Black money: Centre ignores Supreme Court rebukes, reveals no new name

Notwithstanding  Supreme Court's insistence, the Centre today divulged no names of Indians who have stashed their money in tax havens abroad.

Giving no no names, the Centre, in its additional affidavit filed today on the PIL of eminent jurist Ram Jethmalani and some former bureaucrats, went on to detail various measures that it is taking in a bid to retrieve India black money stashed abroad.

Among the steps that are being taken are black money parked in tax havens abroad will be taxable income under the Direct Taxes Code Bill and that it has even completed negotiations for signing Tax Information Exchange Agreement (TIEA) with 10 countries where the money is believed to have been stashed.

The ten countries are--Bahamas, Bermuda, British Virgin Island, Isle of Man, Cayman Island, British Island of Jersey, Monaco, St Kitts and Nevis, Argentina and Marshall Island.

The government had earlier claimed that it had identified 26 citizens, who had parked their ill-gotten wealth abroad as revealed by the German government in Liechtenstein Bank there, but avoided making the names public.

Irked by the government's reluctance in divulging the names, a bench of Justices B Sudershan Reddy and SS Nijjar during the last hearing on January 19 had rebuked the government saying it is not just limited to tax evasion but a "mind boggling crime" amounting to "theft" and "plunder" of national wealth having security ramifications.

"It is a pure and simple theft of the national money. We are talking about mind-boggling crime. We are not on the niceties of various treaties," the bench had remarked as solicitor general Gopal Subramanium contended that the government cannot make public the names of Indian account holders in banks abroad as it was a case of tax evasion.

When pointed out by petitioner's counsel Anil Divan that the source of the black money might be narcotics, terror fund or arms dealing, the bench had remarked. "This is the problem which is worrying us. It is not only about tax evasion and has something more."

Disapproving of the last affidavit, restricting information only to 26 Indians holding accounts in Germany's Liechtenstein Bank, the bench had remarked, "This is all the information you have or you have something more?"

Today's affidavit said  the Cabinet has already granted approval for signing agreement for Tax Information Exchange Agreement (TIEA) with 10 countries.

"It is submitted that the central government has proposed new provisions for unearthing black money in the Direct Taxes Code Bill by defining taxable assets as inclusive of the deposits in banks located outside India in case of individuals and such bank deposits not recorded in the books of account in case of others," an additional affidavit filed by the ministry of finance said.

The government also added that it has initiated the process of negotiations with 65 countries to amend the existing Double Taxation Avoidance Agreement (DTAA) and broaden the scope of the article concerning exchange of information.

Admitting that it did not conduct any fresh study on black money the government said the credibility of any estimate of such money was doubtful and their transactions by their very nature were "unrecorded, unreported, complex and layered."

"However, keeping in view the recent international and domestic developments, a study has now been proposed to be conducted by the finance ministry for a thorough assessment/survey of unaccounted income/ wealth both inside and outside the country, particularly bringing out the nature of activities engendering money laundering with its ramifications on national security," the government said.

The government submitted that in view of the stringent measures required to deal with undisclosed foreign bank accounts and cross-border transactions, the Central Board of Direct Taxes has asked the Income Tax authorities that in specified categories of cases, prosecution proceedings may be initiated immediately after completing the assessment or reassessment.

"It is submitted that once prosecution is launched in such cases, the information will be available for use by other law enforcement agencies and will also become available in the public domain," the affidavit added.

The government has further submitted DTAAs with 13 countries, including Switzerland, was at the final stage of being reached.

"It is submitted that a protocol amending the DTAA with Switzerland has also been signed which would come into force after the internal process of ratification is completed by Switzerland, after which it would allow India to obtain banking information as well as information without domestic interest from Switzerland in specific cases from April 1, 2011," it said.

The affidavit claimed that to curb black money, Income Tax Overseas Unit has already been operationalised in Singapore and Mauritius and it has created such units in the USA, the UK, the Netherlands, Japan, Cyprus, Germany, France and the UAE.

The government further said it has already raised tax demands of Rs24 crore from 18 individuals whose names were disclosed by the German authorities.

"Necessary action to recover the tax demand to get the appeals decided on priority, action to levy penalty and launch prosecution for concealments of income have also been initiated in these cases," the government said.

During the last hearing on January 27, the apex court had asked the government about the action taken against the person whose name has been disclosed by the LGT Bank in Liechtenstein.