To
The Hon’ble Principal Chief Commissioner of Income
Tax (NWR),
Chandigarh.
Sub:
Request for issuance of clarifications
in respect of Direct Tax Dispute Resolution Scheme, 2016
Hon’ble Sir,
Kindly refer to the
matter cited as subject above. Vide Finance Act 2016, the Direct Tax Dispute
Resolution Scheme, 2016 (DTDRS) has been launched for window period of
01.06.2016 to 31.12.2016. The present scheme is almost pari-materia to the
earlier schemes like KVSS, 1998 etc. with slight changes here and there.
We have gone through
the text of the Scheme including rules framed there-under and forms notified so
far. We have also gone through many judgments rendered by Hon’ble courts in
regard to earlier schemes. In many cases, the litigation arose only due to lack
of clarity on the issues and also the extent of the powers the AO can issue
subsequent to issuance of certificate by CIT accepting the declaration. To
avoid such situation, necessary clarifications should be issued.
Based on our
interpretation, certain clarifications are required in respect of this Scheme.
The queries in respect of which this clarification is being sought are attached
herewith. We seek your Honour’s indulgence in seeking necessary clarifications
in regard to those issues from the CBDT. It is prayed that the same may please
be looked into. We shall be highly obliged.
Thanking You,
Yours Faithfully,
For Chandigarh Chartered Accountants Taxation Association
Chartered Accountants
Clarifications
required relating to Direct Tax Dispute Resolution Scheme, 2016
1.
In many cases, the
assessee is not aware about the status of outstanding demand as the AO/CPC
keeps on charging interest u/s 220(2) and adjusts with subsequent deposits or
refunds. What is the mechanism set-up by the department to co-relate the demand
with the assessee and ensure that only the interest upto the date of assessment
is charged, tax is correctly computed, TDS credit, if not allowed earlier, is
now allowed, challan mismatches are settled etc. ?
2.
Where one of the issue
in appeal is denial of TDS credit by the AO, how the same will be dealt when
the assessee has now TDS reflecting in 26AS ? Can the deptt be asked to first
grant TDS credit, then compute correct demand and thereafter demand in the scheme
be computed? Can the assessee suo-motto claim TDS credit from amended 26AS and
then report balance demand in Form under scheme?
3.
What would
happen if the appeal is decided in favour of the declarant after filing of the
declaration and before the order by designated authority in the scheme?
4.
What would happen to
assessments of same issue on 2 persons or same assessee in 2 different years
i.e. substantive and protective assessments? If the filing of declaration by
assessee under one of the mechanism will automatically settle the appeal of
other also?
5.
What would be the point
where it can be said that prosecution is pending? Further, the pendency of
prosecution should have live link with the pending appeal? What if the appeal
is pending but the court
has acquitted the
assessee from prosecution?
6.
If the assessee’s
application is rejected, whether he would be given a speaking and reasoned
order by CIT? Whether this rejection order would be appealable and if yes
before which authority?
7.
Appeal pending before
CIT(A) on 29.02.2016. After 29.02.2016 but before filing of Form in the scheme,
the appeal is disposed off. Whether still “A” is eligible?
8.
“A” opts for or is in
the process of applying for in the scheme. The matter pending before CIT(A) is
on quantum. In the meantime, AO initiates penalty process by issuing SCN or he
may infact levy penalty during such period. Should not the deptt direct the AOs
to strictly keep the penalty in abeyance till the decision by CIT(A) or
decision on the scheme?
9.
Where appeal before
CIT(A) is against intimation u/s 143(1), whether creation of such demand will
be treated as tax ?
10. Appeal against quantum as well as penalty
pending before CIT(A). Quantum less than Rs. 10 Lacs. Whether still
25% of penalty is to be deposited to avoid the situation. In case quantum tax
is more than Rs. 10 Lacs and appeal against the same as well as penalty is
pending, whether by paying 125% of tax + interest, penalty appeal automatically
goes?
11.Whether
all types of penalties like 271(1)(c ), 271A, 271B, 271C, 271D, 271E, 272A(2)(k) etc. covered in the
scheme ? Further, only
12.
search assessments are excluded from
scheme. What about penalties levied u/s 271AAA, 271AAB, 271(1)(c ) etc. ?
12. Whether TDS based assessments u/s 201
covered in the scheme?
13. Whether fees charged u/s 234E in order
passed u/s 200A is covered in the
scheme i.e. whether this fees can be called as a penalty covered in the scheme?
The appeal against levy of this fees u/s 234E is pending.
14. Where appeal on quantum as well as multiple
levy of penalties are pending, by applying in the scheme towards withdrawl of
quantum, whether appeal towards all penalties automatically stands withdrawn
and settled and no need to pay separate for penalty appeals?
15. What is the meaning of Tax effect?
a.
‘A’ has paid tax under
115JB. There is addition in Total Income only and the c/f MAT credit has been
reduced. This reduction is more than Rs. 10 Lacs. What if this is less than Rs.
10 Lacs.
b.
‘A’ has paid tax under
115JB. There is addition in book profit as well as Total Income also. The tax
effect both ways is more than Rs. 10 Lacs. What if tax effect on addition in
Total Income is more than Rs. 10 Lacs but on book profit it is less than Rs. 10
Lacs.
c.
The addition made
reducing the loss only. The notional tax effect on loss reduced is more than
Rs. 10 Lacs. Whether extra 25% still payable?
16. ‘A’ has already paid quantum tax as well as
penalty. Appeal against both pending
before CIT(A). Whether, ‘A’ is eligible for refund of 75% or 100% of penalty as
the case may be?
17. The scheme prescribes paying of interest
only upto date of assessment. But CPC has already suo-motto charged interest
u/s 220(2) and has recovered it by adjustment with refund of other years.
Whether, this interest
would be allowed to be set off with quantum or penalty demand?
18. ‘A’ has been levied penalty u/s 271(1)(b)
for non-compliance of notices issued u/s 131/133(6) etc. issued in case of
ongoing assessment of some other assessee. The other person does not intend to
opt for scheme. There is no appeal on quantum of ‘A’ but appeal against levy of
penalty u/s 271(1)(b) is pending before CIT(A). Whether he can pay 25% of
penalty and opt for scheme?
19. The assessee withdraws the appeal in the
scheme. Whether this would be treated as concession of the same assessee in
appeal on same issue for other years for which appeal is pending before CIT(A)
or higher appellate authority or for which issue may arise in future?
20. Whether deposit made under the scheme if
rejected be allowed to be adjusted subsequently with outstanding demand?
21. Whether appeals filed beyond statutory time
limit will be treated as pending on 29.02.2016? What if application for
condonation of delay is attached thereto and what if not attached? Whether
deptt will direct the CIT(A) to decide the condonation issues and decide the
issue of pendency and admittance so that these assessees can also get the
benefit of the scheme?
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