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Direct Tax Vivad Se Vishwas (Bill no. 29, 2020 including Amendment

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Direct Tax Vivad Se Vishwas (Bill no. 29, 2020 including Amendment
By: Aanchal Kapoor
February 27, 2020
All Articles by: Aanchal Kapoor       View Profile
  • Contents

ISSUES INVOLVED

  1. Key Dates
  2. Definition of Appellant
  3. Designated Authority
  4. Declarant
  5. Disputes Covered
  6. Tax Arrear and Amount Payable
  7. Examples 1-7
  8. Declaration should be filed to designated authority Section 4
  9. Issues of certificate by designated authority Section 5
  10. Provisions of refund Section 7
  11. Scheme is not available in respect of persons covered under section 9
  12. Overview on the issues not dealt by the scheme

Key Dates

Start date: Date on which the provisions of the Bill come into force

Last date: Date to be notified by the Government

Payment date: Pay by 31st March, 2020 to avoid higher payment

Eligibility cut off date: Appeals/writs/DRP cases /Revision u/s 264 pending or due date for filing the appeal has not expired on or before 31.01.2020.

Note:- Appeal is pending does not means whether demand is pending or has been paid

Appellant 2(1)(a)

  • A person in whose case an Appeal/ writs/SLP is filed by him or by Income tax authority and such appeal is pending as on 31.01.2020 are eligible
  • Orders for which time for filing appeal/SLP has not expired on 31.01.2020
  • Objections filed before Dispute Resolution Panel (DRP) U/s 144C on 31.01.2020
  • Cases where DRP issued direction by DRP U/s 144(5) on or before 31.01.2020 but no order U/s144(13) has been passed by AO.
  • Cases where assessee filed R 31.01.2020 Revision (Section 264) and such application is pending on or before 31.01.2020
  • Search case if the disputed tax is less than ₹ 5 Crore

DESIGNATED AUTHORITY “means an officer not below the rank of a Commissioner of Income-tax notified by the Principal Chief Commissioner for the purposes of this Act; (Section 2(1)(e))

DECLARANT “means a person who files declaration under section 4 (Section 2(1)(c))

DISPUTES COVERED

DISPUTED TAX SECTION 2 (1)(j)

In relation to an Assessment Year means the (income tax including surcharge and cess)

(A) In a case where any appeal, writ or SLP is pending before the appellate forum as on 31.01.2020, the amount of tax that is payable by the appellant if such appeal or writ or SLP was to be decided against him;

(B) In a case where an order in an appeal or in writ petition has been passed by the  appellate forum on or before 31.01.2020, and the time for filing appeal or SLP against such order has not expired as on that date, the amount of tax payable by the appellant after giving effect to the order so passed;

DISPUTED INTEREST SECTION 2 (1)(h)

• Interest in Income Tax

• Other than Interest on Disputed Tax

• In which Appeal is filed.

• E.g. Interest u/s 201

DISPUTED PENALTYSECTION 2 (1)(i)

• Penalty in I.Tax

• Other than Penalty on disputed tax or disputed income.

• In respect of which appeal is filed.

Example :- Sec 271D(Failure to comply with provision of sec 269SS) and Sec 271C.

DISPUTED FEESECTION 2 (1)(f)

Fee under Income Tax in respect of which appeal is filed.

Ex :- Sec 234E and Sec 234F.

(C) In a case where the order has been passed by the Assessing Officer on or before the specified date, and the time for filing appeal against such order has not expired as on that date, the amount of tax payable by the appellant in accordance with such order;

(D) In a case where objection filed by the appellant is pending before the Dispute Resolution Panel under section 144C of the Income-tax Act as on the specified date, the amount of tax payable by the appellant if the Dispute Resolution Panel was to confirm the variation proposed in the draft order;

(E) In a case where Dispute Resolution Panel has issued any direction under sub-section (5) of section 144C of the Income-tax Act and the Assessing Officer has not passed the order under sub-section (13) of that section on or before the specified date, the amount of tax payable by the appellant as per the assessment order to be passed by the Assessing Officer under sub-section (13) thereof;

(F) In a case where an application for revision under Section 264 of the Income-tax Act is pending as on the specified date, the amount of tax payable by the appellant if such application for revision was not to be accepted:

Provided that in a case where Commissioner (Appeals) has issued notice of enhancement under section 251 of the Income- tax Act on or before the specified date, the disputed tax shall be increased by the amount of tax pertaining to issues for which notice of enhancement has been issued:

Provided further that in a case where the dispute in relation to an assessment year relates to reduction of tax credit under section 115JAA or section 115D of the Income-tax Act or any loss or depreciation computed there under, the appellant shall have an option either to include the amount of tax related to such tax credit or loss or depreciation in the amount of disputed tax, or to carry forward the reduced tax credit or loss or depreciation, in such manner as may be prescribed.

