[Analysis] Direct Tax Vivad Se Vishwas Scheme 2024 – Key Features | FAQs | Benefits

Over the years, the pendency of appeals filed by taxpayers and the Government has increased since the number of appeals that are filed is much higher than the number of appeals that are disposed of. To address this problem and to provide expeditious disposal of appeals by appellate authorities under its administrative control, the Direct Tax Vivad Se Vishwas Act, 2020, was launched for appeals pending as of 31-01-2020. Considering the success of this Scheme and the mounting pendency of appeals at the CIT(A) level, the Direct Tax Vivad se Vishwas Scheme, 2024 (‘Scheme’ or ‘DTVVS’) is introduced by the Finance (No. 2) Act, 2024 (‘FA 2024’). Sections  88 to 99 of the FA 2024 contained provisions of the DTVVS.

In the subsequent paras, we have covered all possible questions relating to the FAQs. Our response is based on the current Scheme and clarifications[1] issued by the CBDT with respect to the similar Scheme launched in earlier years.

The Vivad Se Vishwas Scheme shall come into force with effect from 01-10-2024. A declaration under the Scheme may be made on or after 01-10-2024 up to the last date yet to be notified by the Government. The Scheme does not provide for the resolution of tax disputes under all direct tax laws. It only covers the resolution of income-tax disputes. It does not cover disputed dues under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Wealth tax, Securities transaction tax, Commodities transaction tax and Equalisation levy.

There is no bar on the declaration by someone who had earlier availed the benefit of the Kar Vivad Samadhan Scheme, 1998, the Direct Tax Dispute Resolution Scheme, 2016 or the Direct Taxes Vivad Se Vishwas Act, 2020. Taxpayers can opt for the old regime as well.

Though the Scheme is in pari materia with DTVVS 2020, it differs from the previous Scheme in the following respects:

• Applies to non-search cases – The DTVVS 2024 covers the settlement of tax disputes only in non-search cases. It does not allow the declaration and settlement of tax disputes in search cases. DTVVS 2020 allowed the settlement of tax disputes in a search case if the disputed tax amount was Rs. 5 crores or less.
• Applies to pending appeals – DTVVS 2020 applied to appeals pending as of the specified date (31-01-2020) and the tax disputes where the time limit to file an appeal had not expired as of the specified date. The DTVVS 2024 applies only to appeals pending as of the specified date (22-07-2024). It does not apply to cases where the appeal is disposed of before the specified date and the time limit to appeal further against the appellate order has not expired as of the specified date.
• Does not apply to arbitration, mediation or conciliation – DTVVS 2020 applied to tax disputes pending by way of arbitration, mediation or conciliation. The DTVVS 2024 does not cover such tax disputes.
• Less liberal – DTVVS 2020 was much more liberal towards the assessee opting for the settlement of tax disputes. Where the amount to be paid as settlement towards interest and penalty in tax disputes (10% of disputed tax/25% of disputed tax/35% of disputed tax) exceeded the amount of interest chargeable and penalty leviable on disputed tax, the excess was to be ignored for computation of the amount to be paid for settlement of tax disputes. There is no such benevolent provision in the DTVVS 2024.

The following are the consequences of making a declaration under the Scheme to settle litigated disputed tax arrears:

• Making a declaration under the Scheme shall not amount to conceding the tax position.
• It shall not be lawful for the income-tax authority or the declarant to contend in any appeal that the other party (income-tax authority or the declarant) has acquiesced in the decision of the disputed issue by settling the issue under the Scheme.
• The declarant does not forego his right of appeal on the same issue in another assessment year.
• The order under the Scheme by the designated authority does not decide any judicial issue. It only provides a dispute resolution mechanism for cases for which the declaration has been made.
• Only the issues covered in the declaration are settled in the dispute without prejudice to the same issues pending in other cases.
• If an assessee has already paid an amount over and above the amounts referred to in the Scheme and subsequently opts for the Scheme, he shall be eligible for a refund of the excess payment already made. However, the declarant shall not be eligible for a claim of interest on such refund under Section 244A of the IT Act.
• If the substantive addition is eligible to be covered under the Scheme, then upon settlement of the dispute related to substantive addition, the AO shall pass a rectification order deleting the protective addition pertaining to the same issue in the case of the assessee.

