Panama papers: Multi-Agency Group probing Indians named, govt says SC

A Multi-Agency Group (MAG), comprising officials of CBDT, RBI, Financial Intelligence Unit and ED, has been set up to ensure "speedy and coordinated" probe against Indians whose names have figured in the Panama papers for allegedly holding bank accounts in foreign nations, government told the Supreme Court on Monday. 

An undisclosed income of about Rs 8,186 crore has been brought under the tax ambit despite non-sharing of any information by the Swiss authorities, the Department of Economic Affairs told the apex court. "However, despite best efforts, the Swiss competent authority has not shared any information (with India) on various grounds including Treaty limitations and their domestic legal barriers. "The deponent (Centre) submits that the alternative method of assisting the tax payer to obtain the information and documents was pursued with the said bank which has led to obtaining of the requisite information/documents in a considerable number of cases...

"Tax demand of Rs 5,377 crore has been raised which includes demands of protective assessments," the affidavit filed by Manu J Vettickan, Deputy Director in the Ministry, said, as it reiterated the commitment of NDA government on unearthing black money.

Centre seeks dismissal of PIL asking for court-monitored probe

The Centre, which sought dismissal of the PIL seeking a court-monitored CBI probe into Panama paper leaks, said about Rs 1,282 crore has been levied in 159 cases pertaining to concealment of tax due to the goverment. "So far 164 prosecution complaints have been filed in 75 cases. The apex court-appointed SIT on black money has been kept updated on the progress in these investigations," the affidavit said.

The Finance Ministry, however, refused to respond to the allegations relating to an interim plea of advocate M L Sharma seeking a direction that the offshore portfolio investors, who invest in the Indian stock market through participatory-notes, should not be allowed to withdraw money till further orders. It said that the issue related to market regulator SEBI, which was the competent authority in this regard.

Dealing with the issue of progress made so far in the probe into the Panama papers, the Centre said, "Till date, five reports have been submitted by the MAG to the government. The SIT on black money is being regularly updated on such issues." Referring to the FEMA provisions on opening of foreign currency account (FCA) by Indians in offshore, the affidavit said no Indian "shall open or hold or maintain the FCA provided that FCA held or maintained before the commencement of these (FEMA) regulations by a person resident in India with special or general permission of the RBI, shall be deemed to be held or maintained under these regulations".

It, however, said the RBI may permit an Indian to open or hold or maintain a FCA if an application is made in this regard. The Centre opposed the contention raised in the PIL that the re-appointment of U K Sinha as SEBI chief was illegal and hence be quashed. "With regard to appointment of U K Sinha as SEBI Chairman, it may be noted that in terms of SEBI rules..., the Chairman and every whole-time member of SEBI shall be appointed by the central government on the recommendation of the search committee," it said, adding that the appointment was made in accordance with law and has been held valid by the apex court also. 

Centre defends P-Notes

The Centre refused to respond to the allegation that ill-gotten monies were being infused in the Indian capital market through P-Notes by Indians, saying that this issue pertained to SEBI. Dealing with the issue of Indians holding secret accounts in HSBC Bank in Switzerland, the Centre said, "Investigation into foreign assets/bank accounts was called through Director General of Income Tax (DGIT), Investigation, across the country and the same has resulted into detection of considerable amount of undisclosed income.

"With a view to collect further information/evidence and take the investigation to a logical conclusion, large number of references have been made under DTAAs/TIEAs to the competent authority of respective foreign countries/ jurisdictions." The government lamented that Swiss authorities have not been sharing information due to various reasons including Treaty limitations and their domestic reasons. Coming back to the ongoing probe against those named in Panama papers, the government said the petition was based on the information published in the newspapers and on the website of International Consortium of Investigative Journalists.

"The names of the specific persons mentioned in the PIL are already available in public domain and are under investigation by various law enforcement agencies including the Income Tax Department," the affidavit said. Seeking dismissal of the PIL, it said the SIT on black money has been kept informed on regular basis about the development made in the probe. "The instant writ petition, neither raises any substantial question of law nor any grounds, thereby deserves to be dismissed," the affidavit said.

The apex court while taking note of the response, asked advocate Sharma to file his rejoinder and fixed the PIL for hearing after two weeks. The PIL had sought a court-monitored CBI probe into the Panama papers leaks which contained an unprecedented amount of information, including more than 11 million documents covering 2,10,000 companies in 21 offshore jurisdictions. Each transaction spanned different jurisdictions and may involve multiple entities and individuals.

The plea also suggested a direction to CBI to lodge FIR and conduct investigation against the SEBI chairman, his associates, share brokers etc. for alleged offences, including under the Prevention of Corruption Act and Prevention of Money Laundering Act. The petition had alleged that Panama papers include the names of nearly 500 Indians, including celebrities and industrialists, who have allegedly parked funds in offshore accounts in transactions brokered by the law firm.