Black Money: Foreign bank account holders accuse tax authorities of haste in filing complaints

The Special Investigation Team (SIT) is leaving no stone unturned to unearth black money and the tax authorities are in a haste to file cases against people having illicit money stashed abroad. Following this, the foreign bank account holders are now under pressure and crowding tax tribunals to either stop persecution or to disclose their names.

However, as per lawyers and chartered accountants, the tax authorities are showing inappropriate haste in filing criminal cases for concealment of income, even when appeals are pending before adjudicatory forums.

The name of KK Modi, chairman of Modi group, allegedly appeared in the HSBC list after which he moved the Income Tax Appellate Tribunal (ITAT) seeking a stay on prosecution proceedings initiated against him. Modi denied any comment and said that he was not aware of any such account in any foreign bank which has around Rs 3 crore deposited.

As per an income tax officials aware of the matter, Modi has paid taxes under protest but refused to sign the consent form. The matter was presented in front of the ITAT last week and another date has been fixed for the hearing.

Meanwhile, in June this year, the tax authorities issued a show-cause notice, under Sections 276 (c) and 276 (d) of IT Act, for initiation of prosecution proceedings for alleged concealment of income. A questionnaire was sent to Modi's office, requesting a formal response, but his spokesman Harmanjit Singh refused to comment.

Modi’s advocate in ITAT, senior advocate Ajay Vohra also refused to comment on the matter. The Income Tax Department's representative questioned the jurisdiction of ITAT to hear the petition by Modi seeking a stay, since the matter had to do with a criminal case.

The representative informed the tribunal that "on the Swiss account, Mr Modi's address is there, mobile number is there, we conducted a search, he conceded and paid taxes but they are refusing to own up the transaction, and also refusing to sign the consent form." However, Modi's lawyer denied owning the account. "When the Swiss account doesn't belong to me, I have no locus to sign the consent form." He also informed the tribunal that his appeal has been dismissed by CIT (Appeals).

However, according to official sources, the ITD had initiated prosecution proceedings against Modi, even before the appeal could be disposed of by CIT (Appeals).

Similarly, in cases of Sanjiv Gupta, Pradip Burman, Rear Admiral PN Aggarwal, all foreign account holders, appeals were pending before CIT (appeals), but criminal proceedings were initiated against them. This issue also figured in Bishwanath Garodia's case, another HSBC account holder, who has got relief from Calcutta high court.

The court order, reviewed by Economic Times says, no steps can be taken against Garodia, "till the appeal pending before the Commissioner (appeals) is disposed of."

On May 7, this year CJM Alipore had issued summons against Bagrodia, on a complaint filed under section 276 (c), by tax authorities. Garodia had claimed that the "issue regarding the alleged concealment of income by the writ petitioner by maintaining an account with HSBC, Geneva, Switzerland is sub judice before the Commissioner (Appeals) Central -21, Kolkata."

The high court order also mentioned about an SC observation in Commissioner of Income Tax vs Bhupen Champak Lal Dalal case, wherein the apex court affirmed the order of the Bombay High Court, staying criminal proceedings. It said, "when ultimately the result to come out of the proceedings before the appellate authorities would have a definite bearing on the cases alleged against the respondents, we find that the high court order is justified in granting the interim order it did."

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