Nature of Cases

Disputed Tax

Where appeal, writ petition or special leave petition is pending before the appellate forum on or before 31-01-2020

Amount of tax (including surcharge and cess but excluding interest) payable if such appeal was to be decided against taxpayer

Where appeal, the writ petition has been passed on or before 31-01-2020 and time limit for filing appeal against such order has not expired

Amount of tax (including surcharge and cess but excluding interest) payable by the taxpayer after giving effect to such order

Where objections are pending before the DRP

Amount of tax (including surcharge and cess but excluding interest) payable by the taxpayer if DRP was to confirm variation proposed in the draft order

Where DRP issued directions but the Assessing Officer didn't pass an order on or before 31-01-2020

Amount of tax (including surcharge and cess but excluding interest) would have been payable by taxpayer had the order been passed by the Assessing Officer.

Where an application for revision under Section 264 filed by the taxpayer is pending

Amount of tax (including surcharge and cess but excluding interest) payable by the taxpayer if the application was to be Rejected

Where CIT(A) has issued an enhancement notice under section 251

Amount of tax (including surcharge and cess but excluding interest) payable by the taxpayer in respect of enhancement proposed in additions to amount payable relating to the disputed issue.

In a case where the dispute in relation to an assessment year relates to reduction of tax credit under section 115JAA or section 115D of the Income-tax Act or any loss or depreciation computed there under, the appellant shall have an option either to include the amount of tax related to such tax credit or loss or depreciation in the amount of disputed tax, or to carry forward the reduced tax credit or loss or depreciation, in such manner as may be prescribed.

 

Tax Arrear (Section 2(1)(o))

If Appeal Filed by Tax Payer

 

Sr. No.

 

Amount payable up to 31.03.2020

Amount payable after 31.03.2020 till last date.

(i)

Disputed Tax+Interest+ Penalty (except search) chargeable or charged levied or leviable

Disputed Tax

Disputed Tax+10% of Disputed Tax (Proviso 10% of DT > Interest+ Penalty) Excess Ignored)

(ii)

Where Tax Arrears is determined in any Assessment on basis of search u/s 132 or 132A and disputed tax does not exceed ₹ 5 Crore.

Disputed Tax + 25% of Disputed Tax. The excess 25 % should be restricted to interest on penalty.

Disputed Tax + 35% of Disputed Tax. The excess 35 % should be restricted to interest on penalty.

(iii)

Disputed interest

25% of Disputed Interest

30% of Disputed Interest

(iv)

Disputed penalty

25% of Disputed Penalty

30% of Disputed Penalty

(v)

Disputed fee

25% of Disputed Fee

30% of Disputed Fee

 

Tax Arrear (Section 2(1)(o))

If Appeal Filed by Department

 

Sr. No.

 

Amount payable up to 31.03.2020

Amount payable after 31.03.2020 till last date.

(i)

Disputed Tax+Interest+ Penalty (except search) chargeable or charged levied or leviable

50% of Disputed Tax

55% of Disputed Tax (Proviso 5% of DT > Interest+ Penalty) Excess Ignored

(ii)

Where Tax Arrears is determined in any Assessment on basis of search u/s 132 or 132A and disputed tax does not exceed ₹ 5 Crore.

62.50% of Disputed Tax (Proviso 12.50% of DT > Interest+ Penalty) Excess Ignored

67.50% of Disputed Tax (Proviso 17.50% of DT>Interest +Penalty) Excess Ignored

(iii)

Disputed interest

12.50 % of Disputed Interest

15 % of Disputed Interest

(iv)

Disputed penalty

12.50 % of Disputed Penalty

15 % of Disputed Penalty

(v)

Disputed fee

12.50 % of Disputed Fee

15 % of Disputed Fee

 

Case:-1

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

10000000

3120000

 

3120000

Addition made by AO

5000000

     

Total income Assessed ₹ 1,50,00,000/-

15000000

5007600

2000000

7007600

Total demand notice u/s 156 ₹ 38,87,600/-

     

3887600

CIT Appeal Allowed relief ₹ 30,00,000/-

-3000000

     

Assessee is in Appeal before ITAT for ₹ 20,00,000/-  before ITAT

Income tax authority is in Appeal for ₹ 30,00,000/-  before ITAT

Assessee applied for the scheme the total amount Payable

100% of Tax including surcharge and education cess on ₹ 20,00,000/-

2000000

667680

The Same is as per 1stProviso Section 3

50% of Tax including surcharge and education cess on ₹ 30,00,000/-

3000000

500760

Increase in surcharge as income is more than 1 crore

 

218400

Total Tax

 

1386840

 

Case:-2

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

20,00,000/-

70,07,600/-

Total demand notice u/s 156 ₹ 38,87,600/-

     

