Modi does a U-turn on black money issue

Govt toes UPA line, says names can't be revealed

Modi does a U-turn on black money issue

The Narendra Modi government on Friday virtually endorsed the stand of the previous UPA regime on not disclosing names of persons holding unaccounted money in foreign banks.

The government cited before the Supreme Court the confidentiality clause in taxation agreements the government had with some countries.

The government referred to the Double Taxation Avoidance Agreement (DTAA) it had with various countries.

The Centre filed an application in the court stating that it cannot disclose all information as the foreign countries with which India had such agreement objected to such disclosure. Revealing names could lead to “serious problems with regard to diplomatic relations with other nations”, it maintained.

The Union Government’s stand was described as “sheer hypocrisy” by the Congress party as the BJP had made bringing back black money in foreign banks and disclosing names of such account holders its main poll plank in the recent Lok Sabha elections.
Noted lawyer Ram Jethmalani, on whose petition the apex court had in 2011 ordered disclosure of names, strongly objected to the Centre’s plea for modification of the order.

Appearing before a three-judge bench presided over by Chief Justice H L Dattu, Attorney General Mukul Rohatgi said the German government had objected to making public names of Indian account holders in LGT Bank, Liechtenstein.

Disclosing information on account holders could prompt the foreign countries to hold back details, besides making it difficult to enter into DTAA with other nations, he said.

“If the government is not able to give a commitment to maintain confidentiality of information exchanged under the tax treaties as per international standards for automatic exchange of information, it will not receive information about Indians hiding their money in offshore financial institutions and tax havens through multilayered entities with non-transparent ownership.

“This will be a consequence exactly opposite to what the petition seeks to achieve,” read the application filed by the Centre.

Petitioner Jethmalani accused the government of trying to protect the culprits holding money in overseas banks. He urged the court not to hear the Centre’s plea.
“Matter should not be entertained even for a day. Such application should have been made by the culprits and not the government,” he said.

Jethmalani, who claimed that around Rs 70 lakh crore was stashed away in foreign banks, said that he has written to the Prime Minister in this regard and awaited his response.

The bench, also comprising Justices Madan B Lokur and A K Sikri, posted the matter for hearing on October 28.

The apex court had earlier rejected a similar stand taken by UPA government.The court had observed that DTAA do not prevent the Centre from disclosing the names of persons having bank accounts in foreign countries.

Talking to reporters, Rohatgi said that all amounts deposited in foreign banks by Indian citizens cannot be termed as black money and it is not a crime to open such accounts. He said details of only those accounts could be made public, against which the government decided to initiate prosecution.

The court, referring to DTAA, had earlier said  that the government cannot bind India in a manner that derogated from Constitutional provisions, values and imperatives.

“This court has not restricted the government of India from entering into a tax treaty wherein a commitment can be made that information received therein would only be used for tax purposes in accordance with the relevant treaty,” the Centre’s application said.

After resisting for more than three years, the UPA government had on April 29 this year revealed in the Supreme Court names of 26 persons who had allegedly stashed black money in LST bank and against whom prosecution proceedings had been launched by the IT department.

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