Circular No.33 of 2016
F.No.142/11/2016-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
Dated: 12th September, 2016
Clarifications on the Direct Tax Dispute Resolution Scheme, 2016
The Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as
`the Scheme') incorporated as Chapter X of the Finance Act, 2016 (hereinafter
referred to as `the Act') provides an opportunity to tax payers who are under
litigation to come forward and settle the dispute in accordance with the provisions of
the Scheme. The Direct Tax Dispute Resolution Scheme Rules, 2016 (hereinafter
referred to as `the Rules') have been notified. In regard to the scheme queries have
been received from the stakeholders seeking further clarity on certain provisions of
the Scheme. The Central Government has considered the queries and decided to
clarify the same in the form of questions and answers as follows.-
Question No.1: In a case an appeal was pending before CIT(Appeals) as on
29.02.2016. However, before making declaration under the
Scheme the appeal is disposed of by CIT(Appeals). Is the
assessee eligible to avail the Scheme?
Answer: In such a case where the appeal was pending before
CIT(Appeals) as on 29.02.2016 and the CIT(Appeals) has already
disposed of the same before making the declaration, the
declaration under the Scheme cannot be filed.
Question No.2: In a case where the appellant has filed a declaration under the
Scheme or has intimated the CIT(Appeals) his intention to file
declaration under the Scheme, whether the CIT(Appeals) will
dispose-off the appeal?
Answer: The CIT(Appeals) have been instructed vide letter
F.No.279/Misc./M-30/2016 dated 30.3.2016 that appeals where
the appellants have expressed their intention to avail the
Scheme should be kept pending. Further, vide letter
F.No.279/Misc./M-74/2016-ITJ dated 19.07.2016, the designated
authority have been instructed to obtain an endorsement from
CIT(Appeals) concerned that the appeal for which declaration
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has been filed was pending on 29.2.2016 and has not yet been
disposed. Therefore, in a case where the declaration has been
made under the Scheme or an intention to avail the Scheme has
been made by the appellant, the CIT(Appeals) shall not dispose
the pending appeal.
Question No.3: Appeal against quantum as well as penalty under section
271(1)(c) is pending before CIT(Appeals). If the assessee files a
declaration in respect of the quantum appeal under the Scheme,
what would be the fate of penalty appeal?
Answer: As per the Scheme, in a case where disputed tax in quantum
appeal is more than Rs.10 lakh, the declarant has to pay the
disputed tax, interest and 25% of minimum penalty leviable.
Further, in a case where the disputed tax in quantum appeal
does not exceed Rs.10 lakh, the declarant is required to pay only
the disputed tax & interest and there is no requirement for
payment of any amount in respect of penalty leviable.
Section 205(b) of the Act provides immunity from imposition or
waiver of penalty under the Income-tax Act or the Wealth-tax
Act in respect of tax arrear covered in the declaration to the
extent the penalty exceeds the amount of penalty referred to in
section 202(I) of the Act. Hence, in both the situations (i.e.
whether disputed tax in quantum appeal exceeds Rs.10 lakh or
not), where a valid declaration under the Scheme is made in
respect of quantum appeal, the appeal against penalty levied
under section 271(1)(c) of the Income-tax Act, relating to the
quantum appeal pending before the Commissioner (Appeals)
shall be deemed to be withdrawn and the penalty or the balance
amount of penalty, as the case may be, shall be deemed to be
waived.
Question No.4: Section 203(2) reads that consequent to the declaration in
respect of tax arrear, the appeal pending before Commissioner
(Appeals) shall be deemed to be withdrawn. From what point of
time does the provision become operative?
Answer: The appeal pending with Commissioner (Appeals) shall be
deemed to be withdrawn from the date on which the certificate
under section 204(1) is issued by the designated authority.
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Question No.5: The addition made in assessment has the effect of reducing the
loss but penalty has been initiated under section 271(1)(c) of the
Income-tax Act. Is the assessee eligible to avail the Scheme?
Answer: The Scheme is applicable to cases where there is disputed tax.
Since in the case of reduction of loss, there is no disputed tax the
assessee shall not be eligible to avail the Scheme. However, if an
appeal is pending before Commissioner (Appeals) in respect of
penalty order framed as a result of variation in quantum loss,
the declarant may file a declaration in respect of such penalty
order.
Question No.6: In a case the time period specified under section 249 of the
Income-tax Act for filing of appeal expired on 29.2.2016. The
assessee filed an appeal in this case on 5.4.2016 with a request
to condone the delay in filing of appeal. The Commissioner
(Appeals) condoned the delay in filing of the appeal. Is the
Scheme available to the assessee in such a case?
Answer: In condonation cases, a declarant shall be eligible for the
Scheme, if:
(i) the time limit for filing of appeal under section 249 of the
Income-tax Act, 1961 has got barred by limitation on or before
29.02.2016;
(ii) the appeal and condonation application has been filed before
Commissioner (Appeals) before 01.06.2016; and
(iii) the delay in filing of such appeal is condoned by the
Commissioner (Appeals)
Hence, in the present case the Scheme is available to the
assessee.
