Black money: Govt discloses 3 more names

Anxious to ward off criticism that its stance on the issue of black money stashed abroad by Indians

Anxious to ward off criticism that its stance on the issue of black money stashed abroad by Indians is the same as that of the UPA it had reproached at the hustings for, the Narendra Modi government reiterated on Monday that it has “absolutely no intention to withhold the names” of these persons and named three — Pradip Burman, formerly of Dabur group, Goa-based mining firm Timblo Pvt Ltd and its five directors and Rajkot-based bullion trader Pankaj Chimanlal Lodhiya — against whom prosecution has been launched. The names were given by French authorities.

The UPA government had in April placed before the apex court names of 26 taxpayers allegedly holding untaxed amounts in LGT Bank in Liechtenstein, including eight against whom no clear case was made out, in two sealed covers. Of these, names of only 17 against whom prosecutions were launched were disclosed.

In a fresh affidavit filed in the Supreme Court on the matter in less than 10 days, the Modi government has now said that information received in this connection from foreign countries “will be disclosed in all cases where tax evasion is established” after following the due process of law. It, however, added that since every such bank account held by Indians abroad may not be illegal, the state cannot ask its citizens to reveal the details thereof or itself reveal the same to the public at large unless and until its own probe established a prima facie case of wrongdoing.

While a Dabur spokesperson denied any wrongdoing by Burman, Lodhiya, said to be a politically well-connected bullion trader, denied having a “Swiss bank account”.

According to informed observers, the Modi government’s stand — that whenever its own probe established tax evasion, details of foreign bank accounts of Indians will revealed to the public — could foil tax evaders’ bid to use banking secrecy as a cover. The decision to disclose names of only tax-evading foreign account holders would help avoid unnecessary harassment and loss of reputation of persons with legitimate investments abroad under the Reserve Bank of India’s liberalised remittance scheme. Under the scheme, Indians were originally allowed to invest $200,000 a year abroad in foreign currency accounts and/or other assets including property. They can now invest up to $125,000 a year as per an RBI directive issued in July 2014.

On Monday, the government repeated the stance taken by finance minister Arun Jaitley earlier that naming account holders before investigations into their alleged tax evasion reach courts would amount to breach of information sharing treaties and would discourage treaty partners from sharing information in the future.

Importantly, the government has sought the court’s consent to sign new bilateral information sharing agreements with other countries which would allow disclosure of information received under these pacts only as part of court proceedings. Earlier, the court had asked the government to reveal names of Indians with foreign bank accounts once the probes were concluded, that is, even without launch of prosecution. The government argued that such a commitment to court would come in the way of signing of new information sharing pacts which is essential for gathering relevant information in the first place.

India, pertinently, is set to sign such a deal with the US before December-end with a similar rider to exchange details of their respective bank account holders between the two. The government has told the court that if it is not able to give commitment to maintain confidentiality of information received from the USA and if the agreement is not signed before December-end, it would lead to serious impairment of the Indian financial system.

In recent talks with Indian revenue officials, Swiss authorities have said that they could provide details of alleged secret account holders in HSBC obtained by India if New Delhi provides independent evidence. Earlier, Switzerland was reluctant to give these details alleging the details India was seeking pertained to “stolen data”. Switzerland has also agreed to assist India in obtaining confirmation of the genuineness of bank documents on request and discuss bilateral and multilateral agreements for automatic exchange of information.

“New global standards on automatic exchange of information will enable us to receive information about Indians hiding their money in offshore financial centres and tax havens through multi-layered entities with non-transparent ownership….,” the government said in the affidavit. It added: “The intention of the present government is clear and unambiguous. The government is keen to unearth black money held abroad and for that purpose it will use all diplomatic and legal means and also all investigative agencies to obtain information that can assist in such unearthing.”

Stating that Pradip Burman doesn’t hold any executive position at Dabur India, a Dabur Group spokesperson said: “We wish to state that this account was opened when he (Burman) was an NRI, and was legally allowed to open this account. We have followed all the laws and the complete details regarding the account have been voluntarily, and as per law, filed with the income tax department, and appropriate taxes paid, wherever applicable.”

Lodhiya denied having “a Swiss Bank account”. In 2013, the I-T department had raided Lodhiya’s premises and seized unaccounted wealth. Lodhiya, the proprietor of Shreeji, a bullion trading company set up in 1997 in Rajkot, has invested heavily in the real estate and is said to be politically well-connected. His on-line trading system for previous metal was started in 2008 and now has as many as 2,100 registered members with centres in many cities in the country.

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