The Indian Express- in partnership with the Washington based International Consortium of Investigative Journalists (ICIJ) and the Paris-based Le Monde newspaper, in a three month long global project revealed a collection of secret documents sourced from HSBC’s Swiss private banking arm that has disclosed the names of 1195 Indian account holders in HSBC and their balances for the year 2006-07 among other account holders from 200 different countries. Roughly double the 628 names given to the Government by the French authorities in 2011, the maximum amount of money associated with a client connected to India was $876.3 million. The Income Tax Department too has been in touch with a whistle-blower who has been requested to share available information. However, the Department is still waiting for his reply.
The Swiss government, while stating that it is “strongly committed” to fight the scourge of black money stashed in its banks, also pointed out that the list is a part of “stolen data”. It pointed out that the published information is based on the known list with stolen data of the years 2007 and earlier. However, Switzerland has come under intense global pressure owing to the problems associated with its banking secrecy laws.
This new revelation is poised to widen the scope of the on-going probe by the Special Investigation Team (SIT) appointed by the Supreme Court, as several top businessmen, diamond traders, politicians and NRI/PIOs have been named as account holders such as MukeshAmbani, AnilAmbani, C.L.Raheja, Chetan Mehta, SmitaThackerey, Swaraj Paul, Naresh Kumar Goyal etc. In what may be an admission of wrong doing on the part of HSBC, it said the compliance culture and due diligence standards were significantly lower in 2007 than they are now.
The CBDT and SIT however, are still grappling with the issues concerning the gap in the data provided and questions concerning the culpability of HSBC and its officials. Finance Minister, ArunJaitley has said that mere information is not sufficient unless backed by independent evidence. However, striking a note of optimism SIT vice-chairman, Justice ArijitPasayathas promised to complete the investigation of all black money cases which are getting time barred by March 31. The Department has launched up to 60 prosecutions for wilful attempt to evade taxes and failure to furnish accounts and documents etc and show-cause notices issued in other cases among complaints of undue harassment.
Attorney General MukulRohtagi had sent a six-page opinion to the Ministry of Finance on January 13 wherein he advised the government to sign confidentiality agreements with foreign governments to enable the sharing of information on foreign bank account holders and black money. The information received may then be shared with courts or relevant tax tribunals. Germany has protested after a list of account holders in LGT bank in Liechtenstein (under a tax treaty) was handed to the Supreme Court in a sealed cover in April 2014, prompting the government to seek AG’s opinion. The AG pointed out that though the information is to be treated as a secret as per the domestic law “it can only be disclosed to persons, authorities (including courts and administrative bodies) involved in assessment, collection, enforcement, prosecution, determination or appeals in relation to taxes covered by the treaty and to the oversight bodies.” The information becomes public only when it reaches judicial and quasi-judicial bodies for adjudication. Though the consequence of this action may affect the signing of inter-government agreement(IGA) with the US under the Foreign Account Tax Compliance Act, the Indian government can guarantee the inviolability of the confidentiality provisions contained in the treaty. Several amendments to the Income Tax Act, 1961 have also been suggested to bring them in consonance with India’s treaty obligations.
by Siddhartha Singh