Operation Clean Money (OCM)/Demonetisation Cases & Vivad Se Vishwas Scheme 2020
Who can forget…?
November 8, 2016
Time: 8 p.m.
“To break the grip of corruption and black money, we have decided that the five hundred rupee and thousand-rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016.”
Yes, with these historic words, the Hon’ble PM Modi has announced the demonetisation of Rs. 500 and Rs. 1000 notes, the Specified Banned Notes (SBNs), on the eve of 8.11.2016, in his surprise prime time address to the Nation.
Post demonetisation of Rs. 500 and Rs. 1000 notes on November 8, 2016, the CBDT has launched a special operation or a probe popularly referred to as ‘Operation Clean Money‘ (OCM), to check and curb the mal-practices concerning conversion of unaccounted /black money into white money. Operation Clean Money has been launched to probe and scrutinise those income-tax cases where suspicious deposits of huge amounts or amounts not in conformity with the transaction history of the assessees, were being made, post-demonetisation.
Citizens were given about two months’ time starting from 9.11.2016 to 30.12.2016, to deposit the invalid currency notes of Rs. 500 and Rs. 1000, in their bank accounts.
Immediately after the deadline of December 30, 2016, the income-tax authorities have issued 17.92 lakh notices, some even in the form of SMSs, to those who were believed to have done suspicious transactions right after demonetisation. Later, the CBDT narrowed its focus to 3.78 lakh cases, mostly involving deposits of Rs 5 lakh or above. The government said the verification process would be closed for cases where deposits have been disclosed under the Pradhan Mantri Garib Kalyan Yojana 2016. The scheme gave amnesty to persons who declare unaccounted income and paid a fine of 50% of the undisclosed amount. This scheme fetched the government just Rs 4,900 crore.
The income-tax authorities, have subsequently, stepped up scrutiny and monitoring on some companies and individuals, especially jewellers and people with large real estate holdings. The I-T department have conducted thousands of surveys and searches to locate black money. Between November 2016 and March 2017, searches were conducted at the premises of approx. 900 companies leading to cash seizure of about Rs 636 crores. Additionally, Rs 6,745 crore of undisclosed amount was detected during the I-T department’s 8,239 surveys, according to government data.
By the beginning of 2019, the tax authority had observed that as many as 87,000 of their demonetisation-related notices were being ignored. The entities named in these notices hadn’t paid taxes or filed returns.
The Income Tax Department has conducted numerous enquiries and have sought pin-pointed and targeted information after identifying instances of huge and unusual cash deposits to identify cases involving risk of tax evasion. Based upon vast amount of information of cash deposits collected and analysed by CBDT, a number of persons have been identified in whose case the cash transactions did not appear to be in line with their profile available with the Income-tax Department.
CBDT has issued detailed instructions/guidelines for the help of the assessing authorities for verification, scrutiny and assessment of cases involving huge cash deposits during demonetisation period of 9.11.2016 till 31.12.2016, covered under Operation Clean Money.
CBDT has issued following instructions/SOP/ Internal Guidance for handling of income-tax cases related to demonetisation.
(c) SOP dated 15.11.2018
(d) SOP dated 03.03.2019
(e) Internal Guidance Note dated 13.06.2019
Post Demonetisation, w.e.f. AY 2017-18 and onwards, incomes in the nature of section 68 to 69D has been made liable for being taxed at higher rate @ 60% plus surcharge of 25% making the effective tax rate at about 78% u/s 115BBE, irrespective of whether such unexplained income is suo moto offered by an assessee as income in the return of income filed u/s 139(1) or in response to notice u/s 142(1)/ 148/ 153A/ 153C, etc. The same tax rate is applicable for unexplained bullion/ jewellery/ stock/ other investment in shares and property etc. found during search or survey and offered in statement u/s 132(4) or 133A.
Prior to 01 April 2017, the question whether the undisclosed income sought to be taxed was in nature of income u/s 68 to 69D or not, or the question with regards to nature of activity from which such undisclosed income was derived, was not at all relevant as the rate of taxation was same in either case i.e. @30% only. But in view of the substantial increase of the tax rate @ 78%, this issue now has assumed huge tax implications from AY 2017–18 onwards.
