Vivad Se Vishwas scheme (the scheme) was announced in the Union Budget presented on February 1, 2020. It allows the waiver of interest, penalty, and prosecution for settling income-tax disputes due up to January 31, 2020.
While the declarations under the scheme have to be filed by December 31, 2020, the government had in October 2020 extended the deadline for making payment by three months till March 31, 2021, in view of the ongoing Covid-19 pandemic.
According to government estimates, there are more than 4,00,000 such cases that are eligible for the scheme, involving at least ₹9.3 trillion. But, as of November 17, 2020 the government collected ₹72,480 crore tax through the scheme. With just three more weeks to go for the scheme to draw to close, the government is obviously disappointed with the lukewarm response and threatening to come down heavily on officers for failing to market the scheme successfully.
When a product is faulty in design, it is unfair to blame the salesman for its poor showing in the marketplace.
It is common knowledge that the government loses almost 90 per cent of the appeals before High Courts and the Supreme Court thanks to high-pitched assessments made by overzealous assessing officers fearing audit dressing-down and with a view to worming into the hearts of higher officials who instinctively award greater merit points to officials supposedly working in favour of revenue interest little realising that they in particular and the government in general has to at the end of the day cut a sorry figure before the higher judicial forums.
In fact the CBDT itself in 2018 exhorted assessing officer to eschew this myopic tendency.
The reason why the scheme has turned out to be a damp squib is not far to seek. Those locked in dispute with the Income-Tax Department and fighting it out through appeals know that they are on solid ground and that ultimately they would have the last laugh. Why then should they shoot themselves in the foot by participating in the scheme?
In the event, it is unrealistic to expect a last minute surge that would dramatically alter the status of the scheme from dismal to enthusiastic response.
Public sector enterprises (PSE) too are victims of the highhandedness of the assessing officers culminating in high-pitched assessments. It is puzzling on the part of the government to pin its hopes on a PSE to enable it to spare the blushes.
A PSE may readily oblige the government by sponsoring a sporting or cultural event as not much is at stake. But bailing out the government to ensure the success of the scheme is unthinkable as it would amount to mea culpa that is not warranted and unnecessary payment of taxes.
Indeed the government has been guilty of running with the hares and hunting with the hounds. You cannot browbeat one to pay the taxes that are not due. If you do, he will take full recourse to the appellate process to prove his innocence. And after having provoked him into knocking at the doors of appellate justice, it is hilarious and irrational to halt him on his tracks by an inane scheme.
What the government expects of the tax officials is to reach out to the same assessees with a placatory offer of pardon under the scheme after having earlier rubbed the same assessees on the wrong side with high-pitched assessments.
You cannot rock the cradle to put a child back to sleep after having rudely awakened it with a stinging pinch!!
The writer is a Chennai-based chartered accountant