•  •  Dark Mode

Your Interests & Preferences

I am a...

law firm lawyer
in-house company lawyer
litigation lawyer
law student
aspiring student

Website Look & Feel

 •  •  Dark Mode
Blog Layout

Save preferences

SC appoints special investigation team to 'follow the money' while hearing Jethmalani's writ

The Supreme Court (SC) yesterday appointed a special investigation team (SIT) under former SC judges B P Jeevan Reddy and M B Shah to supervise the investigations and probe into illegal monies stashed by Indians in foreign banks and tax havens abroad.

A bench comprising of justices Sudershan Reddy and S S Nijjar passed the order for the formation of SIT while hearing a 2009 writ petition filed by jurist Ram Jethmalani and directed the government-constituted high level committee to become a part of SIT.

Justice Reddy who wrote the order observed:

“We hold that it is in fact necessary to create a body that coordinates, directs, and where necessary orders timely and urgent action by various institutions of the State. We also hold that the continued involvement of this Court in these matters, in a broad oversight capacity, is necessary for upholding the rule of law, and achievement of constitutional values. However, it would be impossible for this Court to be involved in day to day investigations, or to constantly monitor each and every aspect of the investigation.”

“We note that in many instances, in the past, when issues referred to the Court have been very complex in nature, and yet required the intervention of the Court, Special Investigation Teams have been ordered and constituted in order to enable the Court, and the Union of India and/or other organs of the State, to fulfill their constitutional obligations.”

The court took into account the tardy progress made into the affairs of Hasan Ali and Tapurias and criticised the government for having “struggled to conduct proper investigations” and reiterated that issue of black money threatens and endangers the nation’s security.

Senior advocate Anil Divan representing Jethmalani-led group of petitioners called Citizen India had earlier slammed the government for delaying the matter and taking the plea of double taxation avoidance treaty (DTAA) as an excuse for its inaction, reported Legally India.

This time also the court objected to the government’s stance that the name of the tax evaders was a ‘secret’ and could not be revealed under the India-Germany treaty, explained ITAT online.

“We have perused the said agreement with Germany. We are convinced that the said agreement, by itself, does not proscribe the disclosure of the relevant documents and details of the same, including the names of various bank account holders in Liechtenstein. In the first instance, we note that the names of the individuals are with respect to bank accounts in the Liechtenstein, which though populated by largely German speaking people, is an independent and sovereign nationstate. The agreement between Germany and India is with regard to various issues that crop up with respect to German and Indian citizens’ liability to pay taxes to Germany and/or India,” the court held.

“It does not even remotely touch upon information regarding Indian citizens’ bank accounts in Liechtenstein that Germany secures and shares that have no bearing upon the matters that are covered by the double taxation agreement between the two countries. In fact, the “information” that is referred to in Article 26 is that which is “necessary for carrying out the purposes of this agreement”, i.e. the Indo-German DTAA. Therefore, the information sought does not fall within the ambit of this provision. It is disingenuous for the Union of India, under these circumstances, to repeatedly claim that it is unable to reveal the documents and names as sought by the Petitioners on the ground that the same is proscribed by the said agreement.”

The high level committee members who shall now be a part of SIT’s team are the revenue secretary, the Reserve Bank of India’s deputy director, the Central Board of Direct Taxes’ chairman, director generals of Revenue Intelligence, Narcotics Control and Foreign Intelligence Office, joint secretary of Foreign Trade and the directors of Central Bureau of Investigation, Intelligence Bureau and Enforcement Directorate under the chairmanship and vice- chairmanship of justice Reddy and justice Shah respectively.

The Director of Research and Analysis wing will also join as a member of the special investigation team.

The hearing in the matter which resumed yesterday after the SC vacation came to an end would be listed next in the week following 15 August 2011.

Download a copy of the order here.

Click to show 3 comments
at your own risk
By reading the comments you agree that they are the (often anonymous) personal views and opinions of readers, which may be biased and unreliable, and for which Legally India therefore has no liability. If you believe a comment is inappropriate, please click 'Report to LI' below the comment and we will review it as soon as practicable.