A new Section 269ST has been inserted by the Finance Act, 2017, w.e.f. 1.4.2017, for the AY 2017-18 and onwards, which provides as under:
No person shall receive an amount of two lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.
Therefore, w.e.f. AY 2017-18 and onwards, any person who receives cash in excess of Rs. 2 lakhs, in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person shall be liable to a penalty of an amount equivalent to the amount of such cash transaction.
Certain entities/transactions have been kept outside the purview of the above provisions of section 269ST as under:
The provisions of the section 269ST shall not apply to—
(i) any receipt by—
(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.
The demonetisation period i.e. period from 9.11.2016 till 30.12.2016, fell in the FY 2016-17 corresponding to the AY 2017-18. So, in the regular assessments for the AY 2017-18, a large number of scrutiny cases were pertaining to the issue of huge and abnormal cash deposits during the demonetisation period.
The earlier deadline for completing regular assessments for OCM/demonetisation cases was 30.9.2019. However, due to the paucity of time, the CBDT has extended the deadline for assessing officers to complete and conclude the assessments of such OCM/demonetisation cases by December 31, 2019, which in any case was the time barring deadline for completion of regular assessment cases for the AY 2017-18, other than transfer pricing cases.
The assessing authorities have segregated such OCM cases separately for business cases and non-business cases and have analysed these in terms of various criterion.
Further, cash deposits made in a financial year have been segmented into three parts, i.e. pre demonetisation period (1.04.2016 till 8.11.2016), post demonetisation period (9.11.2016 till 31.12.2016) and total in the financial year 016-17 and corresponding period in FY 2015-16. The assessing authorities have subjected these data to analytics and have worked out the percentage increase in cash deposits against all the three combinations to derive the meaningful inferences. The analysis of month wise cash sales and deposits for demonetisation period and also the corresponding period in the FY 2015-16 have also been undertaken.
Specific attention has been paid to the cash in hand till 08.11.2016, particularly where such balance was substantial. Cash withdrawals made from the bank despite large cash balance in hand have also received due attention.
The assessing authorities have also questioned and asked for clarification and explanation of revision in VAT returns in post demonetisation period, particularly with large changes in sales and purchase figures.
During the regular assessment proceedings for the AY 2017-18, the assessing authorities have sought elaborate information, explanation and supporting records and documents in support of the genuineness and authenticity of the claims of cash deposits being made out of cash sales in business e.g. monthly sales summary (with breakup of cash sales and credit sales), relevant stock register entries, bank statements to identify cases with preliminary suspicion of back-dating of cash sales or fictitious sales.
The assessing authorities have verified if the cash transactions or its quantum are not in line with the normal practices of concerned business as mentioned in the earlier returns of income.
Special attention has been given to verify the authenticity of the closing cash in hand balance as on 31.3.2016, which constituted the opening cash in hand balance as on 1.4.2016 for FY 2016-17. If the assessing authority had reason to believe that the closing cash balance as on 31st March 2016 has been increased by revising the return or backdating transactions in the books of account, detailed verification has been carried out.
In the cases of persons engaged in business and maintaining books of accounts, the most common and natural explanation and justification for the cash deposits being made by them in the post demonetisation period has been cash sales being made by them in their businesses.
The assessing authorities, in majority of the OCM assessment cases, have declined to accept the genuineness and authenticity of the cash deposits being made out of cash sales of business in post demonetisation period and have made huge income-tax demands under sections 68, 69, 69A, 69B, 69C read with section 115BBE of the Income Tax Act, in the regular assessment orders in such OCM/demonetisation cases. The most common arguments and contentions being made by the assessing authorities in rejecting the genuineness and authenticity of the cash deposits being made by the assessees out of their cash sales in business post demonetisation period are discussed as under:
i. Since w.e.f. 8.11.2016 midnight, Rs. 500 and Rs. 1000 notes (SBNs) were declared invalid and were not to be considered as legal tender, therefore, for the assesses carrying on business, booking of cash sales and accepting such SBNs for transacting business transactions, during post demonetisation period, was prohibited.
