Friday, October 17, 2014

Bank Cannot Disclose Name Of Depositors

India has signed double tax avoidance treaty with countries from whom the information related to back money has come to India. The agreement was signed much before BJP or NDA assumed power. Now as per terms of the agreement if BJP shares the information with media ,it may give MASALA to media and common men or opponents to fire bullets against the current government at centre led by Narendra Modi , but the foreign countries will stop disclosing names in unison with the agreement already signed by none other than Indian Government . It is immaterial whether BJP or Congress Party signed the agreement.

However as soon as the charges against culprits are established, the name can be    disclosed, as I understand from newspaper information. However the final order of Supreme court in this matter will throw light on this issue, how to deal with a situation where the country has to respect treaty signed by a government of India.

It is undoubtedly true that government, NDA or UPA cannot go against the spirit of agreement already signed with foreign countries by Indian government, headed by NDA or UPA , otherwise India as a whole will lose its credibility in international forum. No other country will sign such agreement in future with India. There are specific clauses in the tax treaties with countries (which have furnished names ) that prevent sharing of information. However the information is in various stages of processing and investigation and as soon as it is established that the charges are fit for legal action , the name will automatically come to media. I hop media will also understand the intricacies of treaties and will not give scope foreign countries to dilute their faith on India.

So far as election campaign is concerned, it is not only BJP but all political parties resort to various promises to attract voters in their fold. Promises are not always fulfilled . It is easy to distribute freebees to lure voters from government fund , it is easy to approve quota for various castes and communities, it is easy to sanction subsidies for various projects, it is easy to grant release of prisoners to please voters of some community but it is not easy to violate international treaties.
Now BJP government will have to make effort to alter the terms of agreement and make it convenient to disclose the name of persons who parked black money in foreign banks. It is in the interest of the countries that huge amount of black money parked in other countries to evade tax must be brought back to India and real culprit must be brought to task .It is clearly visible that BJP led NDA government has taken up the matter with Swiss government and left no stone unturned to achieve desired outcome. Matter is moving ahead fast and one can hope for better outcome in near future.

Last but not the least ,media men or some opponents of  Mr. Modi are trying to trap Mr. Modi only because his government has stated in Apex Court Today  that the government cannot reveal the names provided by foreign banks because international treat does not permit it. They should know that even money parked in Indian banks, black or white cannot be disclosed until it is proved that the money kept in a particular account is black or illegally earned. Secrecy Act in India prohibits banks sharing any information to depositors or borrowers until asked under legal provisions or an order to this effect is issued by any court.

Black money is kept not only in foreign banks but also in Indian banks in volume much more than it is foreign banks. Government will have to strike at the root cause of creation of black money. GOI will have to investigate how tax evasion takes place in such large volume and how does it not comes in the knowledge of tax officials. GOI will have to introspect why  court failed to punish black money creators , why and how  team of Chartered Accountants in nexus with tax officials help businessmen small or big , in tax evasion or in payment of tax which is too low in comparison to income really earned by a businessman.

How Black Money Grows In India

Also Read;; Role Of Auditors in Rise of Black Money

How Black Money is Created

BJP should also learn lesson from this episode that a party should not make such promise fulfilment of which is dependent on other nation and international rules and ethics. Indian government or Indian political parties can function as per their constitution within their boundaries only but cannot take decision which may affect the rules of other countries.
If UPA or Congress Party feel that there is no such treaty in force and they are not part of any such treaty which bars disclosure of name, they should strongly oppose the stand taken by BJP and put forward all such document in public domain in the larger interest of the country. But it is also true that even Congress Party did not disclose the names which they received during their tenure . And if what BJP government has stated in Supreme Court is true , Media men and opposing parties should stop mudslinging process on TV to save the country's image in world forum.

Last but not the least, even role of Supreme Court is limited in matters which are linked to international treaties and rules.

Cannot reveal all information on black money: Centre to SC-Hindustan Times-17.10.2014

The Centre on Friday submitted before the Supreme Court that all the information on black money received from foreign countries, with which India has double taxation avoidance agreement, cannot be disclosed.

In its application, the Centre said that the foreign countries have objected to disclosing such information and if such details are revealed then no other country would sign such an agreement with India.

Appearing before a bench headed by Chief Justice HL Dattu, attorney general Mukul Rohatgi mentioned the issue and pleaded for an urgent hearing.

Viewed as going hand in hand with corruption, “black money” has been at the top of the agenda of widespread public protests over the last couple of years.

Senior advocate Ram Jethmalani strongly objected to the stand taken by the Centre and said that matter be not heard.

"Matter should not be entertained even for a day. Such application should have been made by the culprits and not by the government," Jethmalani said, adding that Centre is trying to protect the people who have stashed black money in foreign banks.

Jethmalani said that he has written a letter to Prime Minister Narendra Modi on this issue and his response is awaited.

To meet a deadline set by the Supreme Court for the previous government, Prime Minister Narendra Modi’s cabinet — on the new government’s first day in office in May — set up a high-powered Special Investigation Team (SIT) to look into the issue of black money and slush funds.

The government has given the SIT, headed by retired Supreme Court judge MB Shah, a sweeping mandate to crack down on India’s infamous and bustling parallel economy.

Black money arises mainly from incomes not disclosed to the government usually to avoid taxation and sometimes because of its criminal links.

The SC had directed the government to constitute a SIT to investigate individuals whose names were disclosed by Germany for having accounts in LGT Bank in Liechtenstein — a European principality known for its banking secrecy laws.

