Archive for the ‘Corruption’ Category

Foreign Accounts Bill: Jaitley-Chidambaram Brothers At "Law"!

27 March 2015
Black Money is a bugbear for every Indian, rich or poor, because no Indian escapes firsthand knowledge of how the black money is generated by the venal and grasping state apparatus intruding into her life from birth to death. Politicians, Bureaucrats, to even low level functionaries of government machinery are presumed to be guilty of corruption by people unless proved otherwise. And so are held guilty filthy rich businessmen and corporates, who delight in subverting the system to  their advantage; and their ways at colluding with state apparatus are called Crony Capitalism. Such a blanket indictment may seem unwarranted, but is borne out of experience of how pervasive corruption is. This also partly explains the huge and instant popularity of Anti Corruption movement that was led just a few years ago by Anna Hazare and his demand for an omnibus, omnipotent जन लोकपाल [Ombudsman] to “root out” corruption at all levels. जन लोकपाल was to have power to receive complaints of corruption against anyone or even initiate action Suo Motu, to investigate, to interrogate, to question and to record statements of accused, and finally to prepare charge sheet and prosecute the accused. All political parties, notably even the BJP that enthusiastically attempted to make it it’s show,  baulked at the “grand project”. What was to stop the cancer of corruption from corroding the gargantuan but powerful apparatus that जन लोकपाल was envisioned to be? After all, the staffing was to be done from the same much maligned bureaucracy that was to become the nuts and bolts of जन लोकपाल, however clean and upright were to be the people at the top. The anti-corruption movement drew its strength from the many “revelations” that emerged in the second term of UPA government.
The second term -2009-2014- of Congress led UPA government was marked by slew of corruption scandals blowing up in its face. Then the leaks from HSBC and LGT Bank in Liechtenstein came into public domain revealing that Rich Indians had stashed their ill gotten wealth with them; often ably aided by the banks. This confirmed the old belief that Politicians, Bureaucrats and Businessmen have thousands of billions of US$ stashed in Switzerland and other safe tax-heavens abroad, safer behind the secrecy of regulatory walls there. In the 2014 general elections, that BJP led NDA won handsomely under its charismatic leader Narendra Modi, tall promises were made that the illegal hoards of money would be brought back for the development of India. In fact, it was boasted that within specific time period of 100 days the task would be accomplished. Supreme Court had ordered the UPA government in its dying months to constitute a Special Investigation Team [SIT] to be supervised by retired judges that were handpicked by it to monitor the black money probe. Modi took credit for constituting SIT within weeks of assuming power, though he was by SC’s direction required to do so in any case. However, after the initial flush of defeating the corrupt UPA government, even Modi government was seen dragging its feet on the issue of corruption by arguing in the court that it couldn’t disclose the names of Indians holding Foreign bank accounts that was already received via HSBC/LGT leaks because of treaties and agreements with foreign governments; it was the very same plea taken by the previous UPA government. May be to chnage this perception, in the current 2015 budget session of parliament, the finance minister Arun Jaitely introduced a bill [THE UNDISCLOSED FOREIGN INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015] through which NDA government seeks to address the charge that it is going soft on the issue of black money.
What strikes first on reading the proposed the bill is that how strikingly similar it’s impotency is to the Voluntary Disclosure of  Income Scheme [VDIS] that P Chidambaram had introduced in 1997 [Friend, father & philosopher of black money is Chidambaram]. VDIS had the grand vision of granting immunity from prosecution from a slew of legislations like FERA, Income Tax Act, Wealth Tax Act, Companies act to all the wilful offenders, who agreed the “come clean” before a certain date. Did it change reality of corruption or sending money abroad in anyway? Like Chidambaram, Jaitely too is a prominent SC lawyer and former’s professional colleague; but he belongs to a different party with pretensions to probity in public life. Yet, his vision of granting “immunity” to offenders follows exactly the same trajectory as his senior court-colleague save except he has chosen to value assets at market prices in the financial year of disclosure rather than some arbitrary earlier date suitable to the assessee like Chidambaram.  Chidambaram justified the “trick he conjured” to protect his corporate and wealthy clients as a Carrot and Stick approach. It is better to have speedy and complete compliance “voluntarily” rather than go through the messy affair of investigations, prosecutions, litigations and endless delays. Granted prima-facie, a “noble Intent” indeed, but it did not even scratch the surface of “ill gotten wealth”. Jaitley too is likely to use same or similar argument in defence of his bill. However, the press publicity portrayed totally inverted picture.

Black Money Bill, 2015: 5 terrifying penaltiesThe so-called Black Money Bill 2015, that proposes to penalise those stashing illicit wealth abroad by imposing a 10-year rigorous imprisonment, was introduced in the Lok Sabha today” 

The gaping holes the bill has created for the offenders to escape are glaring.
1. (1) This Act may be called the Undisclosed Foreign Income and Assets (Imposition
of Tax) Act, 2015.
2) It extends to the whole of India.
(3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 2016.
The date is important because it gives a “window of opportunity” to offenders to declare their foreign accounts and/ or assets in F.Y. 2015-16 if they desire to come clean. Moreover, it also gives them a time of over a year to make their foreign accounts/ assets more foolproof and impregnable from any honest attempts that government of India may make to unearth them. In fact, the following sections would serve only the latter purpose of the foregoing, because if an offender wants to come clean, then he better wait for the act to come into force on 1 April 2016.
59. Subject to the provisions of this Chapter, any person may make, on or after the date of commencement of this Act but on or before a date to be notified by the Central Government
in the Official Gazette
, a declaration in respect of any undisclosed asset located outside India
and acquired from income chargeable to tax under the Income-tax Act for any assessment
year prior to the assessment year beginning on 1st day of April, 2016—

(a) for which he has failed to furnish a return under section 139 of the Income-tax 40 Act;
(b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Act;
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise.
60. Notwithstanding anything contained in the Income-tax Act or in any Finance Act, the undisclosed asset located outside India and declared under section 59 within the time specified therein shall be chargeable to tax at the rate of thirty per cent. of value of such undisclosed asset on the date of commencement of this Act.
61. Notwithstanding anything contained in the Income-tax Act or in any Finance Act, the person making a declaration of undisclosed asset located outside India shall, in addition to tax charged under section 60, be liable to penalty at the rate of one hundred percent of such tax
67. Notwithstanding anything contained in any other law for the time being in force, nothing contained in any declaration made under section shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty, other than the penalty leviable under section 61, or for the purposes of prosecution under the Income-tax Act, 1957 or the Wealth-tax Act or the Foreign Exchange Management Act, 1999 or the Companies Act, 2013 or the Customs Act, 1962
Not only Blanket Immunity from prosecution is provided, but even the penalty is made more bearable at 100% than the “draconian 300%” media chose to comment on. I wonder what would Ram Jethmalani have to say about his erstwhile colleague from BJP and fellow lawyer, the current Finance Minister Arun Jaitley. Would he retain all the three adjectives -Friend, Father and Philosopher of Black Money that he employed for Chidambaram- or he would drop one in deference to Jaitely’s disinclination to have some arbitrary date to price the account/ asset for assessing the income tax?
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