Section 94(1) of the FA 2024 provides that any amount paid in pursuance of a declaration made under Section 91 shall not be refundable under any circumstances. However, Section 94(2) carves out an exception that the declarant shall be entitled to a refund of amounts paid by him if the following conditions are satisfied:

• The declarant had paid any amount under the Income-tax Act,1961
• Such amount paid was in respect of his tax arrear
• Such amount paid exceeds the amount payable under section 90

If all the above four conditions are satisfied, then the declarant shall be entitled to a refund of such excess amount, but he shall not be entitled to interest on such excess amount under Section 244A of the IT Act.

However, the Bombay High Court has allowed the interest for the inordinate delays in refunding an excess amount. In UPS Freight Services India (P.) Ltd. v. Dy. CIT [2023] 156 taxmann.com 489 (Bombay), it was held that the assessee was entitled to a refund of a certain sum as per Form No. 5 issued under DTVVS 2020, which should have been paid by 31-7-2021 but the same had been paid only on 26-5-2023. Thus, the assessee would be entitled to interest on this amount from 1-8-2021 up to 26-5-2023 at the rate of 6 per cent per annum, the rate prescribed under section 244A.

As per Section 93, subject to the provisions of Section 92, the designated authority shall not institute any proceeding in respect of an offence, impose or levy any penalty, or charge any interest under the Income-tax Act in respect of tax arrears.

In terms of clauses (b) to (e) of Section 96 of the Scheme, the following persons are barred from making a declaration for any tax arrears for any assessment year:

• 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 date of filing of declaration;
• 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 Prohibition of Benami Property Transactions Act, 1988, the Prevention of Corruption Act, 1988, the Prevention of Money-Laundering Act, 2002, has been instituted on or before the filing of the declaration;
• Any person convicted under UAPA/NDPS Act/PBPT Act/PC Act/PMLA;
• Any person in respect of whom prosecution has been initiated by an Income-tax authority for any offence punishable under the provisions of the Bharatiya Nyaya Sanhita, 2023 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
• Any person convicted of any such offence consequent to such prosecution initiated by an Income- tax authority;
• Any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, on or before the date of filing of declaration.

It should be noted that there is a complete ban on declaration with respect to the person and not merely with respect to any tax arrears.

In terms of sub-clause (ii) of clause (a) of Section 96 of the Scheme, the provisions of this Scheme shall not apply in respect of tax arrears relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration. Sub-clause (ii) uses the words

“an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration”.

Thus, an assessee becomes ineligible to make a declaration of tax arrears for that assessment year in respect of which the Income tax department instituted the prosecution on or before the date of filing the declaration.

It should be noted that the mere issue of notice for prosecution does not amount to the prosecution being instituted and would not bar the assessee from making a declaration. Further, the assessee can declare even if prosecution has been instituted if prosecution is compounded before filing the declaration.

An appellant can file a declaration under this Scheme. The term ‘appellant’ covers the following persons mentioned in sub-clauses (i) to (iv) of Section 89(1)(a) of the FA 2024:

• 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 it is pending as of the specified date (22-07-2024);
• A person who has filed his objections before the Dispute Resolution Panel (DRP) under Section 144C of the IT Act and the DRP has not issued any direction on or before the specified date;
• A person in whose case the DRP has issued a direction under Section 144C(5) and the Assessing Officer has not completed the assessment under Section 144C(13) on or before the specified date;
• A person who has filed an application for revision under Section 264 of the IT Act and such application is pending as of the specified date.

The provision does not stipulate that an appeal should be admitted by the appellate forum before a specified date. It only adverts to its pendency. An appeal would be ‘pending’ in the context of Section 2(1)(a) of DTVVS 2020 (corresponding to Section 89(1)(a) of DTVVS 2024) when it is first filed till its disposal [Shyam Sunder Sethi v. Principal Commissioner of Income-tax – 10 [2021] 130 taxmann.com 66 (Delhi)].

No. Appeal must be pending on the specified date to be eligible for declaration under the Scheme. It may be noted that, unlike Section 2(1)(a) of the DTVVS 2020, the definition of “appellant” in Section 89(1)(a) does not cover a person in whose case an order has been passed by the AO, JCIT(A), CIT(A), ITAT, or high court, on or before the specified date, and the time limit for filing any appeal against such order by such person has not expired on that date.

