Circular No. 21 /2020 I

F. No. IT(A)/1/2020-TPL I

Government of India !

Ministry of Finance I

Department of Revenue I
Central Board of Direct Taxes
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Dated: 4th December, 2020

Sub.: Clarifications on provisions of the Direct Tax Vivad se Vishwas Act, 2020 - reg.

With the objective to reduce pending income tax litigation, generate timely revenue for the
Goverrunent and benefit taxpayers by providing them peace of mind, certainty and savings on
account of time and resources that would otberwise be spent on the long-drawn and vexatious
litigation process, the Direct Tax Vivad se Vishwas Act, 2020 (hereinafter referred to as 'Vivad se
Vishwas') was enacted on 17th March, 2020. The provisions of Vivad se Vishwas were amended by
tbe Taxation and Otber Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to
provide certain relaxations in view of the COVID-19 pandemic and also to empower the Central
Government to notify certain dates. Towards this end, vide notification dated 27'" October, 2020 tbe
date for payment without additional amount under Vivad se Vishwas was extended from 31"
December, 2020 to 31 st March, 2021. The last date for filing declaration under Vivad se Vishwas
was also notified as 31 ,t December, 2020. Subsequently, tbe Central Board of Direct Taxes issued a
circular no. 18/2020 dated 28th October, 2020 relaxing tbe time limit of 15 days prescribed in
section 5(1) of Vivad se Vishwas for making payment of amount payable, as detennined in a
certificate issued by the Designated Autbority.
2. In order to facilitate the taxpayers, the Board had vide circular no. 9/2020 dated nnd April,
2020 issued clarifications in form of answers to 55 frequently asked questions (FAQs) on issues
related to eligibility, computation of amount payable, procedure and consequences under Vivad se
Vishwas. Several representations have been received thereafter seeking further relaxation and
clarifications with respect to such issues. Some of these representations have already been
addressed through the aforesaid notification dated 27th October, 2020 and circular dated 28th
October, 2020.
3. Section 10 and 11 of the Vivad se Vishwas empowers the Board / Central Goverrnnent to
issue directions or orders in public interest or to remove difficulties. This circular is being issued in
continuation of circular dated 22nd April, 2020 (which covered Q. no. I - 55) under section 10 and
11 of the Vivad se Vishwas to provide answers to 34 more FAQs (Q. no. 56 - 89). It may be noted
that in the FAQs, Income Tax Act, 1961 has been referred to as the Act, Designated Authority
(under Vivad se Vishwas) has been referred to as the DA, Assessing Officer has been referred to as
the AO, Commissioner (Appeals) has been referred to as CIT(A), and the Income Tax Department
has been referred to as the Department.

scn "QUESTl0 NS ON PE/ELI(c-'!~B~II~~I~T-:-Y-,-(QC..:•.._N~o._._56--c-c-7;-Sc)'-"--::::----:---:----:c=-::---::-::-::-::-l I
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56. Appeal or arbitration is pending with appellate authority as on 31'" Jan 2020
or time or llin a eal has not expired as on 31st Jan 2020. However,

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Answer: subsequent to that date, and before .filing of the declaration, the appeaihas
been disposed of by the appellate authority. Whether it is still eligible under
Vivad se Vishwas? If yes, how the amount payable under Vivad se Vishwas
shall be computed?

Yes. Amount payable under Vivad se Vishwas shall be computed with reference
to the position of appeal or arbitration as on 31 st January, 2020.

Q.No. 57. Whether Vivad se Vishwas can be availed in a case where the enforceability
Answer: of an assessment order passed by the AO has been stayed by the High Court
or Supreme Court?

Yes, in such case assessee can file declaration under Vivad se Vishwas, whether
or not the appeal has been filed against the assessment order. Writl Appeal
pending in High Court and Supreme Court shall be required to be withdrawn by
the taxpayer. Upon settlement of quantum appeal, interest and penalty, if any,
will be waived.

Q.No. 58. Appeal or writ against order under section U/S 263 o.fthe Act was pending on
Answer: 31" Jan, 2020 (or time to file appeal has not expired on 31st Jan, 2020).
Whether Vivad se Vishwas can be availed for settling such appeal?

If order u/s 263 of the Act contains general directions and income is not
quantifiable, appeal against such order is not eligible under Vivad se Vishwas.
However, if order u/s 263 of the Act contains only specific directions and
income is quantifiable (and does not contain any general directions due to
which income is not quantifiable), appeal against such order is eligible under
Vivad se Vishwas. In such case, assessee is required to settle all the issues in the
order, which are subject matter of order u/s 263 of the Act as well as issues
pending in appeal (or issues in respect of which time to file appeal has not
expired on 31 ,t Jan 2020), if any, with reference to the said order.

