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SC appoints SIT to probe black money
Decrying slow pace of govt’s investigation, apex court turns proactive
R Sedhuraman
Legal Correspondent

New Delhi, July 4
In a far-reaching order to deal with the “massive” problem of “astronomical levels” of black money stashed in secret overseas bank accounts, the Supreme Court today directed the government to set up a Special Investigation Team (SIT) headed by former apex court judges BP Jeevan Reddy and MB Shah and disclose the names of such bank account holders against whom show-cause notices have been issued.

Slamming the government for conducting the investigations “at a laggardly pace,” a Bench comprising Justices B Sudershan Reddy and SS Nijjar observed that even the “named individuals had not yet been questioned with any degree of seriousness. These are serious lapses, especially when viewed from the perspective of larger issues of security, both internal and external, of the country.”

The Bench passed the order on a bunch of PILs seeking steps to bring back over $1trillion of black money taken out of the country illegally by individuals and entities in order to evade tax. Among the petitioners are former law minister Ram Jethmalani and former police chiefs of Punjab - KPS Gill and Julio F Riberio.

Arguing for the government, Solicitor General Gopal Subramanian had strongly opposed the pleas for the SIT and disclosure of the names of the account holders.

While Justice Jeevan Reddy would be the SIT Chairman, Justice Shah would be its Vice-Chairman. The SC also directed the government to include the Director of the country’s external intelligence wing - Research and and Analysis Wing (RAW) - in the SIT.

The apex court said the 10-member high powered committee set up by the government recently to investigate the black money cases, particularly of Pune-based stud farm owner Hasan Ali Kha, should be converted into a SIT with three additions - the two former SC Judges and the RAW chief.

The 10-member committee was headed by a revenue secretary in the Finance Ministry, while its other members were RBI Deputy Governor, Directors of Intelligence Bureau, Enforcement Directorate, Finance Intelligence Unit and CBI, Directors General of Narcotics Control Bureau and Revenue Intelligence and Joint Secretary (FT and TR-I) in the Central Board of Direct Taxes.

When the Solicitor General contended today that the government had attached Hasan Ali’s properties worth Rs 44 crore, the Bench wanted to know as to what happened to “all the zeros.” The Bench was obviously referring to the income tax notice issued to him demanding payment of Rs 70,000 crore towards tax arrears and penalties.

The SIT would have powers to investigate, initiate proceedings and prosecute the accused in all black money related cases, the SC clarified. The SIT would keep the SC informed of all major developments by filing periodic status reports.

The SC directed the Centre and state governments to extend all cooperation to the SIT.

The government “shall forthwith disclose to the petitioners” all the documents and information received from Germany about Indian citizens holding illegal accounts in the tiny tax haven city state of Liechtenstein, bordering Switzerland. The individuals against whom investigations were still on would not be covered by the directive.

In the lengthy order, the Bench used the word worry/worries at least seven times.

There was a suspicion that such black money had been generated “in activities that have been deemed to be unlawful. In addition, such large amounts of unaccounted monies would also lead to a natural suspicion that they have been transferred out of the country in order to evade payment of taxes, thereby depleting the capacity of the nation to undertake many tasks that are in public interest.”





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