The term “appeal” is not defined in the Act. In Nagendranath Dey v. Suresh Chandra Dey [1932] L.R. 59 I.A. 283, 287, Sir Dinshaw Mulla construing the word “appeal” observed:

“ …. Any application by a party to an appellate court, asking it to set aside or revise a decision of a subordinate court, is an appeal within the ordinary acceptation of the term, and that it is no less an appeal because it is irregular or incompetent.”

These observations were referred to with approval and adopted by the Supreme Court in Raja Kulkarni and Others v. The State of Bombay [1954] S.C.R. 384, 388.

In its ordinary meaning and connotation, the term “appeal” would cover appeal before the appellate forum [Commissioner (Appeals), Joint Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court or Supreme Court] or revision application under Section 264 of the IT Act.

Rule 2(1)(b) of the DTVVS Rules, 2024 defines that ‘dispute’ means:

• An appeal, writ or special leave petition filed by the declarant or the income-tax authority before the Appellate Forum [CIT(A)/ITAT/HC/SC],
• Objections filed before the DRP under Section 144C of the IT Act and the Dispute Resolution Panel has not issued any direction,
• DRP has issued the direction under Section 144C(5), and the AO has not completed the assessment under Section 144C(13), or
• Revision application filed under Section 264 of the IT Act.

The designated authority cannot sit in judgment on the strength/merits of appeals. The merits or the strength of the case is irrelevant. As long as the dispute is pending as of the specified date, it has to be regarded by the DA as a pending dispute eligible for declaration and settlement by the taxpayer under the Scheme.

The disputes regarding tax, interest, penalty, fees or TDS/TCS can be settled under this Scheme.

The Scheme is not available for settling disputes pending before the Authority of Advance Ruling (AAR). However, if the order passed by AAR has determined the total income of an assessment year and the writ against such order is pending in the high court on the specified date, the appellant would be eligible to declare and settle the dispute under the Scheme. If the order of AAR has not determined the total income, it would not be possible to calculate disputed tax, and hence, such cases would not be covered.

To illustrate, if the AAR has ruled that a Permanent Establishment (PE) exists in India. However, the AO still needs to determine the amount to be attributed to such PE. Such cases cannot be covered since total income has not been determined.

Similarly, the proceedings pending before the Income-tax Settlement Commission (ITSC) are not eligible for a settlement under this Scheme.

Suppose an appeal has been filed against the interest levied on assessed tax; however, there is no dispute against the amount of assessed tax. In this case, the following position emerges:

• Declarations covering disputed interest (where there is no dispute on tax corresponding to such interest) can be made under the Scheme.
• If there is a dispute on the tax amount, and a declaration is filed for the disputed tax, the full amount of interest levied or leviable related to the disputed tax shall be waived.

Suppose an appellant desires to settle the concealment penalty appeal pending before CIT (A) while continuing to litigate a quantum appeal that has travelled to a higher appellate forum. Considering these are two independent and different appeals, can the appellant settle one to the exclusion of others? If yes, will the settlement of the penalty appeal impact the quantum appeal?

In this regard, in the context of DTVVS 2020, the CBDT had clarified that if both quantum appeals covering disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form covering both disputed tax appeal and penalty appeal. Further, it would not be possible for the appellant to apply for settlement of penalty appeal only when the appeal on disputed tax related to such penalty is still pending.

In this regard, in the context of DTVVS 2020, the CBDT clarified as follows:

• If the appeal has been filed against the imposition of fees under Sections 234E or 234F of the Act, the appellant would be eligible to file a declaration for the disputed fee.
• If the fee imposed under Section 234E or 234F pertains to a year in which there is a disputed tax, the settlement of the disputed tax will not settle the disputed fee. If the assessee wants to settle the disputed fee, he will need to settle the disputed fees separately.

In this regard, in the context of DTVVS 2020, the CBDT clarified that the assessee would not be eligible for Vivad se Vishwas as there is no determination of income against the said notice.

Option to avail of the benefit of DTVVS 2020 in relation to appeals pending for one assessment order or appeals pending for multiple assessment orders vests with sole discretion and option of the assessee [Venkatesha Education Society v. Designated Authority Pr. CIT [2023] 146 taxmann.com 283 (Karnataka), See also  MUFG Bank Ltd. v. CIT [2022] 145 taxmann.com 322 (Delhi)].

In this regard, in the context of DTVVS 2020, the CBDT clarified that such cases are not covered under this Scheme. Waiver applications are not pending appeals within the meaning of DTVVS.

