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Alerts:

Direct Tax Alert - CBDT provides clarification on eligibility for search case under Vivad se Vishwas Scheme

25 March 2021

Background

With an objective to reduce pending litigation and benefit taxpayers by providing them with certainty and saving precious time and resources that would otherwise be spent on litigation, the Central Government enacted the Direct Tax Vivad se Vishwas Act, 2020 (the Scheme). Post enactment, clarifications under the Scheme in the form of frequently asked questions (FAQs) were issued1 from time to time.

With respect to FAQ No. 70, the Central Board of Direct Taxes (CBDT) has recently issued a circular2 providing clarification on eligibility for search case under the Scheme. We, at BDO in India, have analysed and summarised the said clarification and provided our comments on its impact hereunder:

As per FAQ No. 70, where an assessment order is framed in the case of a taxpayer under section 143(3)/ 144 of the Income-tax Act, 1961 (IT Act) based on search executed in some other taxpayer’s case, such matters should be considered as ‘search case’ under the Scheme. However, several representations were made before the CBDT seeking clarity on the meaning of ‘search case’. The circular has now clarified that ‘search case’ means an assessment or reassessment made under section 143(3)/ 144/ 147/ 153A/ 153C/ 158BC of the IT Act in the case of a person referred to in section 153A or 158BC or 158BD of the IT Act on the basis of search initiated under section 132, or requisition made under section 132A of the IT Act.

BDO comments

In order to meet its objective of reduced litigation, the CBDT has been coming out with several clarifications from time to time. The Tax Tribunals and the First Appellate Authority have been condoning delays if the taxpayer is opting for the Scheme. This circular is in this direction. It is imperative to note that writs have been filed before the Delhi HC against the FAQ 703 which has been listed for hearing on 4 May 2021.

Considering that circulars and notifications have been issued from time to time, we at BDO in India have consolidated these notifications/FAQs which can be read at https://www.bdo.in/en-gb/insights/alerts-updates/tax-alert-income-tax-dispute-resolution-vivad-se-vishwas-scheme-2020-(consolidated) 


1Circular No. 9/2020, dated 22 April 2020- (FAQ 1-55)

Circular No. 21/2020, dated 4 December 2020- (FAQ 56-89)

2Circular No. 4/2021, dated 23 March 2021

3S. D. Polyfilms Pvt Ltd vs CBDT (W.P(C) 1608/2021 and CM Appln. No. 4595-96/2021)