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Chartered Accountants Association, Surat

Ref: CAAS/Representations/2019-20/07  Date: 06-03-2020

The Chairman,
Central Board of Direct Taxes,
Ministry of Finance.
Government of India,
New Delhi

Sub: Request to issue clarification for The Direct Tax, Vivad se Vishwas Bill, 2020.

Respected Sir,

We congratulate for launching a very good scheme for settling the disputes relating to direct taxes by way of introduction of Vivad se Vishwas scheme. In order that the scheme is implemented smoothly and more cases of the litigation are covered giving benefit to more number of stakeholders we are making the following suggestions for your kind consideration:

1. The scheme covers the case where the writ petition has been filed by the taxpayer before appellate forum i.e. High Court or Supreme Court. As per the clause 2(j)(A) of The Direct Tax Vivad se Vishwas Bill, 2020, it has been provided that in case where writ petition is filed the disputed tax in relation to the assessment year shall be computed as the amount of tax that is payable by the appellant if such appeal or writ petition or special leave petition was to be decided against appellant.

2. Now if the writ petition is filed against the reassessment proceedings u/s. 147 of the Income Tax Act, 1961 where passing of the assessment order has been stayed by the High Court, there is no clarity in the Bill for computation of the disputed tax payable. The CBDT has issued the clarification in this regard vide Circular no. 7/2020 dt.05/03/2020, wherein it has been stated in reply to Q. No. 12 that in such cases the scheme cannot be availed. However, it is felt that in such cases the disputed tax should be computed with reference to the income escaping assessment that was mentioned in the reasons recorded u/s. 148(2) and accordingly, the benefit of the scheme should be extended to cover such cases also as the person filing the writ petition is the eligible assessee to avail the benefit of the scheme. The object of the scheme is to settle the dispute under the Income Tax Act, 1961 and therefore the object can be achieved better if the cases relating to the writ against the reassessment proceedings initiated u/s. 147 are also covered.

3. The Bill has only been passed by the Parliament on 04.03.2020. It is hoped that the Rules for implementation of the scheme shall be notified shortly by 15.03.2020. Obviously, a very little time is left with the tax payer to go in for the scheme by filing the declaration before 31.03.2020 in order to avoid extra 10% payment of the disputed tax. It has been clarified by the CBDT in the circular no. 7/2020 in reply to Q. No. 41 that assessee is required to pay the tax before 31.03.2020 for availing the benefit of the reduced payments. However, there is no such mandatory requirement that can be interpreted in the Bill to pay the disputed tax before 31.03.2020 in order to avoid 10% extra payment. As per the interpretation of the Bill, assessee is allowed to take benefit of reduced payments by filing declaration before 31.03.2020. Further, the time of 15 days is given for payment after the receipt of the certificate from designated authority. In such a situation it is very illogical requiring assessee to pay tax also on or before 31.03.2020. So clarification should be issued that the date of filing of declaration will be relevant for the purpose of availing the reduced payment and not the date of the payment of the disputed tax.

4. Further, it is requested that the time of 31.03.2020 for filing declaration should also be extended further one month as the scheme has not become operational even today.

5. Assessee is required to pay 10% extra on the amount of the disputed tax although the assessee might have paid substantial amount of tax already before filing of declaration in respect of tax, interest or penalty. Accordingly, assessee should be required to pay 10% extra on the net amount payable as on 31.03.2020 (i.e. after deducting the payment made by the assessee or adjusted by department u/s 245, dehors the scheme).

6. As per section 4(2) of the VSV Act, the appeal filed before the ITAT and CIT(A) shall be deemed to be withdrawn, once the certificate of TAX ARREAR is issued by the DA u/s 5(1). This seems to be harsh on the assessees. Let’s imagine a situation where a person is interested in going for the scheme, he made a declaration, obtained the TAX ARREAR Certificate u/s 5(1), but later could not pay the Tax because of his financial inability. At this point such assessees will be under problem, because the appeal filed will be considered as WITHDRAWN and since he has not paid the amount under the scheme, he will not be beneficiary under the scheme. Therefore, the APPEAL withdrawn shall be considered only when the payment of the disputed tax, penalty, fee etc is made and final certificate is issued u/s 5(2) of the VSV Act.

7. The assessing officer should be instructed to decide assessee’s application made u/s. 154 expeditiously so that the disputed tax is correctly computed.

8. If the computation made in the declaration by the assessee in regard to the disputed tax is not accepted by the DA, the assessee will be thrown out of the scheme. In such a case, the opportunity of being heard should be provided to the assessee to clarify his stand.

9. If the assessee’s case is covered by the situation where he is required to pay extra amount of 10%, he should be allowed to make the payment till the date of closing of the scheme.

10. In view of the above, the Board is expected to issue clarification on following points:

i. The cases of writ petition against the proceedings u/s. 147 should be covered under scheme as assessee in such cases are eligible as per the provision.

ii. The date of the declaration should be relevant and not the date of the payment for the determination of disputed tax or penalty.

iii. The deadline of 31.03.2020 for availing reduced payment should be extended atleast till 30.04.2020 to attract the tax payer to go for the scheme.

iv. The increased payment of 10% should be calculated on net tax payable and not gross tax payable. Even where some part of the disputed tax is paid by assessee or adjusted by department u/s 245, before 31st March and some part is paid after 31st March, the amount paid after 31st March should attract 10% extra payment.

v. The withdrawal of the Appeal shall be deemed to be withdrawn only after the issue of the final certificate and any assessee who has not paid the tax even after filing of the declaration and receipt of the certificate u/s 5(1), shall be allowed to pursue the appeal in regular course.

vi. The assessing officer should be instructed to decide assessee’s application made u/s. 154 expeditiously so that the disputed tax is correctly computed.

vii. In case of difference of opinion on the matter of the disputed tax declared by the assessee, an opportunity of being heard should be provided.

viii. The time limit of 15 days for payment should be relaxed or removed. More so when the scheme is effective till 30th June or later where the assessee is required to pay higher amount by 10%.

We hope the above suggestions would be helpful to your good self. Hence, please do the needful in the matter by issuing the further clarification.

Thanks & Regards,

For Chartered Accountants Association, Surat.

President   | Secretary

Copy to: –

  • Finance Minister, Ministry of Finance, 134, North Block, New Delhi – 110011.
  • Secretary (Revenue), 128/A, North Block, New Delhi – 110001

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