Black Money Foreign Bank Ac Holders Face Taxman Heat

CRYING FOUL Lawyers & CAs representing HSBC account holders say I-T dept is filing criminal cases against them in haste, even when their appeals are pending before CIT

With the Special Investigation Team (SIT) on black money breathing down their necks and tax authorities seemingly eager in filing prosecution proceedings, beleaguered foreign bank account holders are now making a beeline for tax tribunals, settlement commission and high courts, to either seek a stay on prosecution proceedings or to make voluntary disclosures.

Lawyers and chartered accountants representing account holders say that tax authorities are displaying unseemly haste in filing criminal cases for concealment of income, even when appeals are pending before adjudicatory forums.

KK Modi's name allegedly figured in the HSBC list. Modi, who is chairman of Modi Group, has moved the Income Tax Appellate Tribunal (ITAT), seeking a stay on prosecution proceedings, initiated against him. Modi has denied knowledge of this account, which has around ` .3 crore, but has paid taxes under protest, while refusing to sign a consent form, an Income Tax official who is familiar with the case told ET.

On Friday , his case came up before ITAT, and another date was fixed for hearing. The Income Tax authorities (ITD) who had completed Modi's assessment, added income and levied penalty before 31 March, 2015. An appeal filed before CIT (Appeals) -an adjudicatory body -was dismissed.

Also 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 KK Modi's office, requesting a formal response, but his spokesman Harmanjit Singh refused to com ment. Senior advocate Ajay Vohra, who represented KK Modi in ITAT, also refused to comment.

The Income Tax Department's representative questioned the ju risdiction 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 ET has reviewed the court order, according to which, 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.“

The Economic Times, New Delhi, 10th August 2015

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