In this regard, in the context of DTVVS 2020, the CBDT clarified that the disputed tax includes tax related to TDS and TCS that are disputed and pending in appeal. However, where there is no dispute related to TDS or TCS, and there is a delay in depositing such TDS/TCS, then the dispute pending in appeal related to interest levied due to such delay will be covered under DTVVS.

In this regard, in the context of DTVVS 2020, the CBDT clarified that the appellant, in this case, has the option to settle either of the two appeals or both appeals for the same assessment year. If he decides to settle both appeals, then he has to file only one declaration. The disputed tax, in this case, would be the aggregate amount of disputed tax in both appeals.

Suppose ITAT has quashed the assessment order based on lack of jurisdiction by the AO. The department has filed an appeal in the high court, which is pending. In this regard, in the context of DTVVS 2020, the CBDT clarified that the assessee is eligible to settle the department appeal in the high court.

In this regard, in the context of DTVVS 2020, the CBDT clarified that such an appeal will be eligible for settlement under the Scheme.

In this regard, in the context of DTVVS 2020, the CBDT clarified that such a case is eligible for declaration and settlement under the Scheme. Further, the amount payable under the Scheme shall be computed with reference to the position of appeal as of 22-07-2024.

In this regard, in the context of DTVVS 2020, the CBDT clarified that, in such a case, the assessee can file a declaration on whether or not the appeal has been filed against the assessment order.

In this regard, in the context of DTVVS 2020, the CBDT clarified that if an order under Section 263 contains general directions and income is not quantifiable, an appeal against such order is not eligible under the Scheme. However, where the order under Section 263 contains specific directions and income is quantifiable, an appeal against such order is eligible for declaration and settlement under the Scheme. In such a case, the assessee is required to settle all the issues in the order, which are the subject matter of the order under Section 263 and the issues pending in appeal, if any, with reference to the said order.

In this regard, in the context of DTVVS 2020, the CBDT clarified that such a case could be settled under the Scheme, and the set-aside issues will be deemed to be pending at the level of CIT(A)/DRP as of 22-07-2024. However, all issues that were pending in appeal (whether set aside or not) have to be settled.

In this regard, in the context of DTVVS 2020, the CBDT clarified that the Scheme cannot be availed in respect of such pending appeal.

In this regard, in the context of DTVVS 2020, the CBDT clarified that an appeal filed against intimation under Section 143(1) is eligible under the Scheme if the adjustment has been made under sub-clauses (iii) to (vi) of clause (a) of section 143(1) of the Act (i.e., disallowance of loss, expense or deductions and additions due to mismatch).

In Chandrakant Narayan Patkar Charitable Trust v. Union of India [2021] 130 taxmann.com 141 (Bombay), the court struck down this CBDT’s clarification as being divorced from the object and purpose of the Vivad Se Vishwas Act. In this case, the declaration of the assessee was rejected on the grounds that as per clarification by the CBDT, the appeal filed against intimation under Section 143(1) of the Income-tax Act was eligible under Vivad Se Vishwas Act only if adjustment to total income were made under sub-clauses (iii) to(vi) of clause (a) of section 143(1). However, if the adjustment was made under Section 143(1)(a)(ii), such adjustment was not eligible under the Vivad Se Vishwas Act. The Court held as follows:

■ It would be pertinent to refer to that underneath the answer to question No. 71, Circular No. 21 of 2020 purports to segregate and classify the appeals against the orders passed under section 143(1)(a)(i) or (ii) as a separate category from the appeals from clauses (iii) to (vi) of section 143(1)(a). [Para 18]

■ The DTVVS enactment does not provide for classification in appeals with reference to the orders passed by the authority under different provisions. The preamble of the enactment refers to that it proposes to provide for resolution of disputed tax and the matters connected therewith and incidental thereto and define the term ‘appellant’ as aforesaid, which embraces the assessee and covers the case under clause (ii), inter alia, ‘disputed tax’ where the appellate forum has passed an order in appeal and the time limit to file further appeal/writ petition for filing has not expired as referred to under clause (B) of section 2(1)(j). Further, it would be pertinent to refer to the fact that it is not the case of the revenue that the assessee’s case falls in under the excluded categories referred to under the provisions of section 9, viz., clauses (a) to (e), nor such a case has been made out in the affidavit or during submissions. It is also not the case of the revenue that the rules refer to or create classification and categories in the appeals based on the orders passed with reference to sub-clauses under provisions of section 143(1)(a).

