Black money: You can name names once probe over, Law tells Government

In July 2011, the court first ordered the govt to reveal the names and documents it received from Germany.

Written by Amitav Ranjan | New Delhi | Updated: September 3, 2014 10:02:45 pm

In July 2011, the court first ordered the government to reveal the names and documents it received from Germany to petitioner Ram Jethmalani.

More than three years after the Supreme Court order, the Income Tax department may finally have to make public all information on Indian account holders of the LGT bank of Liechtenstein, but with disclosures limited to those against whom it has launched prosecution.

Last month, the Law Ministry advised the Department of Revenue, to which the Income Tax department reports, that information received from Germany in March 2009 under the Double Taxation Avoidance Agreement (DTAA) should be disclosed as per the obligations agreed under the treaty, and any strictures from the court should be avoided.

“There appears to be no bar in disclosing the information received under the tax treaties after completion of investigation/ inquiry and initiation of proceedings,” the Legal Affairs Department wrote on August 21. “Therefore, to avoid any embarrassing situation, it would be advisable to complete the investigation/ inquiry as quickly as possible to initiate prosecution before a competent court/ authority,” it said.

The Revenue Department has been dragging its feet over sharing information — trust deeds, transaction details, trustees’ names or their passports — on the ground that the DTAA does not permit disclosure as “public court proceedings” stated in the treaty relate to tax issues which cannot be disclosed under Income Tax Act.

In July 2011, the court first ordered the government to reveal the names and documents it received from Germany to petitioner Ram Jethmalani. It followed this up with another order last May and again on August 21, asking Additional Solicitor General to share full information obtained from the German authorities.

Sources said the Legal Affairs Department’s views have been sent to the Attorney General for a “considered opinion” before a final call is taken on revealing the details. The Income Tax department claims 12 trusts/ entities were on the list, involving 26 people of Indian origin. Of these, it says, probes in 18 cases have been concluded and prosecution launched in 17.

The three-judge bench on August 21 also asked the ASG to inform the court about the steps taken by the Centre to amend the treaties with other nations to enable investigating agencies to get effective information about Indians stashing money abroad. However, the Legal Affairs Department has opined that this does not mean that India cannot enter into any treaty without the amendments.

“A perusal of the (July 2011) order of the Supreme Court reveals that nowhere the apex court restricted the treaty making power of the government. Care has to be taken not to render any word, phrase or sentences redundant where rendering of such word, phrase or sentence redundant would lead to a manifestly absurd situation, particularly from a constitutional perspective,” it said.

“There is no bar for entering into any tax treaty, either bilateral or multilateral, containing a confidentiality clause,” concluded the Legal Affairs Department.

The Special Investigation Team, set up by the apex court, had said the Centre needed to take a comprehensive look at such treaties and effect necessary changes to enable Indian agencies to legally seek sharing of data on black money from foreign countries.

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