38,87,600/-

CIT Appeal Allowed relief Rs. Nil

       

Assessee is in Appeal before ITAT for ₹ 50,00,000/-

Assessee applied for the scheme the total amount Payable

100% of Tax including surcharge and education cess on ₹ 50,00,000/-

50,00,000/-

16,69,200/-

 

Increase in Surcharge as income is more than 1Crore

 

2,18,400/-

Total Tax

 

18,87,600/-

 

Case:-3

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

20,00,000/-

70,07,600/-

Total demand notice u/s 156 ₹ 38,87,600/-

     

38,87,600/-

CIT Appeal Allowed relief ₹ 30,00,000/-

-30,00,000/-

     

Assessee is in Appeal before ITAT for ₹ 20,00,000/- before ITAT

Income tax authority does not file Appeal for ₹ 30,00,000/- before ITAT due to covered matter

Assessee applied for the scheme the total amount Payable

100% of Tax including surcharge and education cess on ₹ 20,00,000/-

20,00,000/-

6,67,680/-

 

Increase in Surcharge as income is more than 1Crore

 

2,18,400/-

Total Tax

 

8,86,080/-

 

Case:-4

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

20,00,000/-

70,07,600/-

Total demand notice u/s 156 ₹ 38,87,600/-

     

38,87,600/-

CIT Appeal Allowed relief ₹ 30,00,000/-

-30,00,000/-

     

Assessee is in Appeal before ITAT for ₹ 20,00,000/- and the same issue is decided in the favor by the High Court and decision is not reversed by Supreme Court

Income tax authority filed Appeal for ₹ 30,00,000/- before ITAT

Assessee applied for the scheme the total amount Payable

50% of Tax including surcharge and education cess on ₹ 30,00,000/-

30,00,000/-

5,00,760/-

As regard 50% of tax in respect of Assessee Appeal as it is covered by 3rd Proviso to Sec 3 and department appeal is covered by 1st proviso

50% of Tax including surcharge and education cess on ₹ 20,00,000/-

20,00,000/-

3,33,840/-

Increase in surcharge due to income increased ₹ 1 crore

 

2,18,400/-

Total Tax

 

10,53,000/-

 

Case:-5

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

20,00,000/-

70,07,600/-

Total demand notice u/s 156 ₹ 38,87,600/-

     

38,87,600/-

Assessee is in appeal for ₹ 50,00,000/- before CIT Appeal

       

Issue no. 1 ₹ 20,00,000/- is already decided by Tribunal in the favor of appellant and there is no decision by High Court and Supreme court for some other Assessment Year.

Issue no. 2 ₹ 30,00,000/- is a fresh issue

Assessee applied for the scheme the total amount Payable

50% of Tax including surcharge and education

cess on ₹ 20,00,000/-

20,00,000/-

3,33,840/-

The said is covered by 2nd proviso Sec 3 which is applied in case where appeal is filed before CIT

Appeals

100% of Tax including surcharge and education cess on ₹ 30,00,000/-

30,00,000/-

10,01,520/-

Increase in surcharge due to income increased ₹ 1 crore

 

2,18,400/-

Total Tax

 

15,53,760/-

 

Case:-6 AY 2015-16 CIT appeal passed the order on 26-01-2020 in which relief was given for ₹ 3000000/-

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

35,00,000/-

85,07,600/-

Total demand notice u/s 156 ₹ 53,87,600/-

     

53,87,600/-

Assessee applied for the scheme the total amount Payable

       

100% of Tax including surcharge and education cess on ₹ 20,00,000/-

20,00,000/-

6,67,680/-

The said is covered in the definition of disputed tax u/s 2 (j)(B)

Increase in surcharge ₹ 1 Crore

 

2,18,400/-

Total Tax

 

8,86,080/-

 

Case:-7 Assessment framed u/s 147 for AY 2015-16, vide order dated 31-12-2019 and received by Assessee on 02-01-2020 due to din not appearing on site . The Assessee has not filed the appeal on 31-01-2020

Income

Tax

Interest 234A/234B/234C

Total Tax

Returned Income

1,00,00,000/-

31,20,000/-

 

31,20,000/-

Addition made by AO

50,00,000/-

     

Total income Assessed ₹ 1,50,00,000/-

1,50,00,000/-

50,07,600/-

20,00,000/-

70,07,600/

Total demand notice u/s 156 ₹ 38,87,600/-

     

38,87,600/-

Assessee applied for the scheme the total amount Payable

       

100% of Tax including surcharge and education cess on ₹ 50,00,000/-

50,00,000/-

16,69,200/-

The said is covered in the definition of disputed tax u/s 2 (j)(C)

Increase in surcharge ₹ 1 Crore

 

2,18,400/-

Total Tax

 

18,87,600/-

 

SECTION 4

The declaration shall be filed by the declarant in the prescribed form and verify in prescribed manner. Sec4(1)

Before designated authority

After filling the declaration the appeals pending before ITAT or CIT Appeal shall be deemed to have been withdrawn Sec 4(2)

From the date on which certificate u/s 5(1) is issued by department.

