Apex court asks govt to inform it by Oct 28; SIT told to submit fourth report on probe progress by Oct 7
The Supreme Court on Thursday asked the government about the steps taken by it to implement a special investigation team’s (SIT) recommendations to bring back illegal money stashed in foreign banks.
A bench headed by Chief Justice H L Dattu asked attorney-general Mukul Rohtagi to inform it by October 28 about what the government has done so far on the recommendation given by the apex court-appointed SIT on the black money issue. It also asked the SIT to submit its fourth report on the progress of its probe by October 7.
Senior advocate Dushyant Dave, appearing for the SIT, informed the bench that the subsequent report on the progress of investigation would be complete by the month-end and sought its nod to place it before the court in October. The SIT, in its third report, had suggested that market regulator Sebi needs to have an effective monitoring mechanism to study such an unusual rise of stock prices of companies while such a rise is taking place.
According to sources, the SIT has said that Sebi, having strong IT infrastructure, can generate red flags in such instances. “Such red flags could be built upon trading volumes, entities which contribute to trading volume, financial background of firms through their annual returns, and any other indicators SEBI may develop, they said, adding that with effective and timely monitoring by Sebi, a significant number of such instances can be checked. The SIT has further recommended that information about such instances should be shared with CBDT and the Financial Intelligence Unit (FIU). Besides, the Enforcement Directorate should be also kept in the loop so that it can proceed under the Prevention of Money Laundering Act for the predicate offences.
In its latest report, the SIT has also suggested that Sebi needs to further strengthen its monitoring mechanism to detect instances of the stock market platform being misused for tax evasion. It had also suggested to Sebi to review its regulations on participatory notes to help identify the end-users of these instruments.
Advocate Prashant Bhushan had also raised the issue of the SIT’s third report submitted to the apex court in May and claimed that some portions of it have emerged in media which made reference to participatory notes (P-Notes) for investing around R3 lakh crore in the stock market.
Declarations to remain confidential
Government promised confidentiality of information furnished under the black money compliance window and said declarations for years for which bank statements are unavailable can be made on best estimate basis. The finance ministry issued a second set of 27 FAQs on voluntary disclosures to be made in the compliance window.