ii. The money measurement concept of accounting underlines the fact that in accounting and economics generally, every recorded event or transaction is measured in terms of money, i.e., the local currency monetary unit of measure. Since the SBNs were just a piece of papers and they bear no value on 9th November 2016 or after, as Central Government, the guarantor, had withdrawn its guarantee and hence, the receipt of these SBNs can’t be journalized in books of account. Therefore, the transactions made in SBNs on or after 9th November 2016 cannot be entered into cash books.
iii. Therefore, if the assessee has received any SBN notes after 09.11.2016 on account of any monetary transactions and utilizes the same for making cash deposits into the bank account, then the credit of the same into the books of accounts is not to be considered as valid and has to be treated as unexplained money u/s 69A read with section 115BBE of the Income Tax Act and brought to tax.
In some other cases, where the cash deposits have been explained by the assessees as pertaining to cash sales being made by them prior to the demonetisation period, the assessing authorities have again rejected the genuineness and authenticity of such claims believing that the assessees might have backdated the cash sales just before the demonetisation period so as to reflect cash in hand as on 8.11.2016 consisting of banned notes of Rs. 500 and Rs. 1000, which they have deposited in their bank accounts post demonetisation.
(i) Cash deposits made out of cash sales recorded in post demonetisation period treated as unexplained deposits u/s 69A of the Income Tax Act, on considering the Specified Banned Notes (SBNs) of Rs. 500 and Rs. 1000 as not a Legal Tender.
The text of section 69A of the Income Tax Act is being reproduced as under:
“Unexplained money, etc.
69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”
The assessing authorities’ contentions concerning the rejection of the claims of cash deposits being made out of cash sales being recorded in the books of accounts in the post demonetisation period, on account of their presumption of prohibition on booking of cash sales in SBNs in the books of accounts during the post demonetisation period, and treating the same as unexplained cash deposits u/s 69A of the Income Tax Act, may not hold sustainable legal ground before the higher appellate authorities on account of the express legislative provisions as contained in “the Specified Bank Notes (Cessation of Liabilities) Act, 2017” , implemented pursuant to the Demonetisation exercise. These legislative provisions are discussed as under:
a. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 provides that “On and from the appointed day, no person shall, knowingly or voluntarily, hold, transfer or receive any specified bank note.”
b. Section 2(1)(a) in Specified Bank Notes (Cessation of Liabilities) Act, 2017 provides that “appointed day” means the 31st day of December, 2016.
c. Further Section 3 of Specified Bank Notes (Cessation of Liabilities) Act, 2017 states that “On and from the appointed day, notwithstanding anything contained in the Reserve Bank of India Act, 1934 or any other law for the time being in force, the specified bank notes which have ceased to be legal tender, in view of the notification of the Government of India in the Ministry of Finance, number S.O. 3407(E), dated the 8th November, 2016, issued under sub-section (2) of section 26 of the Reserve Bank of India Act, 1934, shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act.”
From the above, it is clear that use of Specified Bank Notes (SBN) pursuant to 8th November, 2016 upto 31st December, 2016 was always allowed. It was never the intention of the Legislature to prohibit their use for transactions uptill 31st December, 2016.
Also, the Specified Bank Notes (Cessation of Liabilities) Act, 2017 clearly provides that the specified bank notes shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act from the appointed date, i.e. 31st December, 2016.
The SBNs of 500- and 1000-rupee denominations can be measured in monetary terms since the guarantee of Central Government and liability of Reserve Bank of India does not cease to exist until 31st December 2016 in lieu of the 500 and 1000-rupee SBNs. Since the RBI is obligated to exchange the SBNs of 500 and 1000 and the liability can be measured with certainty amounting to the values imprinted on these bank notes, these bank notes do possess value and were very much amenable to be recorded in the books of accounts. Hence the contention that it cannot be journalized in the books of accounts based on the SBNs having no monetary value is not valid. Therefore, the same cannot be treated as unexplained money u/s 69A and brought to tax, provided that corresponding supporting documents and records are being furnished by the assessees.
