VIVAD SE VISWAS ACT 2020 (VSV) – a half-hearted approach- all pending and likely disputes should be eligible for settlement.

[CA DEV KUMAR KOTHARI]

Earlier article on this website:

DIRECT TAX VIVAD SE VISHWAS BILL 2020 - SOME SUGGESTIONS

An Article By: - CA DEV KUMAR KOTHARI  February 14, 2020

In the above article a request letter sent to honorable FM was reproduced. Some of suggestions have been implemented during course of amendments to  VSV BiIl, as originally introduced.

VSV should target to settle all pending and

likely disputes as on a cutoff date:

VSV scope has been widened after amendment. Some of suggestions of author has also found inclusion. However, still we find that even amended Act is not covering all disputes and likely disputes, for which action is pending by tax authority or tax payer by filing of submissions, appeal and passing of orders etc.

Scope of VSV Act after amendment

VIVAD SE VISWAS ACT 2020 (In short VSV) has extended scope of settlement but still it is appears to be a half-hearted approach. Many of disputes and disputes to be initiated in near future or likely disputes are not yet covered even after the enlargement of scope by amendments. The same is illustratively discussed in this write-up.

Ddefinitions of appellant and appellate forum, as amended are reproduced below in left column of table  with highlights added by author, and in right column  remarks and suggestions   are given  :

From the VSV Act	Remarks and suggestions
2. (1) In this Act, unless the context otherwise requires,- ‘(a) “appellant” means-
(i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date;	Pending review petitions before High Court and The Supreme Court can also be covered.
(ii) a person in whose case an order has been passed by the Assessing Officer, or an order has been passed by the Commissioner (Appeals) or the Income Tax Appellate Tribunal in an appeal, or by the High Court in a writ petition, on or before the specified date, and the time for filing any appeal or special leave petition against such order by that person has not expired as on that date;	Order / judgment of High Court on appeal should also be covered. As per this clause only order on WP is covered.
(iii) a person who has filed his objections before the Dispute Resolution Panel under section 144C of the Income-tax Act, 1961 and the Dispute Resolution Panel has not issued any direction on or before the specified date;	A case where filing of objections is yet to take place can also be covered.
(iv) a person in whose case the Dispute Resolution Panel has issued direction under sub-section (5) of section 144C of the Income-tax Act, 1961 and the Assessing Officer has not passed any order under sub-section (13) of that section on or before the specified date;	Cases in which time for passing of directions by DRP is available can also be covered.
(v) a person who has filed an application for revision under section 264 of the Income-tax Act and such application is pending as on the specified date;”;	Cases where time for filing application under section 264 is available can be covered.
	Cases where SCN u/s 263 has been issued can be covered
	Cases where order u/s 263 has been passed and appeal before Tribunal is pending and where time is available for filing of such appeal can also be covered.
(b) “appellate forum” means the Supreme Court or the High Court or the Income Tax Appellate Tribunal or the Commissioner (Appeals);	Commissioner can also be covered so that cases u/s 263 and 264 can be covered. This can be described as “appellate and revision forum”

Other coverage to reduce litigation:

Cases where notice for rectification of orders or re-assessment or re-computations or revision etc. have been issued can also be covered  to provide scope to taxpayer to pay tax and avoid litigation. In fact an option can be provided for either to go for litigation or settle on payment of tax amount or 50% of tax amount where tax authorities have lost cases on similar issues in case of assesse or any other assesse.

Provision for litigation or settlement by taxpayer:

Regular provisions can be made to provide option to taxpayers to adopt either approach of litigation or settlement.

This is desirable because many litigation have to be initiated by tax payers even where tax effect is low and / or chances of winning are low only because of draconian provisions of penalty and prosecution.

If an option is provided, many such litigations shall come to an end.

When a taxpayer adopt approach of settlement, he must be required to pay only amount of tax where there is no favorable decision in favor of tax payer and in cases where there is favorable decision in case of any taxpayer on same issue only 50% of tax should be required to be paid by taxpayer. 

In case of settlement, all penalty and prosecutions provisions should be made not applicable.

Author hopes that above suggestions will be considered in near future.