Q.No. 59. Whether the taxpayer in whose case the time limit for filing of appeal has
expired hefore 3J'" Jan 2020 but an application for condonation of delay has
been filed is eligihle?

Answer: If the time limit for filing appeal expired during the period from 1" April 2019
to 31" Jan, 2020 (both dates included in the period), and the application for ----,
condonation is filed before the date of issue of this circular, and appeal is
admitted by the appellate authority before the date of filing of the declaration,
such appeal will be deemed to be pending as on 31" Jan 2020.

Q.No. -

60. Whether cross objections filed and pending as on 31 January 2020 will also
be covered by the scheme?

Answer: Yes. However, the main appeal is also required to be settled along with cross
objections .

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Q.No. 61. Whether Miscellaneous Application (MA) pending as on 31 January 2020
Answer: will also be covered by the scheme?

If the MA pending on 31" Jan 2020 is in respect of an appeal which was
dismissed in limine (before 31" Jan 2020), such MA is eligible. Disputed tax
will be computed with reference to the appeal which was dismissed.

Q.No. 62. Whether search cases where assessment was made under section 158BA (i.e.
block assessment) ofthe Act are covered under Vivad se Vishwas?

Answer: Appeal, writ or Special Leave Petition in respect of block assessment is eligible
if the disputed tax does not exceed five crore rupees for the said block
assessment.

Q.No. 63. Whether Vivad se Vishwas can be availed in a case where proceedings are
Answer: pending b~fore Income Tax Settlement Commission (ITSq or where writ has
been filed against the order ofITSC?

No.

Q.No. 64. Appeal against assessment order is pending (or time to file appeal against
Answer: such order has not expired) on 31s1 Jan 2()2(). Assessee has also filed
application for resolution of assessment order under Mutual Agreement
Procedure (MAP). Whether Vivad se Vishwas can be availed?

In a case where MAP resolution is pending or the assessee has not accepted
MAP decision, the related appeal shall be eligible under Vivad se Vishwas. In
such case, the declarant will be required to withdraw both MAP application and
appcal.

Q.No. 65. If AAR has ruled in favour of the taxpayer and the Department has gone in

Answer writ or appeal before the High Court/Supreme Court and the total income of
Q.No. the taxpayer was quant!fiable on the facts of the case before MR, is the
Answer: taxpayer eligible under Vivad se Vishwas?

Yes, the taxpaycr is eligible since the income is quantifiable. In such case, since
the issue is covered in favour of taxpayer, only 50% of the disputed tax is
payable.

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66. Appeal has been set aside to CIT(A) / Dispute Resolution Panel (DRP) and

was pending as on 31st Jan 2020? Whether it is eligible?

Yes. Such case can be settled under Vivad se Vishwas and the set aside issues
will be deemed to be pending at the level ofCIT(A) / DRP as on 31 st Jan 2020.
However, all issues which were either pending in appeal (whether set aside or
not) or in respect of which time to file appeal has not expired on 31 st Jan 2020

have to be settled.

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Q.No. 67. Whether in cases where the appeilate authority has quashed the prosecution
complaint or ruled in favour of taxpayer and no further appeal is .filed by
Department on or before.filing ofdeclaration are eligible?

Answer: Yes, such cases are eligible if the time limit for filing appeal by the Department I
has expired and the Department has not filed appeal (with or without
condonation of application). I-

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Q.No. 68. Whether the assessee is eligible to opt for Vivad se Vishwas ifprosecution has i

been instituted due to a Tax Deduction at Source (TDS) default?

Answer: If prosecution has been instituted for TDS default in a financial year on or
before the date of filing of declaration, it cannot be settled under Vivad se
Vishwas.

Q.No. 69. A trust has been denied registration U/S 12M of the Act. Whether appeal
against such order is eligible for Vivad se Vishwas?

Answer: No.
Q.No.
70. .if the assessment order has been framed in the case of a taxpayer under
Answer:
section 143(3) / 144 of the Act based on the search executed in some other
taxpayer's case, whether it is to be considered as a search case or non-search
case under Vivad se Vishwas?

Such case is to be considered as a search case.

Q.No. 71. Vivad se Vishwas forms do not contain a specific option to settle appeal filed
Answer: against intimation U/S 143(1) o.f the Act. Accordingly, please clarify how to
set/Ie such appeal, which is pending as on 31'1 Jan 2020 (or time to.file appeal
has not expired on 31'/ Jan, 2()20).

Appeal filed against intimation u/s 143(1) of the Act is eligible under Vivad se
Vishwas if adjustment has been made under sub-clauses (iii) to (vi) of clause (a)
of section 143(1) of the Act.

Q.No. 72. Whether appeal.filed under section 248 of the Act is eligible for Vivad se
Answer: Vishwas?
Q.No.
Yes.
Answer: 73. In the case (!f a taxpayer, prosecution has been instituted for assessment year

2012-13 with respect of an issue which is not in appeal. Will he be eligible to
.file declaration for issues which are in appealfor this assessment year and in
respect of which prosecution has not been launched?