Where the declarant has filed any appeal/writ before the HC or SC against any order in respect of tax arrear, he shall withdraw such appeal or writ petition with the leave of the Court wherever required. Sec 4(3)

after issuance of certificate under sub-section (1) of section 5 and furnish proof of such withdrawal along with the intimation of payment to the designated authority under sub- section (2) of section 5

Any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law 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. Sec 4(4)

after issuance of certificate under sub-section (1) of section 5 and furnish proof of such withdrawal alongwith the intimation of payment to the designated authority under sub-section (2) of section 5.”

Without prejudice to the provisions of sub-sections (2), (3) and (4), the declarant shall furnish an undertaking waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the tax arrear which may otherwise be available to him under any law for the time being in force. Sec 4(3)

In equity, under statute or under any agreement entered into by India with any country or territory outside India whether for protection of investment or otherwise and the undertaking shall be made in such form and manner as may be prescribed.

 

The declaration under sub-section (1) shall be presumed never to have been made if,-

(a) particular furnished  in declaration are false at any stage;

(b) violates any of the conditions ;

(c) the declarant acts in any manner which is not in accordance with the undertaking given by him under sub-section (5)

in such cases, all the proceedings and claims which were withdrawn under section 4 and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived.

No appellate forum or arbitrator, conciliator or mediator shall proceed to decide any issue relating to the tax arrear mentioned in the declaration.

in respect of which an order has been made under sub-section (1) of section 5 by the designated authority or the payment of sum determined under that section

 

SECTION 5

The designated authority shall with in 15 days for the receipt of declaration shall issue a certificate mentioning the amount payable by the declarant.

The declarant shall pay the amount with in 15 days from receipt of certificate and shall also provide prof payment made along with prescribed font. The designated authority shall pass an order stating that the declarant has paid the amount.

The order shall not be reopened under any proceeding of income tax act.

Explanation.–– For the removal of doubts, it is hereby clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.”.

SECTION 6

The designate authority after passing the order shall not issue proceeding in respect of an offence or impose penalty or charge interest.

SECTION 7

  1. Any amount paid on presence of declaration shall not be refunded.
  2. In a case where declarant had paid any amount under Income Tax Act before filling the declaration than such amount shall be refunded but not be entitled to interest u/s 244A

SECTION 8

No immunity shall be provided other than the those in relation to which declaration has to be made.

SECTION 9

Non applicability

a. Tax arrears in relation to

i. Block assessment in search cases where the disputed tax more than ₹ 5 crore.

ii. A year in respect which prosecution is initiated.

iii. Undisclosed income located outside India.

iv. Assessments based on information obtained under DTAAs.

b. To 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 on or before the filing of declaration:

c.         To 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;

(ca) to 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 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;”

d. to 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.

ISSUED NOT DEALT BY SCHEME

Delay in filing of Appeal

A question arises for appeals which were filed before January 31, 2020; however, a delay exists in filing of the appeal as per the respective statutory provisions and the application for condonation of delay has not been disposed of. Can such cases avail the benefit of the Scheme.

According to speaker such cases must be covered within the ambit of the Scheme provided appeal was filled before 31.01.2020.

Set aside proceedings

An issue arises where the matter is remanded back to the Ld.  Assessing Officer (‘AO’) by the Tribunal (mostly) for de novo proceedings, whether the same will be covered within the ambit of the Scheme.

Scenario 1 where all the issues were sent back to the AO. The declaration can not be filed has no Appeal is pending.

Scenario 2 where the all issues are remanded back to the CIT Appeal. The declaration can be filed.

Scenario 3 where one issue was sent back to AO and part to the CIT.

The bill has not covered this situation according to speaker the benefit will not be available.

Orders pronounced post effective date.

A question arises with respect to the matters which were heard before January 31, 2020 and the order has been passed after February 4, 2020. Will such cases be able to take advantage of this Scheme?

According to the speaker, such cases must be covered within the ambit of the Scheme.

Miscellaneous Application

Further, in the event a Miscellaneous application is filed against an order of the Tribunal, in a case which was heard before the cut off date but order has been passed after the budget speech. It must be understood that a Miscellaneous application revives the appeal which pending before the Tribunal and therefore such cases must be covered within the ambit of the Scheme.

Prosecution

With a view to clarify, availment of the Scheme for a particular appeal ensures that there is no prosecution launched for the particular year under consideration.

263 Matters

Scenario 1

Scenario 2

 

By: Aanchal Kapoor - February 27, 2020

 

 

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