(ii) Cash deposits made out of cash sales recorded in post demonetisation period treated as unexplained cash credits u/s 68 of the Income Tax Act.
The text of section 68 of the Income Tax Act is being reproduced as under:
68. Cash Credits
Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:”
From the plain reading of the above section 68, it is abundantly clear that the essential and mandatory pre-requisite for making an addition under this section is that the unexplained sum must be found credited in the books of an assessee maintained by him for any previous year. If the assessee is not maintaining any books of accounts, then addition u/s 68 is unsustainable. The existence of books of account is a condition precedent for invoking of the power u/s 68 of the Act.
The reliance in this regard is placed on the following Judicial Pronouncements viz.
(i) Judgement of Hon’ble Guwahati High Court in the case of Anandram Raytani v. CIT, 223 ITR 544;
The relevant extract of the aforesaid judgement (para 8) is reproduced below for Your Honours’ ready reference,
“8. …………We have gone through Section 68 of the Act. The Assessing Officer before invoking the power under Section 68 of the Act must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account and if the assessee fails to satisfy the Assessing Officer, the said sum so credited has to be charged to income-tax as the income of the assessee of that previous year. The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise.”
Whether Bank Pass Book can be considered as Books of Accounts u/s 68?
In several judicial pronouncements especially in the case of CIT v Bhaichand N. Gandhi  141 ITR 67 (Bom.), it has been held that the bank statement can’t be considered as books of accounts, for the purpose of making addition u/s 68 of the Income Tax Act.
(iii) Rejection of assessee’s claim of cash deposits out of earlier cash withdrawals due to time gap between such withdrawal and the cash deposits
In a recent decision the Hon’ble ITAT Delhi, in the case of “Gordhan, Delhi v/s DCIT dated 19/10/2019, have held that no addition can be made u/s 68 on the sole reason that there was a time gap of five months between the date of withdrawals from bank account and redeposit of the same in the bank account, unless the AO demonstrates that the amount in question has been used by the assessee for any other purpose.
Similarly, in the case of ‘ACIT vs Baldev Raj Charla 121 TTJ 366 (Delhi)’ also it has been held that merely because there was a time gap between withdrawal of cash and cash deposits, explanation of the assessee could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer that apart from depositing this cash into bank as explained by the assessee, there was any other purpose, for which it was used by the assessee
One can also place his reliance on the decision of Ld. Delhi High Court in the case of CIT vs Kulwant rai in 291 ITR 36 wherein the honourable Delhi High Court has held as under:-
“ This cash flow statement furnished by the assessee was rejected by the AO which is on the basis of suspicion that the assessee must have spent the amount for some other purposes. The orders of AO as well as CIT(A) are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessee, a sum of Rs. 10,000 was being spent for household expenses every month and the assessee has withdrawn from bank a sum of Rs. 2 lacs on 4th Dec., 2000 and there was no material with the Department that this money was not available with the assessee. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessee are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the AO or CIT(A) to support their view that the entire cash withdrawals must have been spent by the assessee and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under s. 158BC of the Act and the same was rightly ordered to be deleted.”
On the basis of the above judgement of the Hon’ble Delhi High Court, the Hon’ble ITAT Delhi have recently deleted the addition made for inordinate delay in cash deposit in the case of ‘NEETA BREJA v/s ITO (ITA No 524/D/17/25-11-2019)
(iv) Rejection of the Cash Deposits being made out of Regular Business Cash Sales
The additions being made in the OCM/demonetisation cases by the assessing authorities on the basis of deviation/variance in cash deposits and cash sales ratio of the demonetisation period with that of the earlier periods, as contained in the CBDT Instructions concerning Standard Operating Procedure (SOP) in OCM cases, may not hold legal sustainable ground in higher appellate forums as once an assessee establishes the authenticity and genuineness of the cash sales and corroborates and substantiates such cash sales with all relevant and supporting documents like sales invoices, bank statements, confirmations from buyers, VAT/Sales Tax Returns, co-relation of such cash sales with purchases and stock etc, then the authenticity of making the cash deposits out of such cash sales can’t be disregarded and rejected merely on account of variation or deviation of the ratio of cash sales in the current period with that of an earlier period. There can’t be a fixed sales pattern in any business.