■ All the adjustments referred to under sub-clauses (i) to (vi) of clause (a) of section 143(1) are indications of forming one category and, as such, are grouped under sub-clause (a) of section 143(1). Classifying the adjustments in (iii) to (vi) of clause (a) of section 143(1) to be eligible under the DTVVS Scheme and excluding the adjustments referred to in (i) and (ii) under the Circular No. 21 of 2020 without substantiating the same with any rationale or plausible basis or material therefor, would be arbitrary, unreasonable and discriminatory. The same would be in breach of article 14 of the Constitution of India and be liable to be set aside as such.

■ In the scenario, when the circulars are issued exercising powers under sections 10 and 11 of the DTVVS Act, directions are supposed to aid and smoothen bringing into operation provisions and execution of the actions based thereon. The directions and circulars would not be issued under such provisions, digressing or deviating from the object and purpose under the Scheme of the enactment.

■ The situation thus emerges that the answer to question No. 71 in Circular No. 21 of 2020 tends to overreach the purpose and intendment underlying the provisions of the Act and the Rules and purports to exclude an otherwise eligible assessee on ground and reason neither contained in nor reflected from the Scheme. The circular is manifestly divorced from the object and purpose of the DTVVS Scheme. [Para 23]

■ The answer to question No. 71 purporting to exclude appeals against the orders under Section 143(1)(a)(i) or (ii) is unsustainable and unacceptable. In the circumstances, emerging exclusion from the answer to question No. 71 of Circular No. 21 of 2020, dated 4-12-2020, is untenable and deserves to be set aside.

In this regard, in the context of DTVVS 2020, where the specified date was 31-01-2020, the CBDT clarified that a declaration/application filed under Section 158A/158AA on or before 22-07-2024 shall be deemed to be a pending appeal for the purposes of the Scheme.

Section 89(1)(a) of the Scheme uses the words ‘filed….and such appeal or petition is pending. These words need to be contrasted with the words ‘admitted and pending’ used in the Kar Vivad Samadhan Scheme, 1998. If “pending” in Section 89(1)(a) meant “admitted and pending”, then Section 89(1)(a) would have used the words “admitted and pending” as was the case in KVSS, 1998. That is not the case. Therefore, an appeal filed but pending for admission as of 22-07-2024 would meet the ‘filed…. and pending’ criterion, and the case would be eligible for declaration and settlement under the Scheme.

In this regard, in the context of DTVVS 2020, the CBDT has also clarified this aspect.

In Raja Kulkarni v. State of Bombay AIR 1954 SC 73, the Apex Court held that from the mere fact that an appeal is held to be not maintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court. In Mela Ram & Sons. v. CIT [1956] 29 ITR 607, the Supreme Court held that it is not correct to say that

“an appeal which is filed beyond the period of limitation is in the eye of law, no appeal, unless and until there is a condonation of delay”.

The ratio of the above decisions of the Supreme Court are relevant for the Scheme as the words used in Section 89(1)(a) are ‘filed and pending’ and not the words ‘admitted and pending’ used in the Kar Vivad Samadhan Scheme, 1998 [See also Shree Amarlal Kirana Stores v. Commissioner of Income-tax [2003] 126 Taxman 512 (MP), where the Court explained the distinction between ‘admitted and pending’ used in KVSS and simply ‘pending’]. Given the above judicial rulings and the fact that Section 89(1)(a) uses the words ‘filed….and pending’ instead of ‘admitted and pending’, it is clear that an appeal filed even beyond the period of limitation would be an appeal filed and pending. It is not correct to say that

“an appeal which is filed beyond the period of limitation is, in the eye of law, no appeal, unless and until there is a condonation of delay”.

Section 89(1)(o) of the FA 2024 provides that the term ‘tax arrears” means:

• the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or
• disputed interest; or
• disputed penalty; or
• disputed fee.

As per Section 89(1)(j), “disputed tax”, in relation to an assessment year or financial year, as the case may be, means the income tax, including surcharge and cess payable by the appellant under the provisions of the Income-tax Act, as computed hereunder:

Section 89(1)(g) defines “disputed income” in relation to an assessment year to mean the whole or so much of the total income as is relatable to the disputed tax.

As per Section 89(1)(h), “disputed interest” means the interest determined in any case under the provisions of the Income-tax Act, where—

• such interest is not charged or chargeable on disputed tax;
• an appeal has been filed by the appellant in respect of such interest.

