NewDelhi: It needed some grit for beleaguered AIADMK leader TTV Dhinakaran to cry ‘tax politics’ while he was still in the eye of an income tax storm. He did it nevertheless, repeating terms such as ‘vendetta’ and ‘witch-hunting’ by the Centre.
But, when DMK’s working boss M K Stalin sought to know the fate of earlier high-voltage income tax searches in Tamil Nadu, one sat up and took note, because each such case had travelled a distinctly different path, showing inconsistency in approach.
On April 22, 2016, Karur-based contractor C P Anbunathan’s houses and godowns were searched by income tax officials, and among the seized materials were about Rs5 crore in cash and currency-counting machines.
Three trucks found carrying Rs570 crore were intercepted by election commission officials near Tirupur in poll-bound Tamil Nadu in mid-May 2016. The trucks remained parked in an open ground for days before being taken to RBI vaults, but income tax officials did not show even an academic interest in the drama.
In July-August 2016, I-T officials searched gutka godowns and fished out a diary containing names of officials and politicians on the payrolls of gutka wholesalers. A chief commissioner of income tax personally met the then TN chief secretary and handed over details. Though nothing came of it, the fact remains that the I-T department took pains to ensure action against suspects.
In December 2016, the office of the then TN chief secretary was searched by I-T officials, with armed men from central police organisation standing guard outside. The prime target was sand mining baron Sekhar Reddy. Sensational searches at a minister’s house and recovery of ‘proof’ of distribution of Rs89 crore as bribe to voters of R K Nagar constituency took place on April 7, 2017. On the basis of IT report, the election commission cancelled the bypoll.
R K Nagar election-time search was huge, till more than 1,500 taxmen swooped on about 180 premises related to V K Sasikala+ , the jailed aide of former chief minister Jayalalithaa, last week.
The inconsistent nature of the raids raises the question — can I-T searches and allegations of political vendetta be separated at all? No, if the target is a politician from an opposition camp. “Income tax is a central agency reporting to the present government. So, whenever it touches an opposition party member, the bogey of political vendetta is raised,” says Rabu Manohar, central government standing counsel and counsel for GST and customs.
As for timing of raids, he says untaxed money surfaces mostly on two occasions — during political instability and during price swings of essential commodities, when they could be hoarded. “TN’s political scene now is unstable and the agency has chosen the right time to strike,” he adds.
But, senior advocate P Wilson, a DMK office-bearer and former additional solicitor-general of India says, “I-T searches have to be taken to a logical conclusion. But, unfortunately, in all recent cases, the proceedings had been abandoned midway. In Anbunathan’s case, though the agency had proof of doubtful investments, the information were not forwarded to other agencies for follow up. In gutka case, they took extraordinary interest to ensure action against some officials. In R K Nagar bypoll case they merely sent a report to the election commission, which sent it to city police as complaint.”
So, what really happens after ‘searches’? After search and seizure, comes inquiry when the investigation wing of I-T department sends an appraisal report to an assessing officer who sends a notice to the assesse asking him to file returns for the past six years. “It is an opportunity for the assesse to amend their earlier returns, and declare undeclared assets,” says a senior tax official. “They can also approach the settlement commission to escape penalty and prosecution. An opportunity to compound the offence is then offered after both sides are heard,” he adds.
All the post-search processes are strictly between the assesse and income tax official, and so nothing is heard about it, says Manohar. “If Stalin wants to know the fate of such searches, he can utilise judicial forums seeking specific directions or even invoke RTI Act.”
Referring to allegations of political vendetta behind raids, advocate V Lakshminarayanan says that to eliminate subjectivity, decisions to search premises must be routed through an apolitical body. Searches could be cleared by an entity to which members are nominated on the lines of chief vigilance commissioner and DGPs, he says. “I-T department should first offer a final self-declaration option, ushering in a measure of transparency besides offering the target a last chance to come clean,” he adds.