Confidentiality in tax matters is both an essential part of due process in preliminary proceedings and a necessary ingredient for international cooperation in curbing evasion. However, it cannot be used as a pretext to avoid a proper investigation into details that other countries have shared with it. This is the message from the Supreme Court’s intervention that compelled the government to submit a list of 627 names in a sealed cover. The court, in deference to the principle of confidentiality on which international cooperation in tax evasion issues is premised, has not made any disclosure but has forwarded the names to the Special Investigation Team appointed by it for a further probe. In hindsight, it may appear a redundant exercise, as the government had also submitted the same list to the SIT as early as in June. However, it appears that insufficient progress has been made since then, and the court is possibly justified in believing that unless it monitored the probe it may be delayed unduly. Chief Justice H.L. Dattu has clarified that the court would not have asked for the list but for an application by the government seeking modification of earlier orders passed in the same matter.
Given the zeal shown by the Bharatiya Janata Party in the run-up to the election in promising that it would bring back fabulous sums of money parked in foreign bank accounts, there was a legitimate expectation that the authorities would aid the SIT in a quick and efficient probe. However, governance has its own limitations, and a better understanding of the confidentiality requirement has led to a more pragmatic approach to the issue. The present regime is right in stressing on its international obligations and not wanting to jeopardise future cooperation on tax matters from various countries, which was the stand of the UPA government as well. Apart from an inter-governmental agreement with the U.S., India also plans to adopt a multilateral agreement with 46 other countries. It hardly needs iteration that nothing should be done to undermine such efforts to put in place trans-border mechanisms to curb evasion. For, the identification and prosecution of all those who hold unaccounted money in overseas accounts is more important than the immediate public disclosure of some names. Meanwhile, it should not be forgotten that not all black money is abroad. Much of it is within the country, especially in sectors such as real estate, higher education and mining. A recent report of the National Institute of Public Finance and Policy estimates that the ‘black economy’ in India may constitute 75 per cent of its Gross Domestic Product. A raft of policy measures and diligent monitoring are needed to bring down this illegal edifice.
