENTITLED U/s. 244A OF THE INCOME TAX ACT,1961.

7. INELIGIBLE CASES:

Tax arrear related to Assessment U/s. 143(3) /144 / 153A/ 153C of the IT Act on the basis of search initiated U/s. 132 /132A of the IT Act,1961 where the disputed tax exceeds ₹ 5 Crore.

Tax arrear relating to any Assessment Year for which prosecution has been initiated on or before the date of declaration.

Tax arrear relating to any undisclosed income from a source located outside India or undisclosed asset located outside India.

Tax arrear relating to any Assessment or Re-assessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Income-tax Act (Double Taxation Avoidance Agreement: DTAA).

Any person for which an order of detention has been made under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) on or before the filing of declaration.

THERE ARE SOME SPECIFIC EXCEPTIONS OF THIS POINT WHICH ARE NOT COVERED HERE.

VIVAD SE VISHWAS : A CONSONANCE STEP

Any person in respect of whom prosecution for any offence punishable under the provisions of 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 has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts.

Any person in respect of whom prosecution has been initiated by an Income-tax authority for any offence punishable under the provisions of the Indian Penal Code (IBC) or for the purpose of enforcement of any civil liability under any law for the time being in force, on or before the filing of the declaration or such person has been convicted of any such offence consequent to the prosecution initiated by an Income-tax authority.

Any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration.

Author Bio

Qualification: Post Graduate
Company: Magnitude Consultancy Services
Location: Rajasthan, IN
Member Since: 24 Jul 2020 | Total Posts: 4
Author is currently working as partner in Magnitude consultancy Services in the field of Indirect Taxes.Author can be reached at Magnitude.mcs@gmail.com View Full Profile

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