The CBDT vide Circular no. 12/2024 dated 15.10.2024 (enclosed herewith) has issued a guidance note in the form of frequently asked questions (FAQs) in relation to the recently launched Direct Tax Vivad se Vishwas Scheme, 2024 (DTVSV/ Scheme) whose commencement date stood notified on 01.10.2024.
We would like to highlight certain vital FAQs with our comments as under:
| Issue addressed | Analysis by CBV basis the comments of CBDT |
| Search assessments: Which assessments ought to be considered to be made on the basis of search? |
Assessments framed u/s 153A or 153C clearly qualify to be made in pursuance of a search/ survey. Also, the following assessments made u/s 143(3)/ 144/ 147 shall also be covered, where – a) Assessment is in pursuance of a search action u/s 132/ requisition u/s 132A post 01.04.2021; orb) Assessment is in pursuance of a search action u/s 132/ 132A post 01.04.2021 and it involves satisfaction with prior approval of CIT/ PCIT that money/ bullion/ jewellery for valuable article seized or requisitioned belongs to the assessee; orc) Assessment is in pursuance of a search action u/s 132/ 132A post 01.04.2021 and it involves satisfaction with prior approval of CIT/ PCIT that books of accounts or documents seized or requisitioned pertains to/ relates to the assessee. No threshold prescribed for search cases, thus keeping them out of DTVSV in entirety. |
| Rollback years: Whether advanced pricing agreement can be pursued for remaining years of the four rollback years? |
If few years are settled in DTVSV, the rollback can be applied for the remaining years. |
| Appeal disposed off: While an appeal stood pending as on 22.07.2024 but before the taxpayer could file declaration under the Scheme, the appeal stands disposed off, whether in such a case, can the taxpayer still file declaration under DTVSV? |
Pendency of appeal should rest not only as on 22.07.2024, but also on the date of filing a declaration. However, if by receipt of an appellate order post 22.07.2024, the pendency as on 22.07.2024 does not survive, this pre-condition should not deter an applicant in opting for the Scheme, provided that either party continues to litigate at a higher forum prior to filing of declaration by the taxpayer. |
| Time limit to file appeal not expired on 22.07.24: In a case where taxpayer has received an order, against which taxpayer has not filed an appeal. However, the time limit to contest the said order has not expired as on 22.07.2024, whether such a case qualifies to be covered under the Scheme? |
Unexpired period to file appeal (other than DRP cases) as on 22.07.2024 does not give leeway to taxpayers with respect to eligibility. In other words, pendency of an appeal as on 22.07.2024 is a pre-requisite to be eligible for the Scheme. |
| Settling issues in part: Where disputed tax contains qualifying as well as non-qualifying tax arrears (eg. tax arrears w.r.t. undisclosed foreign income), whether the taxpayer can apply for the scheme in such a case? |
As the scheme does not envisage settling issues in part, an assessment year which entails non-qualifying tax arrears would not be eligible to covered under the Scheme. |
| Settling penalty appeal while quantum appeal pending: Can a taxpayer settle a penalty appeal while continuing to litigate on the associated quantum appeal? |
Normally, a penalty appeal can only be settled where quantum appeal is not alive. However, in a case where penalty appeal as well as quantum appeal are both alive, in such a case one can settle both appeals by paying relevant tax only for the quantum appeal. |
| Protective & Substantive additions: How will appeals w.r.t. substantive and protective additions in either of the following cases be dealt with under the Scheme – (i) Same assessee, different assessment years(ii) Same issue, different assessees |
Taxpayer can settle either substantive or protective litigation provided substantive appeal is eligible for DTVSV. After settlement of any one of the above appeal, the AO will delete the balance other appeal (i.e. protective or substantive as the case may be) by way of rectification. |
| Disputes relating to other direct-taxes: Whether disputes relating to wealth tax, security transaction tax, commodity transaction tax or equalization levy stand covered under the Scheme? |
Only disputes relating to income tax stand covered under DTVSV. Therefore, disputes pertaining to wealth tax, security transaction tax, commodity transaction tax or equalization levy are not eligible for DTVSV. |
| Enhancement notice: In a case where taxpayer has received enhancement notice, whether appellant qualifies for DTVSV? If yes, how would disputed tax be computed? |
Where CIT(A)/ JCIT(A) has issued enhancement notice, the taxpayer can avail DTVSV after computing disputed tax incorporating enhanced income in the total assessed income. |
| Refund issues: Whether taxpayer can utilise refunds that are due from the department towards payment of disputed tax? |
No provision in DTVSV permitting payment of disputed tax by way of adjustment of any expected refund due from the Department. |
| Credit of taxes paid under DTVSV: Whether taxpayer can take credit of taxes paid under DTVSV in subsequent orders? |
