Challenges in wearing a Panama hat

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Published: April 22, 2016 6:17:09 AM

In human affairs, wrote Edmund Burke centuries ago, the lines demarcating right from wrong and good from evil are not like the fine lines of geometry; on the contrary, they are broad and deep, and permit of exceptions.

In human affairs, wrote Edmund Burke centuries ago, the lines demarcating right from wrong and good from evil are not like the fine lines of geometry; on the contrary, they are broad and deep, and permit of exceptions.

All those looking into the Panama files would do well to heed to this sensible advice. The government, on its part, has set the ball rolling by appointing a multi-agency probe team comprising CBDT officials, Financial Intelligence Unit and RBI to carry out a preliminary probe into these cases. After this panel has submitted its report, matters will be passed on to the departments concerned who will have to decide which case to pursue and to what extent. That is when the real work will start and investigators and adjudicators will have to exercise fine judgments every step of the way. The least the departments concerned can do is to prepare the selected officers for the onerous task that lies ahead; and these officers can learn a lot from past experience about what works and what does not.

The officials will have to go through voluminous mass of data and separate what is relevant from what is not. Once that is done, they have to decide which cases to pursue. The preliminary enquiry will itself reveal the first replies of persons to whom notices have been addressed. The investigators will have to take an important call at this stage: did the parties participate in lawful or permitted arrangements? If it’s a tax case, the question to ask is: did they merely minimise their liability through an arrangement approved by law? Either at this stage or even later, if it emerges that the answer to this question is in the affirmative, the proceedings should be dropped immediately. Departments gain much more credibility when they do this, rather than when they fritter away much time, money and energy in pursuing frivolous cases.

Otherwise, regardless of whether we are dealing with cases relating to tax, money laundering or even disciplinary proceedings against an official, the basic attributes of a good, sustainable quasi-judicial order and the investigation backing it remain the same—that inferences of facts should flow from the evidence on record. After she reads the order, a person of ordinary prudence should be convinced that the order is fair and reasonable. Any official performing quasi-judicial functions has an obligation not to be arbitrary, capricious or vindictive. There is no space in such proceedings for conjectures, surmises or guesswork. The citizen must get the fullest right to inspect and rebut the evidence to be used against her.

These time-honoured principles are the cornerstone of modern administrative law and Anglo-Saxon jurisprudence. In our country, they have been sanctified by a plethora of judicial decisions spread over the last 60 years, starting from the Supreme Court’s pronouncements in the cases of Dhakeswari Cotton Mills Ltd vs CIT and Surajmall Mohta vs Visvanatha Sastri. They may appear old hat to a seasoned administrator, but they need to be reiterated in the current context. This is because the Panama cases are not on a par with other routine cases where appellate authorities regularly strike down findings which violate these requirements.

All too often, officers at the grass-root level seem to equate transparency with naivety. “Why should I show my cards to him? He’ll manipulate evidence to nullify the material I gather against him,” an investigator often asks, as she proceeds to make an addition behind the taxpayer’s back. She forgets that this kind of thinking is naive. In fact, this is precisely the kind of rash decision an unscrupulous person wants her to make because now he gets an opportunity to get the entire order, as well as the entire investigation on which it is based, quashed.

As American investigators have learnt to their cost, coercive techniques—such that criminal investigators the world over are, in exceptional circumstances, tempted to use—seldom yield desired results. They have found that these may make people confess to crimes they never committed, but they may not help much in unearthing the truth. That is what an impartial, unbiased investigator should be wishing to unearth. Collection of information about relevant facts through standard non-threatening interrogation techniques generally yields much better results.

The other reason an official may ignore principles of good investigation relates to her wanting to get quick results so as to impress her seniors. In our administrative system, an officer is seldom held accountable when her findings are reversed in appeal. She may even have strictures passed against her, but this fact may not result in any adverse consequences. Till her decision is reversed years later, she acquires bragging rights on her outstanding contribution to the department. The end result is that both she as well as the department lose credibility in the eyes of the citizens. The departments concerned should not allow this to happen in the Panama cases.

The judicial conscience is always shocked when there are inordinate and inexplicable delays between the happening of an event and the commencement of proceedings. The Supreme Court observed in the State of MP vs Bani Singh case that such delays vitiate the charge-sheet and are sufficient ground for quashing the latter on account of denial of reasonable opportunity to the accused.

In essence, when a person is asked to defend herself against a charge relating to events which occurred ages ago, it is possible for her to allege that the allegations suffer from the vice of staleness. How can she defend herself when the sources of evidence on which she is relying have dried up? This line of argument is especially relevant when the delay in completing the investigation cannot be attributed to the charged officer.

Finally, as she moves on in life an investigator as a human being, like all of us, inevitably develops all kinds of biases and prejudices. Depending upon her background, education and subsequent experiences, she begins to stereotype. People who are rich, famous or successful are often the objects of much envy, hatred or adulation by all of us.

More than us, however, a civil servant is burdened with a special responsibility cast upon her by society, to be fair. This means that when she deals with a case, no matter how important, she has to go by the evidence on record. Sometimes she has to proceed against someone she admires, simply because a prima facie case has been made out; on the other hand, she may have to drop proceedings against someone else she dislikes, because the evidence on record is not good enough to proceed. Both decisions need courage and robust common sense. In both cases, she has to rise above herself to do what is right.

The Romans summed it up the best: Fiat justitia ruat caelum (Let justice be done though the heavens fall).

The author is former Chief Commissioner of Income-Tax and Ombudsman to the Income-Tax Department, Mumbai

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