There is plenty of ambient noise about foreign accounts and secret stashes hidden away in accounts on foreign shores. But at the heart of the matter is black money, unaccounted-for wealth which people hide from the tax authorities. And most of Indian black money lies within the country, not abroad. Outlook learns that a high-profile Congress leader could be under the scanner for concealing his income.
The leader in question is one of the country’s top lawyers, with a slew of corporate clients. With an income running into the high crores, he is among the richest MPs and one of the Congress’s most visible faces on television. Reliable sources say that his troubles with the income tax authorities, which began two years ago when the UPA was in power, may have a taken for the worse with efforts at a settlement fizzling out. (On the day of going to press, the Congress leader could not be contacted.)
The lawyer-leader’s troubles with the I-T authorities began in 2011-12 when the financial intelligence unit of the finance ministry was alerted by several huge cash transactions. Attempts to come to a settlement with the taxman have come to nought and the buzz in Congress circles is that their compatriot may have to shell out Rs 100 crore in penalties or face criminal prosecution. (The penalty for failing to make a full and true disclosure can be 300 per cent of the tax demand and there can be imprisonment for seven years in case of conviction.)
When his efforts to make then finance minister P. Chidambaram ease his passage failed, the lawyer-leader approached the Income Tax Settlement Commission (ITSC) in May last year and sought immunity from penalty or criminal proceedings. He went on to disclose an “additional income” but the taxmen were not convinced. The ITSC, a quasi-judicial body for alternate dispute resolution, allows a one-time tax evader or an unintending defaulter to make a one-time clean declaration of his affairs.
The Congressman would hope that finance minister Arun Jaitley, a fellow lawyer, would help him out as a former colleague. But sources say the amounts of money involved are too huge for the Modi-led regime to show leniency. “If Chidambaram did not bail him out why would Jaitley do so, risking the story leaking out?” asks a top lawyer.
Still, the lawyer-leader does have friends embedded in the system and has represented influential corporates. He would certainly have IOUs across party lines and several in the media as well. But the news of him being prosecuted for tax evasion is a scandal waiting to blow up. The sum involved, over Rs 100 crore, is also huge for an individual tax payer.
What is black money? In an article published last week, Congressman and former union minister Manish Tewari asked this question and then gave the answer: “Black money is wealth held by an individual or a company in violation of the laws that are applicable to them. It can broadly be classified as capital that has been subject to tax evasion or are the proceeds of crime.” By that definition his fellow traveller in the Congress party is indeed staring at a big black hole.
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