No credit of taxes paid under DTVSV can be taken in any subsequent order (such as OGE) issued by the Department. |
| TDS/TCS issues: Whether the scheme covers cases of delay in deposit of TDS/ TCS? |
If dispute in TDS/ TCS in the order passed u/s 201(1) is not disputed, then dispute pertaining to interest levied u/s 201(1A) can be settled. However, where dispute relates to TDS/ TCS in 201(1) order as well as interest u/s 201(1A), then only dispute pertaining to TDS/ TCS ought to be settled. |
| TDS/ TCS issues: Where assessee settles TDS appeal against order u/s 201(1) as deductor, will credit of such tax be allowed to the deductee? |
Yes, credit of such taxes will be allowed as on the date of settlement of dispute. |
| TDS/ TCS issues: Where assessee being deductee settles own appeal under DTVSV, whether consequential relief will be available to deductor for default u/s 201(1) of the Income Tax Act, 1961? |
Yes, accordingly the deductor would no longer be required to pay the corresponding defaulted TDS amount. Nevertheless, such deductor would be required to pay interest u/s 201(1A) of the Income Tax Act, 1961. Further, such deductor in default may settle the disputed interest if the same qualifies under DTVSV. |
| Consequential relief u/s. 40(a)(i)(ia): If assessee settles dispute u/s 201(1) order, when will he get consequential relief of expenditure allowance under proviso to section 40(a)(i)/(ia) of the Act? |
Deductor entitled to get consequential relief in the year in which tax was required to be deducted. However, where such deductor already claimed deduction in subsequent year, then no further relief allowable under DTVSV. Further, in a case where taxpayer is settling dispute pertaining to an order u/s 143(3) which includes disallowance u/s 40(a)(i)/(ia) and such disallowance already stands settled separately, then in such a case disputed tax w.r.t. the order u/s 143(3) would be calculated excluding the disallowance u/s 40(a)(i)/(ia) |
| Registration u/s. 12AA: Whether a Trust which has been denied registration u/s 12AA qualifies for DTVSV? |
Denial of registration u/s 12AA not eligible for DTVSV. |
| Set-aside matters: Whether an order which has been set-aside (fully or partially) to the AO qualifies for eligibility under DTVSV? |
Set aside matters to the AO is not an appeal pending as such and thus such matters whether set aside fully or partially do not stand covered under the Scheme. |
| Writ on 148/148A notice: Whether cases where writ has been filed against notice u/s 148/ 148A qualifies for eligibility under the Scheme? |
Such cases fall outside the ambit of DTVSV as disputed tax is not ascertainable since income is yet to be determined by the Department. |
| Appeal before HC/SC yet to be admitted: Whether appeals which are yet to be admitted by HC/ SC qualify for eligibility under DTVSV? |
Yes. |
| Cross objections: Whether cross-objections filed qualify for eligibility under DTVSV? |
Yes. |
| Miscellaneous Applications (MA): Whether MA qualify for eligibility under DTVSV? |
No, since MA is not an appeal. |
| Assessment order stayed by HC/SC: Whether DTVSV can be availed where enforceability of an assessment order has been stayed by HC/ SC? |
No as assessment order has been stayed and the same does not tantamount to be an appeal. |
| Other issues: Where 2 appeals pertaining to the same assessment year lie before an appellate forum against different orders (such as 143(3) and 143(3) r.w.s. 147), whether such cases qualify for DTVSV? |
Taxpayer has an option to settle either or both appeals. |
| Other issues: Whether for appeals pending before HC, whether there is 50% concession, while computing disputed tax, in cases where assessee has got relief on same issue from SC? |
Such provision is absent as ideally there isn’t any existing dispute before HC since SC has decided on the said issue in favour of the taxpayer and thus it does not call for settlement of such issue before the HC. |
| Other issues: Where addition was made u/s. 143(3) on two issues and appeal is filed only for one addition, whether interest and penalty can be waived for both additions provided taxpayer files under DTVSV? |
Interest and penalty will be waived only in respect of issue which stands disputed in appeal. |
| Other issues: Whether the immunity from prosecution is only for the declarant or also for the Director of the company or partner of the firm with respect to the disputes settled under DTVSV Scheme, 2024? |
Immunity from prosecution shall also extend to director/ partner of company/ firm (being the declarant). |
Comments of Nirav Poddar, Partner, Direct Tax:
The FAQs recently released by CBDT provide the much needed clarity on several contentious issues, thereby resolving taxpayer’s dilemma w.r.t. eligibility of the Scheme. It is now apparent that all search/ survey related cases are outside the ambit of DTVSV, as FAQs stay silent on any threshold (which existed in erstwhile VSV regime) on search/ survey related cases. Further, FAQs do not contain any leniency w.r.t. settlement of cases involving undisclosed foreign income/ asset, which reiterates the tough stance taken by Ministry of Finance in the recent past on matters pertaining to undisclosed foreign assets.
