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Feb 29, 2020
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Vivaad se Vishwas gives chance to slay demonetisation demons
The new Vivaad se Vishwas tax litigation settlement scheme appears to have come as a blessing for those who came under scrutiny following demonetisation, according to people with direct knowledge of the matter. They include promoters of several mining, commodities, textile and real estate companies who deposited unaccounted money or made supposedly questionable entries in the account books.
Several sectors that transact in cash were left holding large sums when Rs 1,000 and Rs 500 currency notes were rendered invalid in November 2016. Several companies deposited the cash they were holding in bank accounts. Some allegedly faked entries in their financial statements to justify cash holdings and subsequently came to the attention of the tax department.
In most cases, the income tax department issued notices to the companies and questioned the source of funds under Section 68 of the Income Tax Act dealing with unexplained cash credits in bank accounts or company books.
“Many promoters of companies that had received notices under Section 68 during the demonetisation are now looking to settle the litigation under the Vivaad se Vishwas scheme,” said Girish Vanvari, the founder of tax advisory firm Transaction Square. “This would mean that they can just pay up the taxes and there could be no more questioning around the unexplained credits in their bank accounts or the entries in their books.”
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