Vivad se Vishwas scheme: 100% target or poor appraisal, taxmen told

Income tax (I-T) officials have been directed to resolve all the tax dispute cases through the Vivad Se Vishwas scheme, and failure to do so will have direct bearing on their appraisals and promotions.

In an official communication, field officers have been informed that the performance assessment target under the scheme is 100 per cent of cases, which has given rise to fears of harassment of taxpayers.

The assessees have already started to feel the pressure from tax officials to withdraw cases and settle the disputes through the scheme.

“The target for assessment of the performance of the field officers in respect of the Vivad se Vishwas scheme has been fixed at 100 per cent of the cases with disputed tax demand which fulfil the eligibility conditions under the scheme,” said the official communication circulated by the Central Board of Direct Taxes (CBDT) last week.

The I-T officials argue that the target of 100 per cent cases is “unreasonable to begin with” and may lead to harassment of taxpayers. Besides, forcing assesses to go for the scheme may mean taking away taxpayers’ right to appeal.

“How can one have a 100 per cent target in the first place? This indicates that you are taking away an assessee’s right to appeal and settle a dispute,” said an I-T official.

Assesses are facing the heat with calls from the tax officials. A New Delhi-based assessee said he had received at least five calls from the tax official to withdraw the case from Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal (ITAT), and settle it through the scheme. Upon refusing to do so, the taxpayers are being asked to meet tax officials to explain as to why they are not participating.

Amit Maheshwari, managing partner, Ashok Maheshwary & Associates  said these unrealistic targets may have an unintended effect. “The CIT(A) may either not decide the cases till the time the scheme is going on or may pass negative orders against taxpayers. Also, we don’t believe these kinds of targets are achievable, and the scheme may have limited success in the context of large taxpayers,” said Maheshwari.

Rajat Mohan, senior partner, AMRG & Associates said: “Tax officers are expected to use persuasive as well as coercive methods, asking the taxpayers to opt for this scheme as this will have an effect on their overall performance assessment and evaluation.”

Arranging for cash and getting timely company approval are among the key challenges assesses are facing. Declarants will need to attach the application on withdrawing cases from the CIT (A), the IATA, High Court, or the Supreme Court, along with the Vivad se Vishwas form.

The amended version of Vivad se Vishwas Bill is likely to be tabled in Parliament when the session resumes on Monday after the recess. If passed, it will leave assesses with barely 20 days window to benefit most from the scheme, which offers a waiver of interest, penalty, and prosecution for settling tax disputes on amounts that were due up to January 31 this year. The scheme also offers a 50 per cent discount on principal tax amount where appeal has been filed by the I-T department. However payments have to be made by March 31, and an additional 10 per cent penalty will be levied if payment is made after March 31 but before June 30.

Amendments to the Bill, which was tabled in Parliament last month, expanded the scope of the scheme, and propose to reduce the tax amount by half in cases wherein assessees have won the cases but the I-T department has filed appeals.

Another officer pointed out that in case an assessee has won a case, there is a high probability of winning it at the next stage too. “How can we force that person to opt for the Scheme?” the official said.

There are more than 400,000 such cases pending, involving at least Rs 9.3 trillion of taxes in disputes.

Incidentally, the Prime Minister’s Office is learnt to have asked the revenue department to collect at least Rs 2 trillion from the dispute resolution scheme.

Disputes related to search and seizure cases where recovery is below Rs 5 crore will also be taken up under this scheme.

Cases related to undisclosed foreign income/assets and assessment or reassessment made on the basis of information received under the double taxation avoidance agreement are out of the purview of the scheme. Also, cases falling under the Indian Penal Code, Prevention of Money Laundering Act, or Prohibition of Benami Property Transactions Act, or convicted under these Acts, are not part of the scheme.