The ineligibility to file declaration relates to an assessment year in respect of
which prosecution has been instituted on or before the date of declaration. Since
in this example, for the same assessment year (2012-13) prosecution has
already been instituted, the taxpayer is not eligible to file declaration for this
assessment year even on issues not relating to J2rosecution.

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Q.No. 74.. If the prosecution is for a different assessment year and the appeal for a
different one, would it debar the assessee from the benefit ofthis scheme?

Answer: Prosecution in one assessment year does not debar the assessee from filing

declaration for any other assessment year if it is otherwise eligible. I

Q.No. 75. Whether cases where the taxpayerlDepartment has filed r
declaration/application under section 158AI158AA are eligible under Vivad
I

se Vishwas?

Answer: Yes, in such case declaration/application filed u/s 158AI158AA of the Act on or
before 31st January 2020 shall be deemed to be a pending appeal as on 31't Jan
2020 for the purposes of Vivad se Vishwas.

"QUESTIONS RE.LAT·ED TO COMPU'I'A]]ON (Q. No. 76 - 79)"

Q.No. 76. Whether enhancement notice issued by CIT(A) post 31" Jan 2020 is to be
taken into accountfor computation ofdisputed tax?

Answer: Enhancement notice issued by CIT(A) after 31st Jan, 2020 but before the date of
issue of this circular shall be required to be taken into account for determining
amount payable under Vivad se Vishwas. However, the enhancement notice
issued on or after the date of this circular but on or before 31 s December shall
not be taken into account for detennining amount payable under Vivad se
Vishwas.

Q.No. 77. Whether any additional ground filed in relation to an appeal is to be
Answer: considered while computing disputed tax?

If any additional ground has been filed on or before 31 st January 2020, it shall
be considered for the purpose of computing disputed tax.

Q.No. 78. In case of appeals pending against both assessment and reassessment where
Answer: addition is repeated on same issue, would tax be payable twice in respect of
the same issue if both appeals are settled?

Since disputed tax in respect of repeated addition will be payable only once,
both the assessment and reassessment appeals are required to be settled
together. If there is a difference between tax liability in respect of such addition
in assessment and reassessment, then higher of the two tax liabilities will be
considered for computing disputed tax.

Q.No. 79. In a case where assessee accepts certain additions in an order (giving rise to
undisputed lax liability) and appeals against certain additions (giving rise to
disputed tax liability), how the prepaid taxes will be adjusted against the
disputed tax liability or undi~puted tax liability?

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Answer: If prepaid tax, being TDS/TCS, is dearly identifiable with the source of

income, it will be adjusted against tax liability with respect to such income.

Rest of the pre-paid tax, which cannot be clearly identified with the source of

income, will be apportioned against the remaining t:::a::.:x-,l::.:ia:::b",il:.::it:d.Y':"·_ _ _ _ _ _...J i

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"QUESTIONS RELATED TO CONSEQUENCES (Q No 80 - 87)" I

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Q.No. 80. Whether appeal against penalties that are not related to quantum assessment
like penalty U/S 271B, 271BA, 271DA of the Actetc. are also waived upon
settlement ofappeal relating to 'disputed tax?

Answer: No, appeal against such penalty order is required to be settled separately.

Q.No. 81. In respect of some loan, uddilion was made U/S 68 of Ihe Act. Appeal is
Answer: pending b~fore CIT(A) and the assessee is eligible for opting Vivad se
Vishwas. After making the payment of tax under Vivad se Vishwas, can the
assessee make entries in his books by crediting the said loan in his capital
account?

No, Vivad se Vishwas is not an amnesty scheme. It only provides an option to

settle appeals on contentious issues that are neither accepted by the Department
nor the assessee.

Q.No. 82. Whether the immunity from prosecution is only for the declarant or also for
Answer: the Director of the company or partner of the firm with respect to the issues
settled under Vivad se Vishwas?

If an issue has been settled under Vivad se Vishwas, the immunity from
prosecution with respect to that issue shall also extend to the director I partner
of company I finn (being the declarant) in respect of same issue under section
278B of the Act.

Q.No. 83. If appeal involving issue of disallowance under section 40(a)(i)/(ia) ofthe Act
is settled under the Scheme, whether consequential reli~f will be available in
proceedings under section 201 of the Act initiated qua the same payment!
deduction.

Answer: No. _____._________._ _ _ _.__,._

Q.No. 84. Tax was not deducted on an income and order under section 201 of the Act

was passed in case ofthe deductor. The said income was also assessed in the

case ofthe deductee. Bolh deductor and deductee are in appeal or arbitration,

which is eligible under Vivad se Vishwas. What would be the amount payable

by the deductor and the deductee with reference to the said income under

Vivad se Vishwas in the/ol/owing scenarios-

(i) Where the deductor settles his appeal or arbitration and makes

payment under Vivad se Vishwas?