Also, once an assessee has offered his cash sales as his business income, then again taxing the cash deposits being made out of his cash sales as unexplained cash credits amounts to double taxation, which is not permissible as per the canons of Income Tax Law.
The Hon’ble Delhi Tribunal in the case of AGSONS GLOBAL P LTD v/s ACIT (Appeal No 3741 to 3746/Del/2019 have held that the addition being made on the sole ground of deviation in ratio of cash sales and cash deposits during the demonetisation period with that of earlier period, is not proper and lawful.
The Hon’ble Indore ITAT Bench in the case of DEWAS SOYA LTD, UJJAIN v/s Income Tax (Appeal No 336/Ind/2012 has held that,
“the claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been taxed (after deducting gross profit from same price ultimately credited to profit & loss account) and on the other hand amounts received from above parties has also been added u/s. 68 of the Act. This view has been held by the Hon ‘ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 72ITR194 (SC) that “It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed”. The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again.”
The primary reason for bringing out the Direct Tax Vivad Se Vishwaas Scheme 2020, as asserted by the learned Revenue Secretary is to ensure amicable resolution of disputes arising out of OCM/Demonetisation Cases.
The Income-tax department has launched an aggressive outreach drive, wherein, a large number of jewellers and real-estate developers have been sent notices, emails and proposals to opt for this Tax Amnesty Scheme and avail the benefit of immunity from interest and penalty and even prosecution.
The detailed discussion and analysis in the above paragraphs, concerning the strategy, modus operandi and the approach of the Revenue Authorities in making the additions in the assessments pertaining to OCM/Demonetisation cases, and the corresponding defence of the assessees to combat such additions on merits as per the legal precedents and the legislative provisions, will surely and definitely assist and help the assessees in taking wise, informed and balanced decisions concerning the opting or otherwise of the Vivad Se Vishwaas Tax Amnesty Scheme 2020.
For better understanding and clarity of the Readers, concerning the practicalities and nuances of settling income tax disputes pertaining to OCM/Demonetisation Cases under the Direct Tax Vivad se Vishwas Scheme 2020, a practical Case Study is being discussed as under:
|Assessee Name:||Mr. P|
|Nature & section under
which order has been passed
Order u/s 143(3)
Additions/Disallowances: The addition of Rs.50,00,000/- u/s 69A read with section 115BBE, taxable @ 78% (60% basic tax rate u/s 115BBE plus surcharge 25%), has been made, on account of considering the cash deposits made by assessee in his bank account during the demonetization period, from 9.11.2016 till 31.12.2016, as unexplained deposits.
|Date of Passing of Order:||28.12.2019|
|Date of Receipt of Order & Demand Notice u/s 156:||28.12.2019|
In ‘e-Proceedings’ window, the assessee receives the assessment order as soon as the order is uploaded by the AO in the registered e-filing a/c of the assessee.
The Computation of Income and Income Tax Demand u/s 156, pursuant to the said Regular Assessment Order for AY 2017-18:
|Addition on account of unexplained investment u/s 69A read with section 115BBE (taxable @ 78% as above)||50,00,000/-|
|Tax Liability (a):||39,87,370/-|
|Add: Interest u/s 234B/234C (b):||14,76,000/-|
|Total Tax Liability (c):||54,63,370/-|
|Less: Tax already paid (d):||87,370/-|
|Net Tax Liability (e):||53,76,000/-|
Aggrieved by the said addition, the assessee Mr. P, has e-filed an appeal before CIT(Appeals), u/s 246A, in the prescribed Form 35, on 27.1.2020, i.e. within 30 days from the receiving of the assessment order u/s 143(3) on 28.12.2019.
Therefore, the appeal of the assessee Mr. P is pending on the specified date on 31.1.2020, before the specified appellate authority i.e. CIT(Appeals).