Question No.7: In a case the Commissioner (Appeals) has given a notice of
enhancement. Is such a case eligible for availing the Scheme?
Answer: A case where notice of enhancement has been received by the
declarant before the date of commencement of the Scheme i.e.
01.06.2016 shall not be eligible for the Scheme.
Question No.8: A survey was conducted during F.Y. 2013-14. Incriminating
documents relating to assessment year 2011-12 were found and
assessment under section 147 of the Income-tax Act for the said
year was made based on these documents and other enquiries
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conducted. Is the assessee's case for A.Y. 2011-12 which is
pending with Commissioner (Appeals) eligible for the Scheme?
Answer: As per section 208 of the Act, the Scheme shall not be available
for assessment or reassessment on which survey conducted
under section 133A of the Income-tax Act has a bearing. Hence,
in the present case, A.Y. 2011-12 is not eligible for the Scheme.
Question No.9: In a case, appeal against penalty order under section 271(1)(c) is
pending before Commissioner (Appeals) and appeal against
quantum addition is pending with higher appellate authority.
As per the Scheme, the amount payable is 25% of the minimum
penalty leviable and the tax and interest payable on the total
income finally determined. What should be construed as `total
income finally determined' for computing the quantum of tax,
interest and penalty payable under the Scheme? Further, what
would be the effect of any variation in quantum addition as a
result of appellate order(s) passed subsequent to filing of
declaration?
Answer: In case of an appeal relating to penalty under section 271(1)(c),
the amount payable under the Scheme is 25% of the penalty
amount and also the tax and interest payable on the total income
finally determined. For this purpose the total income finally
determined shall be the total income as determined after giving
effect to the last appellate order passed on or before the date of
filing declaration under the Scheme.
Any variation to the total income as a result of any appellate
order passed subsequent to the date of declaration shall be
ignored for the purposes of computing the amount of penalty
payable under the Scheme.
Question No.10: Where certain income has been charged to tax in the hands of
two different persons or where it has been charged to tax in the
case of same person in two different assessment years, one on
substantive basis and the other on the protective basis, will the
declarant or the other person get advantage in respect of
additions made both substantively and protectively?
Answer: The assessees are advised to make declarations in cases or for
assessment years where the additions are made on substantive
basis. The protective demand is not subjected to recovery unless
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it is finally upheld. Once the declaration in a substantive case or
year is accepted, the tax arrear in protective case/year would no
longer be valid and will be rectified by suitable orders in the
normal course.
Question No.11: By filing declaration under the Scheme for one assessment year,
does the taxpayer forego his right of appeal on the same issue in
another assessment year?
Answer: No. The order under the Scheme does not decide any judicial
issue. It only determines the sum payable under the Scheme
with reference to tax arrear or specified tax, as the case may be.
It only provides for a dispute resolution mechanism in respect of
cases for which declaration has been made.
Question No.12: The declarant has not paid the tax payable under the Scheme
within 30 days of the order under section 204(1) for any reason
including the non-realisation of the cheque presented to the
bank. Will the declarant be eligible for the relief under the
Scheme?
Answer: No. The tax payable under the Scheme should be paid to the
credit of the Government on or before the due date as specified
in the Scheme. The assessees are advised to pay the tax well on
time so as to avail the relief under the Scheme.
Question No.13: There is no time limit specified for intimating the payments
made by the declarant in accordance with the certificate issued
in Form-3. Further, there is also no time limit specified for
issuance of order under section 204(2) of the Act by the
designated authority. Please clarify?
Answer: The declarant shall intimate the fact of payment along with the
proof of the same to the designated authority within one month
from the date on which time limit for making payment under
the Scheme expires. The designated authority shall issue the
order under section 204(2) of the Act within one month from the
end of the month in which intimation regarding payment is
received in Form-4 from the declarant.
Question No.14: Whether refund will be granted in cases where the assessee has
already paid the penalty amount in full or in part while the
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appeal is still pending at CIT(A) stage and the assessee opts for
this Scheme?
Answer: As per section 202(I)(b) of the Scheme, in case of pending appeal
related to penalty, 25% of the minimum penalty leviable
alongwith tax and interest on the total income finally
determined is required to be paid. Therefore, if an assessee who
has already paid an amount over and above the amounts
referred to in section 202(I)(b) opts for the Scheme, he shall be
eligible for refund of the excess payment already made.
However, the declarant shall not be eligible for claim of interest
on such refund under section 244A of the Income-tax Act, 1961.
(Dr. T.S. Mapwal)
Under Secretary to the Government of India
Copy to:-
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
3. The Chairperson, Members and all other officers in CBDT of the rank of Under
Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax with a request
to circulate amongst all officers in their regions/ charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/
Pr. DGIT (L&R).
6. CIT (M&TP), CBDT.
7. Web manager for posting on the departmental website.
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