Can Taxpayer opt for Vivad se Vishwas Scheme in case an enhancement notice is issued by CIT(A)

income tax

According to the Finance Minister, at present there are as many as 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court and hence the Bill in the name of Vivad se Vishwas was proposed in the Budget 2020 which in essence was aimed at resolving direct tax related disputes in a speedy manner and reduce litigation in the direct tax arena.

Under the proposed Vivad Se Vishwas scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount of 10% of disputed tax.

In the original version of the Scheme, the cases where a notice of enhancement is issued by Ld. CIT(A) were excluded from the Scheme per se. This provision was a huge setback to taxpayers who has received an enhancement notice for a very petty amount in relation to a specific ground and there is another ground involving huge tax liability which he wants to settle through the opting of the Scheme however he cannot go for the Scheme because of specific exclusion of enhancement cases. The Government would also be at an equal loss in such scenario.

Hence, in the revised version of the Bill, the exclusion has been omitted and thus taxpayer who has received notice for enhancement can still opt for the scheme provided they are ready to pay the tax arrears which arises out of enhancement of income.

Further, the Revised Bill mentions that tax has to be paid on enhancement of income only in cases where the notice of enhancement is received before 31.01.2020. Hence it will be a huge opportunity for taxpayers who has been issued notice of enhancement after 31.01.2010 to save full tax on proposed enhancement of income.  At the same time, it shall act as a deterrent for the First appellate authority to issue notice for enhancement in unnecessary cases.


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