Therefore, this case is covered under section 2(1)(j)(A) of the Direct Tax Vivad Se Vishwaas Act 2020 and accordingly the Disputed Tax payable would be the amount of tax that is payable by the appellant Mr. P, if his appeal before the CIT (Appeals), was to be decided against him.
The assessee Mr. P has filed his appeal against the addition of Rs. 50,00,000/- made by the AO, u/s 69A read with section 115BBE of the Income Tax Act, on account of considering the cash deposits during the demonetisation period as unexplained investments, in the regular assessment order for AY 2017-18.
So, the ‘disputed tax’, in this case would be the income tax and surcharge payable (excluding interest u/s 234B/234C), on the addition of Rs. 50,00,000/-, as if the appeal of the assessee Mr. P, before the CIT (Appeals), has been decided against him.
Computation of ‘Disputed Tax’ u/s 2(1)(j) of the Act, in this Case Study
|Total Tax Liability (including Income tax & surcharge plus interest u/s 234B/234C) as per column (c) in Notice of Demand u/s 156, above:||Rs.54,63,370/-|
|Less: Tax Already Paid on Returned Income as per column (d) in Notice of Demand u/s 156, above||Rs. 87,370/-
|Tax Arrears Payable u/s 2(1)(o)(i) of the Direct Tax Vivad Se Vishwaas Act 2020||Rs. 53,76,000/-|
|Less: Interest u/s 234B/234C as per column (b) in Notice of Demand u/s 156, above, in respect of disputed tax.||Rs. 14,76,000/-|
|Disputed Tax u/s 2(1)(j)(A) of the Act||Rs.39,00,000/-
Conclusion: Thus, in the above Case Study, the income tax liability of the assessee Mr. P, as it existed before the opting of the Vivad se Vishwas Scheme 2020 was Rs. 53,76,000/-. However, the disputed tax payable by him, if this Vivad se Vishwas Scheme is being opted by him, comes out to Rs. 39,00,000/-. This reduction in tax liability under this amnesty scheme is on account of immunity from the payment of interest u/s 234B & 234C of the Income Tax Act of Rs. 14,76,000/-.
The assessee will also become immune from any penalty u/s 270A of the Income Tax Act.
The nomenclature of this dispute resolution scheme i.e. ‘Vivad se Vishwaas Scheme’ suggests the ‘trust-centric’ philosophy and intent of the Law Makers behind bringing out this Tax Amnesty Scheme.
It has been asserted that this dispute resolution scheme would benefit primarily in the disputes concerning cash deposit cases in demonetisation period and penny stock cases.
In all such cases, the provisions of section 115BBE have been pressed into service by the Revenue Authorities and an effective tax rate of almost 78% (Basic Rate u/s 115BBE @ 60% plus surcharge @ 25%), has been levied on the additions.
Therefore, in all such cases, even the ‘disputed tax’ @ 78%, is very high and may not be persuasive enough to motivate the assessee to opt for this scheme.
Therefore, in order to bring fruitful results in such cases, under this scheme, the amount of ‘disputed tax’ to be paid by the appellant, should be reduced to the maximum marginal rate of tax of approximately 33.66% and not at the high rate of 78%. If at all, some differentiation is to be made between normal cases and such cases, then a higher rate of say 40% may be prescribed, so as to ensure fruitful tax realisation, in such cases, under the scheme.
For more details and complete understanding of the nitty-gritties and nuances of the Direct Tax Vivad se Vishwas Scheme 2020, the recently published Book titled “Case Studies & Procedures under Direct Tax Vivad se Vishwas Act 2020”, authored by the author of this article, Sh. Mayank Mohanka, FCA (Senior Partner in M/s Sushil Jeetpuria & Co., Chartered Accountants, New Delhi) and published by Taxmann Publications, may be referred, which is a ready referencer and a user manual incorporating more than 50 Real-life practical Case Studies, to help and assist the assessees and the tax professionals in making wise, timely and informed decisions concerning the settlement of their income tax disputes under the Vivad se Vishwas Scheme 2020.