Govt likely to challenge ITAT ruling on Bofors case

Though government was not a direct party in the case, based on the opinion of Attorney General Ghoolam Vahanvati, the Law Ministry is understood to have asked the Finance Ministry to challenge the ITAT ruling as it contained certain remarks against the Income Tax department.

The tribunal had said that commissions were paid to late Win Chaddha and Italian businessman Ottavio Quattrocchi in the Bofors gun deal in the nineties.

"In our view, to enforce the rule of law, these steps were desirable to bring all the relevant income tax violations to the logical end by the income tax department. Inaction in this regard may lead to a non-existent undesirable and detrimental notion that India is a soft state and one can meddle with its tax laws with impunity," the tribunal had said in its 98-page order.

Vahanvati is learnt to have told the Law Ministry that the Income Tax department, which comes under the Finance Ministry, should challenge the ITAT order in the Delhi High Court for removal of the remarks by the tribunal against the Income Tax department in its December, 2010 order.

The appeal will be restricted to the strictures against the I-T department only. It will not touch upon the issue of any private person who had approached the tribunal on taxation matters.

The tribunal in a ruling on an appeal filed by Chaddha's son, Hersh W Chaddha had concluded the arms dealer had got Rs 52.6 crore as kickbacks and Quattrocchi got USD seven million (around Rs 13 crore).In response to a reference from the Finance Ministry, the AG is learnt to have stated the tribunal had overstepped its jurisdiction