The Supreme Court on Thursday questioned the Centre what steps it took to find out the “faceless persons” who had stashed away their money in foreign banks and asked it to probe their source of money.
A Bench of Justice B. Sudershan Reddy and Justice S.S. Nijjar hearing a petition filed by the former Union Law Minister, Ram Jethmalani and others, also asked the Centre not to restrict its probe to tax evasion only and expand its scope by tracking the source of money which might have originated from anti-national activities.
Justice Reddy told Solicitor General Gopal Subramaniam: “Looking at the issue from taxation point of view is only one aspect. Some names have been given to you in respect of a bank. What steps have you taken? Have you set the law in motion? They are Indian people and are amenable to Indian law. We would like to know what action you would take to know who are the faceless persons.”
When the SG said, “We are governed by the Double Taxation Avoidance Agreement (DTAA) and it would be difficult to get the information without the cooperation of the other countries” Justice Reddy asked, “What action have you taken against them when you came to know that they have stashed away money in LGT Bank in Liechtenstein.”
The SG, however, tried to convince the court saying “the government is taking all possible action under international agreements and taxation law against the erring persons and it has no problem in sharing the information with the court.”
Mr. Gopal Subramaniam informed the court, "We are aware that black money is a problem for the country and we are dealing with it. We have the DTAA with 79 countries and we have finalised revised agreement with other countries including Switzerland. The government has been able to prevent the outflow of around Rs. 34,000 crore out of the country because of prompt action.”
Justice Reddy asked the Centre to file a comprehensive affidavit indicating what action the government took against those who had stashed away their black money abroad; where has the money come from; whether it was routed through other countries and other details.”
Senior counsel Anil Divan, appearing for the petitioners, submitted that the government was not serious in interrogating the Pune-based businessman Hasan Ali, facing probe for stashing away money to the tune of Rs. 36,000 crore in UBS Bank in Swiss bank. This had resulted in his fleeing the country.
Mr. Jethmalani alleged that the protocol signed by India with Switzerland had made it impossible to get any information from that country. When Justice Reddy sought a copy of the protocol, Mr. Jethmalani said “he would produce a copy.”
Appearing for the former Income Tax official, K.V.M. Pai, senior counsel Krishnan Venugopal brought to the notice of the court the permission granted by the government to the Swiss government for opening a branch of UBS Bank in India though it had not fulfilled the norms prescribed by the Reserve Bank of India. He also explained how India had failed in its efforts to get back the black money stashed away abroad, while other countries were able to do so.
The Bench, after hearing counsel Meenakshi Arora, issued notice to the Centre on the petition filed by Julio F. Ribeiro and others alleging that to date India had not entered into any Tax Information Exchange Agreements (TIEAs), though it had signed comprehensive DTAAs with approximately 75 countries. The petition also sought ratification of the U.N. Convention against Corruption by the government of India which could help in complete overhaul of the black money system throughout the world.
