Angry Supreme Court demands black money list TODAY: 800 names could surface as Modi government is accused of protecting the guilty

Furious at what it sees as the Modi government’s flip-flops on the black money issue and selective revelation of names of Indians holding foreign bank accounts, the Supreme Court on Tuesday ordered it to disclose by Wednesday the names of around 800 holders of accounts abroad.

A bench led by Chief Justice H.L. Dattu sternly told the government that it had no right to conduct a probe “and  protect people” when the court had specifically entrusted the task to a Special Investigation Team.

“Why are you trying to protect people having illegal bank accounts in foreign countries? Why are you providing a protective umbrella for all these people? The order to disclose names was passed in open court in the presence of the Solicitor General and the new regime can’t ask for the modification of the order,” the bench told Attorney General Mukul Rohatgi while dismissing a plea to modify its order of July 2011 to disclose all names.

After the SC’s criticism, Finance Minister Arun Jaitley defended the government, saying it had no qualms about furnishing the list to the court

“You don’t have to show so much interest in certain people. Your role is only this. You just hand over whatever information you have got from foreign countries to us. We will take care of other things. We will hand over the investigation to an agency like the CBI or Income Tax Department,” the bench said.

ORDER SIGNIFICANT

After going through affidavits submitted by the government, the bench apparently was of the view that it was not sincere about revealing the names.

“We can’t leave the issue of bringing back black money to the government. It will never happen during our time,” Dattu remarked.

With its order to reveal all the names in a sealed cover for its perusal, the apex court sent out a strong message that it will not brook any pick-and-choose policy in disclosing the names or nominated persons for prosecution while letting the real culprits and bigwigs off the hook.

Earlier the court had asked the government to submit all names to the SIT, which was to order a further probe.

“The court has seen through the game of the government and intervened at the right time most appropriately,” said senior lawyer Ram Jethmalani, the petitioner in the case.

When Rohatgi told the court that it had revealed 18 names received from Germany, the Chief Justice said: “It is only the tip of the iceberg.”

The affidavit submitted by the government on Monday had raised questions as to whether the NDA had the will to disclose real big names.

While on the one hand it said “the intention of the government is clear and unambiguous” and “it was determined to  unearth black money,” it also said “every account held by an Indian in a foreign country may not be illegal and a fundamental right of citizens to privacy cannot be ignored”.

That the Enforcement Directorate, in whose domain cases related to FEMA and PMLA fall, is extremely upset over the manner in which it has been deliberately kept out of the probe only adds to the mess.

Finance Minister Arun Jaitley introduced yet another twist, saying the government will make public only the names of those people against whom there is a prosecutable case in connection with tax evasion through offshore accounts.

This came after another U-turn, when the Centre said it cannot disclose details given by countries with which India has double taxation avoidance agreements.

After all the hype and hoopla, the first list of names of persons who had allegedly stashed black money in foreign banks turned out to be a damp squib as it included only a few low profile industrialists – Pradip Burman (a member of the promoter family of Dabur India), Pankaj Chimanlal Lodhiya (a Rajkot-based bullion trader), Timblo Private Limited and Radha Satish Timblo, Chetan S. Timblo, Rohan S. Timblo, Anna C. Timblo and Mallika R. Timblo (a Goa mining company and its five directors).

CORNERED

The bench brushed aside the contentions of the AG that disclosing the names of foreign account holders would violate the right to privacy of those who have legitimate accounts and that the names could be revealed only after a prima facie case of tax evasion is proven.

Rohatgi tried his best to convince the court that disclosing the names of all account holders could hamper the government’s efforts to bring back black money as other countries might not give further information on tainted accounts.

Rohatgi said: “We need to sign several treaties and agreements with several countries. Such a stand by the court may jeopardise all future agreements with other countries and close our source for getting information on black money.”

In July this year, the Reserve Bank of India and the Securities and Exchange Board announced a timeline for full Foreign Account Tax Compliance Act (FATCA) implementation.

Under FATCA, participating foreign banks and financial institutions are required to report the offshore accounts and assets of US citizens and foreign firms in which US taxpayers hold substantial ownership.

In agreeing to comply with FATCA, Indian authorities will similarly be granted access to information on Indian tax- payers’ U.S.-based holdings.

The CJI, however, told Rohatgi: “If needed, let the Indian government not commit to the confidentiality clause insisted on by foreign countries in double taxation avoidance agreements.”

Where the NDA goes from here can now be best described as a developing situation.

MAIL TODAY EXCLUSIVE: ED angry at being left out

By Abhishek Bhalla in New Delhi

The Enforcement Directorate (ED) is extremely upset over the manner in which it has been deliberately kept out of the investigation into black money accounts in Swiss banks.

According to top ED sources, cases related to foreign bank accounts or cash held by Indian nationals abroad come under the purview of the Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA), which are the exclusive domain of the ED.

However, the Income Tax (I-T) Department has taken over the investigation and refused to pass on information to the ED.

The French government had in June 2011 provided a list of more than 600 Indian account-holders in HSBC’s Geneva branch.

In March 2009, the German government had furnished information about Indian taxpayers having accounts with LGT Bank in Liechtenstein. Sources say this information was not shared with ED.

The I-T Department has taken the stand that these cases involve tax evasion and have to be dealt with under the Double Tax Avoidance Agreement (DTAA) signed with Switzerland and other countries. Their tack is that if India violates treaty obligations, information flow will dry up.

Interestingly, the Swiss authorities have been denying information on the secret accounts on the ground that they don’t see tax evasion as a criminal offence.

Sources disclose that ED informed the I-T Department that money in several  accounts represent ill-gotten wealth which involves proceeds of fraud or crime and illegal hawala transactions that are a cognisable offence under FEMA.

However, the I-T Department has refused to accept this argument, which would have helped gain access to these accounts.

According to sources, the Supreme Court-appointed SIT has also concluded that the ED should be the nodal agency to investigate the overseas black money accounts. Things appear to have become clearer after discussions held at meetings of the multi-disciplinary unit under the SIT that includes ED, CBI as well as I-T officials.

India has managed to negotiate a fresh tax treaty with Switzerland which allows for exchange of information on tax fraud as well as tax evasion cases.

More information on Swiss accounts has started flowing in after the new tax treaty was signed in October 2011, but the problem is that the information from prior to 2011 is still held up.

According to finance ministry figures, deposits of Indians in Swiss banks have shown a steady decline over the years and had more than halved to Rs 9,295 crore in 2010 from about Rs 23,373 crore in 2006.

Indians accounted for 0.1302 per cent of the total wealth stashed by foreigners in different Swiss banks in 2010.