The government has given the SIT a wider mandate to investigate the operations of Indian individuals and “entities” whose money is found stashed in foreign banks. It will file periodic status reports to the Supreme Court.

The income tax department has given to the Enforcement Directorate (ED) — the agency that tracks overseas money laundering deals — names of 17 individuals who had held accounts in Liechtenstein’s LGT Bank.

“The ED has sought more information, but the tax department has said that there were specific clauses in the tax treaties with these countries that prevent sharing of information,” said an official who did not wish to be identified.

The official said that in the last two years, the income tax department had collected 7,704 “items of information containing details of payments received by Indian citizens in various countries, besides information from LGT Bank accounts.”

In addition, in the past one year the government has made more than 175 requests to countries with which India has inked tax treaties.

“This information is in various stages of processing and investigation,” the official said.

There are no official estimates of India's black economy

The Global Financial Integrity (GFI), a Washington-ased think-tank, has estimated that Indians had salted away $462 billion (about Rs. 28 lakh crore in current exchange rates) in overseas tax havens between 1948-2008.

The government is expected to reveal a new estimate, the first since 1985, of India’s unaccounted “black money”, most of it stashed abroad, and follow it up with a plan to hold it to account.

It has commissioned the National Council for Applied Economic Research (NCAER), the National Institute of Public Finance and Policy (NIPFP), and the National Institute of Financial Management (NIFM) to bring out an estimate of India’s black economy.

“Given the complexities inherent in quantification of unaccounted income and wealth both inside and outside the country, it will take some more time for the finalisation of these reports,” another official said.

The Bharatiya Janata Party (BJP), in a 2011 report, had estimated India’s black economy to be worth around $500 billion and $1.4 trillion (between Rs. 30 lakh crore and Rs. 84 lakh crore).

Between 2009-10 and 2012-13, the income tax department detected undisclosed income of more than Rs. 65,000 crore through specific “search and seizure” operations and “surveys”.

Narendra Modi government tells Supreme Court it cannot disclose black money details from certain countries-DNA

The Narendra Modi government, which promised to bring back black money stashed by Indians in foreign banks, on Friday toed the line of UPA regime by informing the Supreme Court that it cannot disclose such details given by countries with which India has double taxation avoidance agreement (DTAA).

In an application with annexures running into about 800 pages, the Centre contended that it cannot disclose all information as the foreign countries, with which India has double taxation avoidance agreement, have objected to making them public.

In the run-up to the Lok Sabha polls, BJP spearheaded by Narendra Modi had promised to bring back black money kept by Indians in overseas bank and slammed UPA government for not taking effective action and accusing it of shielding the corrupt. After assuming power in May, the Modi government had pledged to fulfil its pre-poll promise.

Expressing reservation on disclosing all information on account holders, the government said that the foreign countries may not give further information and it would also be difficult to get into DTAA with other nations.

Appearing before a bench headed by Chief Justice HL Dattu, Attorney General Mukul Rohatgi mentioned the issue saying that German government has raised objection on making public names of the Indian account holders in LGT Bank, Liechtenstein.

Accusing NDA government of trying to protect the culprits who stashed money in overseas banks, senior advocate Ram Jethmalani on whose plea the apex court had constituted Special Investigating Team (SIT) on black money, strongly objected to Centre's stand and said that matter be not heard.
"Matter should not be entertained even for a day. Such application should have been made by the culprits and not by the government," Jethmalani said, adding that Centre is trying to protect the people who have stashed black money in foreign banks.

Jethmalani, who claimed that around Rs 70 lakh crore was stashed in foreign banks, said that he has written a letter to Prime Minister on this issue and his response is awaited.
Interestingly, the apex court had earlier rejected the same stand taken by UPA government, observing that such DTAA does not prevent the Centre from disclosing the names of the persons having bank accounts in foreign banks.

It had said the treaty has been drafted in a "sloppy" manner, and cautioned the Centre not to enter into an agreement which undermines the Constitution

Tax probe: Switzerland to assist India in validation of bank documents -HBL

Switzerland will assist India in getting confirmation of the genuineness of bank documents on specific requests made by the Indian side for its tax administration purposes.
This is reflected in the joint statement issued by Revenue Secretary Shaktikanta Das and State Secretary Jacques De Watteville after their meeting in Berne to discuss bilateral and multilateral topics related to fiscal and financial matters.
At this meeting, Switzerland also agreed to swiftly provide information on requests related to non-banking matters.
De Watteville indicated that Switzerland would be willing to examine requests for which investigations had been carried out independently from what the Swiss government considers as data obtained in breach of its domestic laws.
This could be reassuring for the Indian revenue authorities who hit a wall in a recent case involving several Indians’ accounts held with HSBC Geneva.
The Swiss authorities had declined to share information on such banking accounts on the ground that the information sought by Indian side were based on details involving stolen data.
The Swiss domestic laws forbid their authorities from sharing banking information related to stolen data.
In order to deal expeditiously with pending cases (for information sharing), Das has agreed to indicate to the Swiss competent authority which cases should be dealt with as a matter of priority and to give additional information where appropriate.
The visit of the high-level Indian delegation led by Das to Switzerland is significant as it showed the Modi-led Government’s keenness to keep its general election manifesto promise of tracking down and bringing back black money stashed in foreign banks and offshore accounts.
“We will proactively engage with foreign governments to facilitate information sharing on black money”, the BJP election manifesto had said.
On the issue of black money, the Government has already set up a task force to bring back black money stashed abroad and recommend amendments to existing laws and enactment of new laws.

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