(iiJ Where the deductee settles his appeal or arbitration and makes

payment under Vivad se Vishwas?

L -_ _..J _ _...L._ _ _ _ _ _ _ _ _ .._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _----'

Page 60f8
Answer: In case of (i), since the deductor has settled his appeal (or arbitration) and paid
the tax he would get waiver from interest and penalty under Vivad se Vishwas.
Deductee will not be required to pay the tax under Vivad se Vishwas with
reference to said income and he will get credit for tax paid by deductor.
However, he shall be required to pay interest and penalty, if any, with reference
to said income and if such interest or penalty qualifies for Vivad se Vishwas, he
can settle the same by paying the applicable amount (25%/30%).
In case of (ii), since the deductee has settled his appeal (or arbitration) and paid
the tax he would get waiver from interest and penalty. Deductor will not be
required to pay tax under Vivad se Vishwas with reference to non-deduction of
tax on said income. However, he shall be required to pay interest and penalty, if
any, with reference to said income and if such interest or penalty qualifies for
Vivad se Vishwas, he can settle the same by paying the applicable amount
(25%/30%).

Q.No. 85. In the scenarios mentioned in Q. no. 84, what will be the amount oftax credit
Answer:
if the payment of amount on settlement of section 201 appeal is more than

100% of disputed tax for il being a search case or for the reason that the
payment is made after 31st March 2021?

Tax credit in the hands of deductee cannot be more than 100% of disputed tax,
even if the payment of more than 100% of disputed tax is required to be made
by the dedcutor settling his section 20 I appeal.

Q.No. 86. Answer to Q. no 31 clarifies that where assessee settles TDS liability as
deductor (!f TDS under Vivad se Vishwas (i.e against order U/S 201 of the
Act), he will get consequential relief of expenditure allowance under proviso
to section 40(a)(i)/(ia) of the Act in the year in which the tax was required 10
be deducted. What will happen in a situation where the same amount of TDS
was recovered in subsequent year and accordingly the assessee has already
claimed deduction in that year?

Answer: There is no question of double deduction. If the assessee has already claimed

deduction of the same amount under section 40(a)(i)/(ia) of the Act in

subsequent year on account of payment of such sum, be shall not be entitled to

again claim the deduction on the basis of the settlement under Vivad se

~~--~~.--~V=is-hw-a~ s. ~--~--~~~~--~-~~----~--~~-~------~
Q. No. 87. The declarant has filed a declaration for disputed penalty. He is required to

pay 25% or 30% of disputed penalty to settle the dispute. Will interest levied

or leviable be waived in this case?

Answer: Yes. Once the required amount of disputed penalty has been paid by the
declarant, interest relating to such penalty would be.c.wc::a=iv'-e:::d::._ _ _ _ _ _ _--'

Page 70f8
"Q1JESTIONS RELATED TO PROCEDURE (Q. No. 88 " 89)"

Q.No. 88. Separate orders were passed U/S 201(1) & 201(JA) of the Actfor a particular
assessment year. Assessee has filed two separate appeals for principal portion
U/S 201(1) of the Act and interest portion U/S 201(lA) o.fthe Act. Can hefile
only one declaration under Vivad se Vishwas against 201(1) order and seek
100% waiver of interest levied U/S 201(lA)o.f the Act.

Answer: Yes, once appeal against order uls 201(1) of the Act is settled under Vivad se
Vishwas, there would be 100% waiver of interest levied uls 201(IA) of the Act.

Q.No. 89. Once declaration is filed by assessee U/S 4 of Vivad se Vishwas can the same

be revised? If Yes, at what stage ofthe proceedings will the same be allowed?

Answer: Yes, declaration can be revised any number of times before the DA issues a
certificate under section 5(1) of Vivad se Vishwas.

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. .·t..tz,oJP

. kit Jain)

Under Secretary to the Govt. of India I

Copy to:

1. PS to FMI OSD to FMI PS to MoS(F)/ OSD to MoS(F)

2. PPS to Secretary (Revenue) I
3. Chairman, CBDT & All Members, CBDT

4. All Pro DOsITI Pro CsIT I
5. All Joint Secretariesl CsIT! Directors! Deputy Secretaries! Under Secretaries ofCI3DT

6. The C&AG ofIndia

7. The JS & Legal Adviser, Ministry of Law & Justice, New Delhi

8. CIT (M&TP), Official Spokesperson ofCBDT

9. 0/0 Pro DOIT (Systems) for uploading on official website

10. lCIT (Database Cell) for uploading on ww,v.irsofficersQnline.gov.in

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