As per Section 89(1)(j), “disputed penalty” means the penalty determined in any case under the provisions of the Income-tax Act, where—

• such penalty is not levied or leviable in respect of disputed income or disputed tax, as the case may be;
• an appeal has been filed by the appellant in respect of such penalty.

Section 89(1)(f) defines “disputed fee” to mean the fee determined under the provisions of the Income-tax Act in respect of which an appeal has been filed by the appellant.

Section 90 of the FA 2024 provides that where a declarant files on or before the last date, a declaration under Section 91 to the designated authority in respect of his tax arrears, the amount payable by the declarant in respect of his tax arrears under this Scheme shall be as mentioned in the table below, namely:

The procedure for making the declaration and payment of tax arrears in respect of the declaration are stipulated by Sections 91 and 92 of the FA 2024.

1. Filing of declaration and particulars to be furnished

Declaration

• The declaration referred to in section 90 shall be filed by the declarant before the designated authority in Form 1.
• The declarant shall furnish an undertaking waiving his right, whether direct or indirect, to seek or pursue any remedy or claim in relation to the tax arrears that may otherwise be available to him under any law for the time being in force. The undertaking shall be made in Form 1.

When declaration shall be deemed not to have been made

The declaration made as above shall be deemed not to have been made if:

• any material particular furnished in the declaration is found to be false at any stage;
• the declarant violates any of the conditions referred to in this Scheme; or
• the declarant acts in any manner which is not in accordance with the undertaking given by him, and in such cases, all the proceedings and claims which were withdrawn under section 91 and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived.

2. Time and manner of payment of the amount payable

Designated Authority (DA) to determine the amount payable and issue a certificate to the declarant

• The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, determine the amount payable by the declarant in accordance with the provisions of this Scheme and grant a certificate to the declarant containing particulars of the tax arrears and the amount payable after such determination, in Form 2.
• Every order passed determining the amount payable under this Scheme shall be conclusive as to the matters stated therein, and no matter covered by such order shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force. In other words, there is no appeal or revision remedy to the assessee in respect of DA’s order and certificate. Of course, in appropriate cases, the assessee can approach High Courts by filing writ petitions under Article 226.

Declarant to pay the amount determined by DA

• The declarant shall pay the amount determined by the designated authority within a period of fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in Form 3, and thereupon, the designated authority shall pass an order stating that the declarant has paid the amount.

Furnish proof of withdrawal of appeal

• Where the pending appeal in respect of which declaration has been made is an appeal filed by the assessee in HC/SC, he shall withdraw such appeal with the leave of the Court wherever required after issuance of a certificate and furnish proof of such withdrawal along with the intimation of payment to the designated authority.

3. Impact of the declaration and payment on the pending litigation

Deemed withdrawal of pending appeal

• Upon filing the declaration, any appeal pending before the ITAT or CIT (Appeals) or JCIT (Appeals), in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrears, shall be deemed to have been withdrawn from the date on which the designated authority issues certificate.
• No appellate forum shall proceed to decide any issue relating to the tax arrears mentioned in the declaration in respect of which an order has been made by the designated authority or in respect of which payment has been made.

Withdrawal of appeal pending before HC/SC with leave of the Court

• Where the declarant has filed any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of tax arrears, he shall withdraw such appeal or writ petition with the leave of the Court wherever required after issuance of a certificate and furnish proof of such withdrawal along with the intimation of payment to the designated authority.
• Making a declaration under this Scheme 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 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.

In this regard, in the context of DTVVS 2020, the CBDT clarified that the declaration made can be revised any number of times before the DA issues a certificate. The above view is supported by the decision in Value Added Futuristic Management (P.) Ltd. v. Union of India [2022] 143 taxmann.com 428 (Jharkhand) wherein it was held that there is no provision in the Scheme that further envisages filing of revised/fresh declaration after the declaration has been accepted by the designated authority.

In this regard, in the context of DTVVS 2020, the CBDT clarified that if the taxpayer avails the Scheme for disputed transfer pricing adjustment, a secondary adjustment under Section 92CE will be applicable. However, it may be noted that the provision of secondary adjustments as contained in Section 92CE of the Act is not applicable for primary adjustments made in respect of an assessment year commencing on or before 01-04-2016. That means if there is any primary adjustment for assessment year 2016-17 or earlier assessment year, it is not subjected to secondary adjustment under Section 92CE of the Act.