The Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as ‘the Scheme’) incorporated as Chapter X of the Finance Act, 2016 (hereinafter referred to as ‘the Act’) which has been come into the force from 1^st day of June’16 and will be into force on or before 31^st day of December, 2016 (As per notification of the Central Government). Further, The Direct Tax Dispute Resolution Scheme Rules, 2016 (hereinafter referred to as ‘the Rules’) have been notified to give effect to the Scheme.

The Scheme provides an opportunity to tax payers who are under litigation to come forward and settle the dispute in accordance with the provisions of the Scheme.
 
Declaration of Tax Payable
Subject to the provisions of this Scheme, where a declarant files, on or after the 1^st day of June, 2016 but on or before a date to be notified by the Central Government in the Official Gazette i.e. 31^st day of December, 2012, a declaration to the designated authority in accordance with the provisions of section 203 of the Act in respect of tax arrear, or specified tax , then, notwithstanding anything contained in the Income-tax Act or any other provision of any law for the time being in force, the amount payable under this Scheme by the declarant shall be as under, namely:––
(I) in case of pending appeal related to tax arrear being––

(a) tax and interest,—
(i) in a case where the disputed tax does not exceed ten lakh rupees, the whole of the disputed tax and the interest on disputed tax till the date of assessment or reassessment, as the case may be; or
(ii) in any other case, the whole of disputed tax, twenty-five per cent of the minimum penalty leviable and the interest on disputed tax till the date of assessment or reassessment, as the case may be;

(b) penalty, twenty-five per cent of the minimum penalty leviable and the tax and interest payable on the total income finally determined.

(II) in case of specified tax, the amount of such tax so determined.
 
The Scheme has defined the terms, tax arrear and specified tax as follows:
‘‘specified tax’’ means a tax—

“tax arrear” means, the amount of tax, interest or penalty determined under the Income-tax Act or the Wealth-tax Act, in respect of which appeal is pending before the Commissioner of Income-tax (Appeals) or the Commissioner of Wealth-tax (Appeals) as on the 29th day of February, 2016;
Here, it must be noted that scheme cannot be availed if appeal is pending as on the 29^th day of February, 2016 but has been disposed off before commencement of the scheme i.e. 1^st day of June, 2016.

Further, declarant shall be eligible for scheme in case of condonation cases, if –

 
Procedure of Declaration
Declaration shall be made in between time window provided by the Scheme i.e. 1^st day of June, 2016 to 31^st day of December, 2016.

The declaration under sub-section (1) of section 203 shall be made in duplicate in Form-1 to the designated authority and the undertaking referred to in sub-section (4) of section 203 shall be furnished in Form-2 along with the declaration.

Such declaration and undertaking shall be signed by the declarant or any person competent to verify the return of income on his behalf in accordance with section 140 of the Income-tax Act, 1961.
The designated authority on receipt of declaration shall issue a receipt in acknowledgement thereof.
 
Time and Manner of Payment
The designated authority shall, within a period of sixty 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 in Form-3, to the declarant setting forth therein the particulars of the tax arrear or the specified tax, as the case may be, and the sum payable after such determination.

The declarant shall pay the sum determined by the designated authority as per the certificate granted within thirty days of the date of receipt of the certificate and intimate the fact of such payment to the designated authority along with proof thereof in Form-4 within one month from the date on which time limit for making payment under the Scheme expires. Further, If declarant did not paid the tax payable under the Scheme within thirty days, then, he would not be eligible for relief under the scheme.

The designated authority shall thereupon pass an order within one month from the end of the month in which intimation regarding payment is received in Form-4 from the declarant.

Every order, determining the sum payable under this Scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be re-opened in any other proceeding under the Income-tax Act or the Wealth-tax Act or under any other law for the time being in force, or as the case may be, under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India.
 
No Refund of Amount Paid under Scheme
Any amount paid in pursuance of a declaration made under section 202 shall not be refundable under any circumstances.

Although, if an assessee who has already paid an amount over and above the amounts referred to in section 202(I)(b) opts for the Scheme, he shall be eligible for refund of the excess payment already made. However, the declarant shall not be eligible for claim of interest on such refund under section 244A of the Income-tax Act, 1961.
 
Scheme Not to Apply in Certain Cases
The provisions of this Scheme shall not apply—
(a) in respect of tax arrear or specified tax,

(b) to 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 subject to prescribed conditions;

(c) to any person in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, 1988 or for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts;

(d) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.
 
The author is member of the ICAI and can be contacted @ pbhch.d@gmail.com